Customer Loyalty

How to Increase Customer Loyalty and LTV with Value-Added Services

Anastasia Fullerton
March 24, 2022

As new technologies that uplevel our online shopping experiences go from innovative to table stakes, customer expectations go with them. 

For example, 68% of consumers expect online delivery time to be 2-3 days or less.

With such high customer expectations, plus an influx of competition as online store development becomes democratized, it's more difficult to keep customers coming back. In 2020, 40% of customers will change brands after just one bad experience. They’ve got choices, after all.

To stand out among competitors takes a broader perspective than the now-outdated purchase funnel. What modern merchants really need today is an engagement loop — driven by value-added services. 

Perspective Shift: From Purchase Funnel to Engagement Loop

Every merchant is familiar with the purchase funnel: 

  1. Make customers aware of you
  2. Interest them enough to get them to your store
  3. Motivate them to select a product 
  4. Get them to complete a purchase
  5. Make them a loyal customer

But the path between first purchase and loyalty is a long one — and the purchase funnel doesn’t say much about how to get there. Maybe that’s why many retailers over-index on customer acquisition — which comes at a cost about 5x that of retaining an existing customer. 

To move beyond the simple step funnel and foster engagement across channels and mediums, merchants need a loyalty loop. 

In our high-touch world, you have to keep customers engaged by offering moments of value that trigger them back to their physical and digital stores. 

Winning merchants will master long-term customer relationships and community building, in part by inserting value-added services as meaningful digital touchpoints across the entire customer journey.

Build Loyalty into the Journey with Value-Added Services

The top merchants are dominating the market by continuing to innovate on the experience they provide — leveraging in no small part an assortment of value-added services like these:

  • Live chat
  • Personalized recommendations
  • Loyalty programs
  • Product protection
  • Frictionless returns
  • Special offers
  • Deferred payments
  • Shipping insurance 
  • Customer reviews

Looking at the evolution of commerce customer experience, it’s clear that value-added services are the new wave of innovation. 

Amazon, for example, is constantly pushing the bounds of value-added services like AI-driven product recommendations, live chat, and product protection to keep customers in their ecosystem. And their loyalty program? Amazon Prime members spend roughly 4x more than non-Prime members. 

But you don’t have to be the number one retailer in the world to drive long-term customer value. Today’s solutions make it possible for every merchant to deliver value-added services across the loyalty loop to compete with their biggest customers.

At Backcountry, added value is strategy

Backcountry goes above and beyond for their customers through value-added services. A suite of brands dedicated to outdoor sporting enthusiasts, Backcountry’s brand ethos is defined by the way they add value outside of the purchase conversion. 

They are most known for their Gearheads — live chat experts that help their customers pick the right piece. But they also offer a loyalty program, product protection, frictionless returns, and deferred payments to name a few. 

“Our business strategy is centered on delivering value-added services. There are so many businesses for customers to choose from, and if you don’t take care of your customers, they’re really quick to write a business off and move on to the next one,” said Todd Anderson, Director of Bike and Powersports Gearheads at Backcountry. 

Without product protection, Backcountry was losing up to an estimated $7 million a year eating product replacement costs and losing incremental revenue to keep customers happy. Now, they partner with Extend to provide Backcountry customers with extra protection that the manufacturer’s warranty cannot provide, including extended warranty and protection against accidental damage. It’s a win-win. They also saw an increase in units sold per order and average order value.

Add Product Protection into Your Loyalty Loop

Embedding value-added services across your end-to-end customer journey, particularly in post-purchase, keeps customers in your ecosystem — building a loyalty loop. Those touchpoints build long-term relationships that make customers feel like they’re part of a community.

Offering product protection plans is an easy way to start adding value-added services to your tech stack. Some of the benefits: 

  • Higher average order value 
  • No added inventory 
  • No raising costs 

And with Extend, your customers’ experience is one of our top concerns. And relieving your own customer support staff of product issues covered by protection plans can help save time and money — all while providing an excellent customer experience.

Contact us for a demo today.

Anastasia Fullerton
Anastasia Fullerton is Head of B2B Marketing at Extend.

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