Imagine your business is a bucket; unfortunately, it’s not watertight (bare with me this will all make sense with context later on).

I present to you, the leaky bucket theory 

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What is the leaky bucket theory?

What is the point of acquiring new customers if you can’t keep them coming back regularly for more? 

Now I know that not all brands have a wide range of products, with a wide range of offerings - and you aren’t going to be able to retain all customers. Plus some products are meant to last a hell of a long time. Regardless of this, you need to ensure you always know exactly how you will keep these hungry customers coming back for more of your lovely product.

Now, back to the bucket. The ‘Leaky Bucket Theory’ imagines your business as a bucket with a load of holes in it: acquiring new customers is like pouring water into the bucket while retaining customers is plugging up those pesky leaks to prevent losing existing ones. 

This peculiar metaphor highlights the importance of not just focusing on new customer acquisition, but balancing efforts between attracting new customers and keeping the ones you’ve already worked so hard on acquiring satisfied. 

Essentially, an overemphasis on acquisition can be futile if retention is neglected, as customers will 'leak' out, hence, the leaky bucket. However, focusing solely on retention could limit all-important growth. Sustainable business growth requires a strategic balance, considering that acquiring new customers is often more costly than retaining existing ones. Having said this, some academics have poked figurative holes in the leaky bucket theory, stating that the theory itself does not hold water - but we’ll let you be the judge of that. 

There’s a key point in there: retaining a customer (in theory) costs much less than acquiring a new one. By increasing the lifetime value (LTV) of your customer base, you make everything else more efficient in the process. 

If the LTV of your customers increases over time not only should this improve your margins because the people you are acquiring are going on to spend more, but it’s a good indication that you are fostering brand loyalty. 

Here are 6 ways you can improve brand loyalty and keep those customers coming back for more.

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How does community building influence brand loyalty?

Building a community around your brand and creating ‘brand evangelists’ is a key way to drive brand loyalty from a group of dedicated brand fans, especially for DTC brands. By being visible on social channels, hanging out in the same places that your ideal target audience hangs out,  and having distinctive "hero products" that solve direct issues/make life better for your TA, you can start to create initial buzz around the brand. 

McKinsey highlights key steps that work in tandem to create a valuable and longstanding community around your brand:

Identify the communities your brand wants to be a part of and earn the right to participate

By being a part of and participating within specific, relevant, already existing communities you gain a much better understanding of your ideal audience and can tailor your messaging to suit and cater to specific community audiences who share similar values and interests. 

Spacegoods has done a great job at building a community around its brand by being involved in the right conversations. As well as Matt, the founder, being incredibly transparent about the brands journey through his YouTube channel and podcasts. 

Have a credible, talkable, inspirational brand story

Get people bought into the brand by sharing the story of how the brand came to be what it is today. This is a key way to communicate the values you share with your community and instantly fosters a connection on an emotional level. Remember, people's decision-making is rooted in emotion and rationalised with logic. 

47 Skin has a great brand story; the founder, Nic, shares the common issues that he had in the past with his skin and how his grandmother sent him some cream that cleared up his acne scars better than any product he had tried before. He then made it his mission to get his grandmother's wonder ointment out there to help anyone who shared the same issue.

Encourage community engagement

Make content that your community loves and wants to engage with. Simple as that. Make content that helps and rewards them but also makes them part of the conversation, conduct surveys to help improve products, and personalise email communication. 

Encourage UGC from your audience. Brands that have created successful communities see that more than 75% of the content about the brand is generated by real users of the brand. Look at Stanley for example, their brand has seen record growth in the past year and you can put this frenzy down to the sheer amount of UGC you are currently seeing everywhere, it’s generated such a buzz on social media channels. They’ve taken a leaf from this exact playbook. 

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How does a frictionless user experience improve brand loyalty

Let’s for a second imagine that you’ve just discovered a new brand and jump to their site, but it takes about 10 seconds to load - you’re busy, you don’t have time for that! That 10 seconds could have been spent chasing your dreams, or driving a fast car, or spending time with your loved ones - but no, you had to spend it waiting for a site to load. Now you’re angry. But good things come to those who wait, right? WRONG. 

According to Portent, having a load time of 0-4 seconds is optimal. But obviously the quicker the better. A staggering one in four visitors would abandon a website if it takes longer than that! Shock!

So the site has taken a decade to load, now you’re looking for the item you saw advertised but it’s super difficult to navigate and the categories don’t make sense. After a few minutes of hard work and resilience, you’ve finally found what you were looking for. You want more details on the sizing but it’s buried deep in the description. You begrudgingly add to cart and go to checkout finally ready to end this hellish journey and buy the product you’ve been yearning for. 

It’s checkout time. They don’t have your preferred payment method. That’s the final straw. You’ve had enough. You look somewhere else. An ordeal you hope you never have to go through again. 

Now, picture this. You’ve seen an ad for a similar product - you hesitantly click, hoping not to be put through another gruesome on-site experience. But what’s this? The landing page loads INSTANTLY. All the information anyone could ever want about the product is displayed in a clear and easy-to-understand way - and it’s above the fold, bliss. 

You click add to cart and checkout, you get to the checkout page. Why has the total amount come in cheaper than on the previous page? They’ve added an automatic discount to your order. Took kind. They’ve even got your favourite payment method. Wow, it only took you 3 or 4 clicks to check out. 

You’re blown away by the whole experience, you shop there again. You are now a loyal, repeat customer. 

This is just a hypothetical example, but you can see how frictionless experiences encourage users to come back and shop with you again. But what about the post-purchase experience?

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What is the impact of post-purchase experience on brand loyalty?

Remember, how you interact with and care for your customers after they’ve parted ways with their hard-earned cash is a key driver of people coming back for more (AKA brand loyalty) AND telling their friends about how much of a great experience they had shopping with you. Remember, word-of-mouth marketing is considered one of the most effective ways of marketing, people trust the opinions of their peers. 

Let's look at a few scenarios…

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Delivery experience

No one is immune to a bad delivery experience. 

We’ve all had them. I for one have had my fair share of simply awful encounters with shoddy delivery people. And unfortunately, it really does affect your perception of the brand you shopped with and the likelihood of you shopping there again. According to a report 86% of Gen Z shoppers are less likely to reorder from a retailer after a bad delivery experience.

Now, let’s imagine you log onto the site you order through to check your order status and have live, real-time shipment updates - and to top it off, you can track your delivery driver so you know exactly when it’s going to turn up. Now that’s what I call shipping.

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Unboxing experience

A sometimes overlooked aspect is the unboxing experience. By creating a unique, satisfying, first experience between the product and your customer and it becomes a shareable moment. Encouraging interaction makes customers ‘buy into’ the brand you have created. Shopify highlights a few different ways you can create an unforgettable unboxing experience for your customers.

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Customer engagement and support

Speaking to your customers on a regular basis through email marketing is a great way to establish personal connections with your customers. Don’t just bombard them with ‘salesy’ emails. Hit them with valuable content that’s relatable to them and that they actually want to read. There is a lot of value in providing value in your emails. 

And if you have a problem with your order, the way that this is dealt with is going to be a huge driver on if a customer shops with you again. Bad experience + bad resolution = will not shop with you again (and likely be pretty vocal in telling people not to shop with you). 

Bad experience + effective resolution = happy customer. In fact, 78% say that even if a brand makes a mistake, as long as it’s resolved well they’re likely to make another purchase.

This brings me to our next topic…

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How great customer service impacts brand loyalty

Let’s cut to the chase. 95% of customers say that top-quality customer service is a key driver of brand loyalty. The better your customer service, the more likely to see customers coming back for more. Customer service is a wide umbrella that encompasses a lot of different areas - think answering queries about your products and orders as quickly as possible, making returns as easy as possible for the customer, providing shipping updates as standard… the list goes on. 

Investing time and money into top-quality customer service is one of the best decisions you can make as the founder of a brand. It’s a key pillar of any business. Good customer service is not a ‘nice to have’ it’s a ‘need to have’. 

If you run an e-commerce brand and you’re looking to get serious with your customer service, look no further than Gorgias - the customer care platform built specifically for e-commerce brands. You can book a discovery call to get started on the platform.

 Why are loyalty programs effective in retaining customers?

It’s all in the name and it’s a pretty obvious, tried and tested method of bringing customers back for more. I’m sure you’ve heard a lot about them so we won’t spend too much time on this one. 

Loyalty programs work. They increase customer referrals, retention, and are effective at turning regular customers into brand advocates. This being said it doesn’t come for free. You need to spend money to make money.

But when should you use a loyalty program? They’re great at locking in customers in industries with low brand differentiation. Great loyalty programs need to align with the overall strategy of your company as well as with your brand messaging - essentially you need to make sure it doesn’t feel out of place within your core offering. They need to offer value to both the consumer as well as your brand and be flexible enough to your overall strategy. Here are some examples of great loyalty programs for you to take inspiration from.

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Why is ethical and value-driven branding crucial for customer loyalty?

This can sometimes be overlooked but is a key driver of customer loyalty towards brands.  Ethical branding supercharges customer trust and perceptions of quality. When customers recognise a company as ethical, they often perceive the brand's service and product quality to be superior compared to competitors. This is also known as the ‘Halo Effect’ This enhanced perception is crucial for building and maintaining customer loyalty.

Building an emotional connection with customers is vital for brand loyalty and this can be achieved through ethical and valuable marketing. Brands that successfully tap into customers' values and beliefs, like Dove with its "Real Beauty" campaign, create a resonance that extends beyond the product's features and benefits. It makes you feel like the brand cares about you as well as the things you care about. It’s emotional connections like these that are essential for fostering trust and loyalty towards a brand. 

Wrapping things up…

Now, I’ve talked for long enough, and I could talk for another few thousand words about this topic as there are tonnes of ways you can drive loyalty for your brand. Remember, it’s a long game you are playing here and it’s up to you to earn the trust of your customers to keep them coming back for more. 

These strategies not only plug the leaks in your bucket but also ensure a steady and consistent flow of water, symbolising loyal customers who contribute to the long-term success and growth of your brand. Remember, every touchpoint with a customer is an opportunity to reinforce your brand values and build lasting loyalty. By focusing on both acquisition and retention with equal vigour, your brand will be transformed from a leaky bucket into a resilient vessel capable of holding a substantial amount of more water.

If you run an e-commerce brand and are looking for a digital marketing partner to take your business to the next level, book a call in with one of our team.

Written by Andrew Boardman - Marketing Content Manager