Brand loyalty in question: Sellers need the human touch

In an age where digital convenience often overshadows traditional interactions, brand loyalty is at a crossroads. While automated tools and data-driven strategies can save enterprise sellers countless hours and resources, many businesses have discovered that these solutions alone do not automatically translate to sustainable customer retention.

Sellers may be overlooking a critical component: the human touch. From delivering authenticity to investing in loyalty programs, human-driven interactions reinforce customer relationships – an essential building block for long-term brand loyalty.

Customer retention during economic uncertainty

In turbulent times, it’s only natural for consumers to become more financially cautious. While commerce brands should always seek to grow their organization, keeping existing customers happy is a solid strategy, particularly in a difficult economy where marketing budgets might be shrinking.

That said, the key question remains: are brands effectively addressing their customers' needs?

For the 2023 Evolution of Commerce Report, PayPal commissioned Forrester Consulting to conduct two surveys among enterprise businesses and consumers in five global markets: Australia, France, Germany, the United Kingdom, and the United States. We wanted to know precisely how companies and consumers are reacting to the economy, how prepared they feel for these challenges, and what their priorities are going into 2023.

In this report, we explore what it means to be loyal and, more importantly, what brands should do to keep customers on their side without breaking the bank.

Brand loyalty comes from value and authenticity

At a time when no shopper wants to waste money, making sure they are buying an authentic – and therefore quality – product is high on the agenda of 63% of global consumers and 56% of US consumers.¹ The same study also suggests that consumers around the world expect to see improvements in authenticity information and priority customer care over the next five years.¹

To enhance brand loyalty through increased value and authenticity, consider:

• Implementing transparency initiatives. Clearly communicate the origin, materials, and manufacturing processes of your products. This builds trust and demonstrates your business’s commitment to quality.
• Enhancing quality assurance measures. Regularly review and improve product quality to ensure that customers receive the best possible goods. This could include everything from stricter quality control checks to sourcing higher-grade materials.
• Encouraging customer reviews. Invite customers to share their experiences and feedback publicly. Reviews provide new shoppers with social proof of your products' quality and reliability.
• Showcasing real customer stories. Feature case studies or stories from actual customers who have benefited from your products. This can be particularly effective on your website and in marketing materials to demonstrate the real-world value and authenticity of your offerings.

Customer frustrations with chatbots highlight problems with growing automation

With so many potential channels to interact with customers, it is tempting to default more to a fully digital way of doing business. Although customers appreciate the convenience that digital channels can bring, many are struggling with the digital-only approach.

Chatbots, while potentially useful in alleviating pressure on frontline customer service staff, have also drawn the ire of consumers. Research by Forrester Consulting commissioned by customer experience specialists Cyara found that almost 40% of interactions with chatbots were deemed negative by consumers and 50% of consumers said that interactions with chatbots often left them feeling frustrated.²

This is consistent with PayPal’s own research, which reveals that 33% of US consumers surveyed were frustrated by an inability to reach customer service when shopping with an e-commerce company.³

All evidence points to too much of the wrong contact potentially having an impact opposite to what companies intend – driving customers away, instead of keeping them close. So, instead of blindly relying on automated marketing and customer support tools, consider:

• Offering more value. Companies could ‘right the wrongs’ or simply improve their existing relationship by providing even more value to the customer. 60% of respondents said that free shipping and returns would reduce the strain on squeezed budgets, while 49% would welcome more promotions and deals.¹
• Upgrading chatbot intelligence. Invest in smarter, more responsive chatbots that can handle a wider range of customer inquiries effectively. This reduces frustration and increases the chances of solving issues on the first interaction.
• Streamlining customer service connectivity. Reduce wait times and simplify the process for customers to connect with live representatives. This might involve better integration of customer service channels or more intuitive navigation on digital platforms.
• Implementing omnichannel support. Develop a seamless integration between various communication channels, such as social media, email, phone, and live chat. By allowing customers to easily switch between channels without repeating their issues, you enhance their overall service experience and satisfaction.
• Enhancing proactive communication. Instead of waiting for customers to reach out with problems, use customer data to anticipate issues and reach out proactively. You could, for example, notify customers about potential issues before they encounter them or offer help when unusual activity (like repeated failed transactions) is detected.

Are brands placing enough value on customer loyalty?

There is evidence that a growing proportion of consumers value loyalty offerings from businesses that they use. According to an in-depth survey of American consumers by gifting company Snappy, 70% of consumers report loyalty program offerings as key factor when choosing to give a business their money. Moreover, 72% will join a loyalty program before making their first purchase from a brand.⁴

Paypal’s own study conducted by Forrester shows that 42% of brands surveyed have already implemented a structured loyalty program, while 45% intend to offer experiential rewards and create customer referral programs.¹

Unsurprisingly, from the consumer perspective, many care about companies having a built-in loyalty program where they can be rewarded for their continued purchasing.

Here are some ways businesses can add the human touch to their loyalty programs:

• Personalize rewards. Tailor loyalty rewards to match the preferences and purchasing history of individual customers. For example, businesses could offer special discounts on items they frequently buy or provide early access to new products.
• Offer exclusive events and experiences. Invite your top customers to special events, such as product launches, workshops, or VIP sales. By putting faces to the brand, these experiences can strengthen the emotional connection between you and your customers.
• Create dedicated customer support lines. In our survey, 55% of US consumers considered priority care to be a top priority.¹ Just make sure you actually offer a better experience rooted in efficiency and personalization.

Sustainability is important, but no guarantee of loyalty

Nearly three-quarters (72%) of businesses prioritize aligning their organizations with charities and sustainability initiatives.⁵ The same study showed that nearly as many (68%) say they are implementing additional initiatives beyond standard loyalty programs to help their customers through the current economic crisis. The biggest motivator for these programs is because 34% believe customers care about companies’ political and societal stances.

However, given the evidence earlier in this report, businesses may see better brand loyalty by improving existing chatbots and making it easier to connect with live customer service representatives instead. Indeed, when asked about the tactics they were using to secure consumer loyalty, businesses leaned in the direction of more technology – 59% believed data analytics would give them the edge, and a further 51% were looking to create a frictionless shopping experience.⁵

So, while it’s important to align business values with those of your customers, enhancing direct engagement remains essential. Consider these avenues for improving customer interaction and loyalty:

• Optimize the purchasing journey. Use data analytics to track and analyze customer interactions across your website or app. Identify common cart abandonment points or areas where shoppers seem to struggle, then streamline them to create a smoother, more intuitive navigation path.
• Personalize the shopper experience. Analyze data on individual customer preferences and previous interactions. Use this information to customize the shopping experience, such as displaying personalized product recommendations and tailored content that meets their specific needs.
• Improve inventory management. Analyze purchasing trends and customer demand to better manage inventory. Ensure that popular products are well-stocked and leverage predictive analytics to anticipate future demand, reducing the likelihood of out-of-stock issues.
• Enhance customer support. Deploy analytics to understand the most common customer queries and issues. Use these insights to provide proactive support solutions, such as targeted FAQs, preemptive troubleshooting guides, or automated alerts about potential issues.
• Simplify the checkout process. Analyze the checkout process to identify and eliminate unnecessary steps or friction points. Use data to optimize the number and sequence of steps, and personalize the checkout experience based on the customer’s buying history and preferences.

Improve your customer retention

36% of businesses say they are focused on — building emotional connections with consumers.¹ However, it’s clear from our research that many are falling short. Customers don't just want products, answers to their questions, and recognition of their loyalty – they want them in a way that feels personal and genuinely considers their individual needs and preferences.

Ready to deepen brand loyalty with existing customers? Here’s a quick recap of effective strategies:

• Focus on product authenticity. Before integrating additional digital features and enhancing loyalty programs with experiential rewards, commerce brands should prioritize product authenticity. After all, shoppers are more likely to return for more if they’re reassured that they’re purchasing high-quality goods. Demonstrating authenticity also involves offering comprehensive product details, making sure that this information is readily accessible and originates from a reliable source.
• Ensure customer service has a human touch. Simplify the process for customers to ask questions, possibly by enhancing chatbot interactions and, ideally, by offering access to human customer service representatives when feasible. Remember: retention hinges on value and trust.
• Invest in your loyalty program. Enhance your loyalty offerings by incorporating more personalized rewards and recognition. This could include customized discounts, birthday bonuses, or even loyalty milestones that celebrate the customer’s journey with your brand.
• Use the right technology. Implement technology that enhances the customer experience rather than complicating it. This includes using data analytics to predict customer needs, optimizing mobile experiences, and ensuring all digital interfaces are user-friendly and efficient.