It’s no secret that customer loyalty can make or break your long-term success. One of the most jarring customer retention statistics is that the probability of selling to an existing customer is 60-70%, while the probability of selling to a new customer is only 5-20%.
Encouraging customer loyalty starts with an understanding of all the different stages a customer has to go through to become loyal - which is where the ladder of customer loyalty comes into play. Wait, what is the customer loyalty ladder?
This is a metaphorical ladder, where each rung represents a different stage in a customer’s perceived loyalty to your brand. It starts at the bottom before they’re actually a customer, they’re a prospect. The final rung represents your most loyal customers: brand advocates.
While you’ll find different breakdowns of the ladder, with some saying there are as many as 7 different rungs, we like to keep things simple and focus on the 5 most important rungs:
- Prospects
- First-Time Customers
- Repeat Customers
- Loyal Customers
- Brand Advocates
Learn more about how you can use the customer ladder of loyalty to your advantage below and set up a seamless Shopify loyalty program that naturally moves users higher and higher up the ladder.
What is the Customer Loyalty Ladder?
So what is the customer loyalty ladder, exactly? It’s a simple framework for helping brands understand and categorize customers based on their level of engagement and loyalty.
It shows you each step a user takes, from early in the customer acquisition journey where they’re blissfully unaware of who you are to the point where they’re a raving fanatic for your brand and bringing their loved ones into your ecosystem through referrals.
Cool - why does this matter though? The hard truth brands need to realize is that not all customers are created equal. They shouldn’t be treated the same.
Those who are just discovering your brand need to have their trust earned, still. On the other hand, loyal customers need to be rewarded and encouraged to continue engaging.
Identifying where each customer sits on the ladder of customer loyalty empowers you to tailor your communications and marketing efforts accordingly to strategically move them up the ladder. The concept of a customer loyalty ladder helps brands answer hard-hitting questions:
- How can we convert one-time buyers into repeat customers?
- What’s the best way to incentivize loyal customers to become brand advocates?
- Where do we see drop-offs, and how can we fix them?
That being said, let’s take a look at the customer ladder of loyalty below.
A Look at the Ladder of Customer Loyalty: What Does Each Rung Represent?
Understanding the different rungs on the ladder of customer loyalty helps you fine-tune your brand loyalty segmentation, so you can deliver the most personalized experience to each customer. We’ve seen that this approach drives better results.
While you might see others tell you there are 3 rungs, or some say there are as many as 7, we feel this 5-rung customer loyalty ladder is the most accurate representation of different types of customers:
Stage 1: Prospects
Many believe the ladder starts with “suspects,” which are people who don’t even know your brand exists. We’ll skip over this step because it’s pointless and frankly, these people don’t matter. They’re not in your eco-system in any way, shape, or form. It starts with prospects.
These people know your brand exists and might have some level of awareness as to what you offer, but they’re not ready to make a purchase yet. They could have seen an ad, visited your website, or engaged with your social media but may have hesitations still.
Prospects are simply weighing their options, and you are just one of many in this increasingly competitive E-commerce environment. You can sway them through discounts for first-time buyers, free trials, or gated content.
It could even be as simple as staying top of mind with retargeting campaigns so that when they are ready to make a purchase, they think of you first. Hammer these prospects with social proof in the form of testimonials, case studies, and user-generated content (UGC) to earn trust.
Whatever the case, your goal here is conversion - turning prospects into first-time customers.
Stage 2: First-Time Customers
You finally got the customer to take a chance on your brand - the hard work is done. Well, not quite. In weighing the customer lifetime value vs customer acquisition cost, the real value comes from repeat purchases.
So many customers buy from a brand once and then fade into the darkness, never coming back for more. This is a critical junction at which you can turn a one-time purchase into a loyal advocate for life.
It starts with the immediate interactions after the purchase. A follow-up email thanking the user and providing value with how-tos while they wait for delivery is a good first step.
Speaking of delivery, get the product in their hands as fast as possible and check in with them to see if you missed the mark in any way or if there’s anything you can do to help them make the most of their product. 96% of consumers say customer service influences brand loyalty.
After a while, you can start sending personalized follow-ups with complementary product suggestions, or even go as far as offering incentives for the next purchase (discounts, loyalty program enrollment, etc.).
The key takeaway is that a positive first experience can make or break your customer retention efforts. Get it wrong here, and you have a much lower chance of getting them to come back,
Stage 3: Repeat Customers
A repeat customer is anyone who has paced more than one order from your Shopify storefront. Although they continue to support your brand transactionally, they may not be fully bought in from an emotional perspective just yet.
In other words, they see value in your products but still need reasons to keep coming back. This is where you can implement a well-structured loyalty program. Tiered loyalty programs allow customers to earn points or exclusive perks over time.
You can also use data to send more personalized recommendations that align with their purchase history. Don’t let your customer service falter at any stage, though. 61% of customers will jump ship to a competitor after a single poor customer service experience.
Stage 4: Loyal Customers
Loyal customers are deeply connected to your brand and choose you because of you. Not just because of what you sell. They have an emotional attachment that guides their purchase habits, and they’re some of your most valuable customers.
Don’t just take our word for it - one study found that loyal customers can drive up to 65% of a brand’s revenue, even though they make up a small fraction of total customers!
That’s to say you need to go above and beyond to reward these customers with ultra-exclusive benefits. That doesn’t just mean free shipping or discounts. Early product access, behind-the-scenes content, and unexpected surprises like handwritten notes all go a long way.
Give these customers opportunities to interact with your brand beyond purchases with events or opportunities to offer feedback on new product releases. The priority is to make them feel like they’re not just a customer, but a part of the movement.
Stage 5: Brand Advocates
Eventually, your most loyal customers will turn a corner and become brand advocates. This final rung in the customer loyalty ladder represents your most powerful users, those who serve as an organic marketing channel for your brand.
These customers actively promote your brand to their friends, family, colleagues, even random people they come across on a daily basis. They leave glowing reviews and share your products on social media, too.
Invite them to a Shopify referral program where they can earn exclusive perks for consistently promoting your brand. Continue taking other steps to make them feel like insiders, too: involve them in product decisions, beta testing, or VIP-only events.
Advocates are your most valuable customers because they lower your cost of acquisition and drive growth naturally. So, how do you move people up the ladder of customer loyalty into this stage?
How Brands Can Use the Customer Loyalty Ladder to Their Advantage
Understanding the customer loyalty ladder is just step one. Then, it becomes a matter of using it to encourage stronger loyalty and improve retention for your brand. There are strategies you can use to move customers from one rung to the next at each stage, which we’ll get into below.
Assessing Your Current Customer Base
First, you need to take a look at your customer base as it currently stands to figure out where you’re struggling the most. Maybe you have a hard time getting customers to take a chance on your brand but once they do, they stick around. You have an acquisition problem.
Or, perhaps you get customers to buy once but they never come back to make another purchase. You may not provide enough value, or could be falling short in the customer service department.
Take some time to dig into your customer retention KPIs and figure out where you have the most room for improvement. Here’s a breakdown of what to look for at different rungs of the customer ladder of loyalty:
- Prospects: Look at website traffic, ad engagement, and email sign-ups to gauge brand awareness.
- First-Time Customers: Examine conversion rates and purchase behavior - how many return for a second order?
- Repeat Customers: Track purchase frequency and product preferences to find patterns.
- Loyal Customers: Use customer lifetime value (LTV) and engagement metrics to see who keeps coming back. You can even poll them and find out why they come back.
- Brand Advocates: Monitor referral program participation, social media mentions, and review submissions.
Easy Ways to Move Customers Up the Ladder
The best way to intentionally guide customers through the loyalty journey is through a well-structured loyalty program. This empowers you to set up various reward structures for each customer based on where they sit on the ladder of customer loyalty.
Engaging Prospects and First-Time Buyers
The goal here is to make the first purchase as frictionless as possible and incentivize a second order. Common customer loyalty strategies include:
- Welcome offers (10% off first purchase or free shipping on first order).
- Bonus points for sign-ups to encourage future purchases.
- Post-purchase nurture sequences with personalized product recommendations.
Encouraging Repeat Customers to Become Loyal Customers
At this stage, you should be focused on strengthening the brand connection and making it worth the customer’s while to stay loyal. You can get more creative with how to reward customer loyalty here:
- Tiered loyalty systems (like Silver, Gold, Platinum) to reward consistent buyers based on how consistent they are.
- Personalized rewards based on purchase history (perhaps discounts on favorite categories).
- Exclusive product launches or early access to sales to make them feel like VIPs.
- Milestone bonuses (such as extra points after every 5th purchase).
Turning Loyal Customers into Advocates
We said your brand advocates are your best asset, so how do you push loyal customers over the edge and get them to become a free extension of your marketing team?
- Referral incentives (like “Give $10, Get $10” referral bonuses).
- Insider communities for top-tier members (private groups or exclusive events).
- Perks for promoting the brand on social media or leaving a review.
- Surprise and delight rewards (freebies, handwritten notes) to show them they’re more than a customer, they’re family.
Measuring Success and Optimizing the Loyalty Journey
Along the way you need to keep a close eye on your customer loyalty analytics to see how the changes you’re making are impacting your bottom line. The most important metrics to track for your customer ladder of loyalty are:
- Customer Retention Rate: Are first-time buyers coming back?
- Repeat Purchase Rate: Are customers making more frequent purchases?
- LTV Growth Over Time: Are loyal customers spending more than casual buyers?
- Redemption Rates: Are customers actually using their loyalty points and perks?
- Referral Participation: Are top-tier customers bringing in new business?
From there you can take corrective action. If first-time buyers aren’t returning, tweak your welcome offers or improve post-purchase engagement. If redemption rates are low, simplify the rewards structure or increase point value. Improve referral incentives or enhance tracking visibility if referrals are underwhelming.
Loyalty programs should evolve as your customers do, so continue to iterate and see how effortlessly you can move users up the customer loyalty ladder!
Bringing Our Guide on the Customer Ladder of Loyalty to a Close
We hope this guide on the ladder of customer loyalty has provided you with a clear roadmap of how you can turn one-time buyers into lifelong brand advocates. It’s as simple as seeing where customers are and structuring a loyalty/referral program that incentivizes upward movement.
The platform you use to build your loyalty program can make or break your results. So, invest in a highly customizable Shopify loyalty platform that’s proven to deliver an ROI: Rivo. this is where leading e-commerce companies come to improve retention. See how we stack up below:
.jpg)
