Customer Loyalty

Building Lasting Connections: The Power of Customer Loyalty in Retail

Aug 1, 2023

12 mins read

Manisha Khandelwal


In today’s fast-paced and crazy competitive retail customer experience world, customer loyalty is like the secret sauce for staying ahead of the game. Seriously, it’s a game-changer! 

Understanding what loyalty really means and how it impacts a brand’s growth is absolutely crucial in coming up with killer strategies.

Loyal customers not only make frequent purchases, but they also tend to spend more, ultimately boosting a brand’s revenue and profitability. Moreover, they become your ultimate cheerleaders, spreading the good word about your brand to everyone they know.

But, let’s be real, building and nurturing customer loyalty in retail isn’t a walk in the park. 

You have to get inside your customers’ heads, figuring out what they love, what they need, and what bugs them. And this is where gathering customer feedback becomes a crucial aspect of the journey.

By actively seeking and analyzing customer feedback, you can gain invaluable insights into what makes your customers tick. This proactive approach not only strengthens customer satisfaction but also paves the way for long-term loyalty.

But how to build customer loyalty for retail brands? 

Let’s find out!

What is the Impact of Customer Loyalty on Retail Success?

Here are some positive impacts that customer loyalty can have on your retail customer experience:

  • Increased Customer Retention: Customer loyalty plays a pivotal role in driving customer retention and repeat purchases for brands. And according to the research study conducted by Harvard Business School, The Economics of E-Loyalty, increasing customer retention rates by 5% increases profits by 25% to 95%. 
  • Brand Advocacy: Loyal customers are powerful brand advocates who spread positive word-of-mouth about their favorite brands. According to the Sprout Social Index, 83% of consumers recommend a brand they follow on social to friends and family.
  • Higher Customer Lifetime Value and Revenue Growth: Loyal customers tend to have a higher CLV due to their increased purchasing frequency and larger average order values. According to the Brand Keys Customer Loyalty Engagement Index, a 7% increase in customer loyalty can result in a significant increase of up to 85% in the money customers spend over their lifetime.
  • Competitive Advantage in the Crowded Retail Market: With numerous options available, customers are drawn to brands that provide exceptional experiences and personalized interactions. Brands with a loyal customer base have a competitive advantage, as customers are less likely to switch to competitors offering similar products. 

How to Leverage Customer Feedback to Build Customer Loyalty?

So, how can you, as a retail brand, forge these unbreakable bonds with your customers? 

The answer lies in the power of leveraging customer feedback.

Customer feedback isn’t just a bunch of random comments – it’s the key to unlocking the secret to your customers’ hearts. It’s like having a treasure map that leads you to discover what truly delights your customers. 

And the best part? 

When you tailor your offerings based on this valuable feedback, it’s like sprinkling a touch of magic that fosters a deep emotional connection.

It also helps you identify areas where you can improve. By addressing pain points and resolving issues promptly, you can show your dedication to improving your retail customer experience

Ultimately, what you do with the feedback matters the most. Action driven from this data is the key to customer loyalty. 

But how can you manage all of this – gathering feedback, tracking, analyzing, and taking action? 

With an effective retail customer feedback tool, of course!

With SurveySesum, you can easily:

  • Launch CSAT, CSI, SSI surveys, and more
  • Collect omnichannel feedback in real-time
  • Identify touchpoints with the most friction with journey-based dashboards
  • Identify top trends and sentiments from thousands of feedback in just a few minutes.
  • Get instant detractor alerts on your CRM so you can close the loop in time.


Boost Customer Loyalty with Surveys – Request a Demo


7 Best Practices for Building Customer Loyalty in Retail?

Here are 7 best practices that you can follow to build strong customer loyalty for your brand.

1. Identifying Target Customer Segments and Preferences

The image shows the segmentation of customers

Building customer loyalty in retail requires a strategic approach that revolves around understanding your customers, meeting their needs and expectations, and creating personalized experiences. 

But how can you do that?

  • Collect and Analyze Customer Data: Utilize customer data to gain insights into their preferences, purchase history, demographics, and behavior. Use tools like CRM tools like SurveySensum. Hubspot or Zoho to track and analyze this data effectively.
  • Segment your Customers: Group your customers into specific segments based on their characteristics and preferences. This allows you to tailor your marketing efforts and offerings to meet the unique needs of each segment.
  • Personalization at Every Touchpoint: Implement personalization across all touchpoints of the customer journey, including website interactions, emails, mobile apps, and in-store experiences.
  • Loyalty Programs: Create a loyalty program that rewards customers for their repeat business. Make sure the rewards are valuable and relevant to the customer segments you’ve identified.

2. Designing Effective Loyalty Programs and Incentives

The image shows an effective loyalty program

Loyalty programs and incentives are powerful tools for building customer loyalty. 

Brands should design loyalty programs that provide customers with tangible value and meaningful rewards. This can include offering exclusive discounts, personalized offers, early access to sales, or VIP experiences. 

Here are a few points to consider while designing your loyalty programs:

  • Take a Customer-Centric Approach: Conduct research and gather customer feedback to understand what rewards and incentives would be most appealing to your target audience. Tailor the program to resonate with different customer segments, making them feel special and valued.
  • Create Tangible Value: Ensure that the loyalty program offers tangible and significant value to customers. The rewards should be attractive and relevant enough to entice customers to participate actively and make repeat purchases. 
  • Give Meaningful Rewards: Design rewards that customers genuinely desire and find meaningful. Apart from discounts, consider offering experiential rewards like VIP access to events, early product releases, or personalized shopping experiences. 
  • Keep it Simple: Keep the loyalty program simple and easy to understand. Avoid overly complicated rules or redemption processes that may deter customers from participating. 
  • Make it Personal: Infuse personalization into the loyalty program by tailoring rewards based on individual customer preferences. Leverage customer data to offer personalized offers and discounts that align with their past purchases and interests.

By designing effective loyalty programs that provide genuine value, align with customer preferences, and offer personalized experiences, retailers can foster stronger customer loyalty, increased engagement, and ultimately, long-term success in the competitive retail landscape.

3. Ensuring Seamless Customer Experiences Across All Touchpoints

The image shows a customer journey

Brands need to focus on providing a seamless experience across all multiple touchpoints, including brick-and-mortar stores, online channels, and social media. 

But why?

  • Changing Customer Behavior: Customer behavior has evolved rapidly, especially with the increasing adoption of technology. Shoppers now expect a consistent and connected experience, regardless of the channel they use to interact with a brand. Here’s how Nike perfectly doing it. Nike provides Buy Online, Pick Up In-Store option which combines the convenience of online shopping with the immediacy of in-store fulfillment.

The image shows Nike’s buy-online-pick-up-in-store service

  • Emergence of Social Media as a Shopping Platform: Social media has become more than just a platform for communication; it has transformed into a shopping destination. Customers are increasingly turning to social channels to discover products, read reviews, and make purchases. For example, Sephora offers a shopping experience via its Instagram page.
  • Increased Brand Switching Due to Value and Convenience: Today’s customers are more willing to switch brands if they find better value, availability, and convenience elsewhere. To retain their customer base and prevent brand switching, retailers must consistently deliver value and convenience across all channels.

4. Collecting and Leveraging Customer Feedback for Continuous Improvement

The image shows how to close the feedback loop

Customer feedback is a valuable resource for understanding customer preferences, pain points, and areas for improvement. This feedback can provide insights into product preferences, service quality, and overall customer satisfaction

Here is a step-by-step process to collect and leverage feedback for continuous feedback:

Step 1: Establish Multiple Feedback Channels

Don’t limit yourself to just one feedback channel, set up multiple feedback channels to gather customer insights. These channels may include online surveys, feedback forms at the point of purchase, customer reviews on your website, or social media monitoring to track customer mentions and comments.

Step 2: Design Effective Surveys

Create well-designed surveys that are clear, concise, and easy for customers to complete. Ask relevant questions that address different aspects of the customer experience, such as product satisfaction, service quality, etc. 

Step 3: Encourage Customer Reviews

Actively encourage customers to leave reviews and feedback after making a purchase but don’t irritate them with multiple requests.

Step 4: Monitor Social Media

Keep a close eye on social media platforms to monitor customer conversations and mentions of your brand. Respond promptly to both positive and negative feedback to show that you value customer opinions.

Step 5: Analyze Feedback Data

Regularly analyze the collected feedback data to identify trends, patterns, and common themes. Identify areas of improvement and potential pain points that customers may be experiencing.

Step 6: Prioritize Actionable Insights

Focus on actionable insights that can lead to tangible improvements in your products or services. Identify key issues that, when addressed, could significantly enhance the overall customer experience.

Step 7: Implement Data-Driven Changes

Use the feedback insights to make data-driven decisions for continuous improvement. This may involve refining product offerings, enhancing customer service protocols, or streamlining the checkout process.

Step 8: Close the Feedback Loop

Respond to customers who have provided feedback, whether positive or negative. Show appreciation for their input and inform them of any actions taken based on their suggestions. 


Close the Feedback Loop Effectively with SurveySensum – Request a Demo


5. From Transactional to Experiential Loyalty 

The image shows an example of an Experiential loyalty program

In the past, loyalty programs primarily revolved around transactional rewards, where customers were incentivized based on the frequency or amount of their purchases. While these programs did succeed in driving repeat purchases, they often lacked a deeper emotional connection with customers. 

Today, brands are recognizing the importance of emotional connections and memorable experiences in building long-term customer loyalty. Instead of just offering rewards for purchases, brands aim to provide experiences that resonate with customers personally and make them feel valued and understood. This is called the experiential loyalty program.

→ Personalization is the key here. 

By gathering and analyzing customer data, businesses can tailor interactions and offerings to match individual preferences and needs. Personalized experiences can range from product recommendations based on past purchases to customized email campaigns that address customers by name. These personalized touches show that the brand understands and cares about its customers, which can lead to a deeper emotional connection. 

For example, Amazon pioneer in providing personalization in retail experiences for their customers by providing them with personalized product recommendations, product suggestions, wishlist alerts, etc.

The image shows the personalized Homepage of Amazon

6. Rewards Tied to Customer Lifetime Value 

The image shows Customer Lifetime Value 

Traditionally, loyalty programs offered rewards based on short-term activities like transaction frequency or spending levels. While these programs did encourage repeat business, they often failed to consider the long-term value that certain customers bring to the business. 

Recognizing the limitations of this approach, companies are shifting towards a more customer-centric strategy that takes into account the Customer Lifetime Value (CLV) of each individual customer.

Brands prioritize retaining their most profitable customers by focusing on customer lifetime value. Rather than focusing solely on acquiring new customers, they invest in retaining and nurturing existing ones who have a higher potential for long-term profitability. This can lead to reduced customer churn and increased customer retention rates. Also, happy and loyal high-CLV customers can become brand advocates, recommending the brand to their friends, family, and colleagues. 

Implementing rewards tied to CLV requires a data-driven approach. Companies need to analyze customer data to determine each customer’s lifetime value accurately. Utilizing customer analytics and CRM systems, businesses can identify trends and patterns that indicate which customers have the highest potential for long-term value.

7. Member Engagement and Brand Advocacy 

The image shows Brand Advocacy through social media platforms 

Member engagement plays a pivotal role in building loyalty. Engaged customers are emotionally invested in the brand, actively participating in various activities, and regularly interacting with the brand across multiple touchpoints. 

Loyalty programs that go beyond transactional rewards and offer exclusive content, personalized recommendations, or early access to new products or services make customers feel special and appreciated. This sense of exclusivity enhances the customer’s emotional connection to the brand, leading to a stronger sense of loyalty and dedication.

This enables positive word-of-mouth brand advocacy by real customers. When customers have positive experiences and feel a strong connection to the brand, they naturally share their experiences with friends, family, and online communities. Word-of-mouth marketing driven by brand advocates is one of the most powerful and cost-effective ways to attract new customers and expand the customer base.

Brand advocates also act as social proof, building trust and credibility for the brand. Positive recommendations and testimonials from satisfied customers are more influential in driving purchase decisions than traditional advertising.

For example, under Glossier’s Ambassador Program, the beauty features stories of real customers turned brand advocates creating a positive brand reputation.


This image shows Glossier’s Ambassador Program


Customer loyalty plays a crucial role in the success of retail businesses. It impacts various aspects of retail operations, such as repeat business, increased retention rate, revenue generation, positive brand advocacy, and higher Customer Lifetime Value. 

The emotional connection and trust between loyal customers and the brand also provide a competitive advantage, making it harder for competitors to lure them away. Moreover, loyal customers provide valuable feedback, helping retailers identify areas for improvement and deliver better customer experiences.

To build customer loyalty effectively, retailers can rely on effective customer feedback tools like SurveySensum

With SurveySensum, you can gather and analyze customer feedback and data efficiently to create personalized experiences and recommendations tailored to individual preferences. It also enables retailers to measure customer loyalty metrics, track improvements, and identify loyal customer segments. 


Manisha Khandelwal

Senior Content Marketer at SurveySensum

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