The Customer Loyalty Loop: What it is, and How Product Protection Helps Drive it

Customer loyalty is in decline. Brands must continually innovate to meet customers’ evolving expectations by delivering modern products and best-in-class shopping experiences.

The reality is that 83% of consumers report that customer experience is a key factor in their decision-making.

But too many business leaders focus on the pre-purchase experience to the detriment of what comes after conversion. For a merchant to win a customer these days, they must exceed expectations at each stage of the customer loyalty loop.

When customers enter the loop, whether online or in person, they will always consider their options first, before evaluating a select few. Once customers decide to purchase, their loyalty hinges on merchants’ ability to service any post-purchase product needs.

What is a loyalty loop? 

More than likely, you’re already familiar with the concept of a 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 of about 5x that of retaining an existing customer.

Benefits of a loyalty loop model

One benefit of considering the loyalty loop over the marketing funnel is a stronger representation of the post-purchase experience and how it impacts customer relationships. While a digital marketing funnel represents a linear journey, the loyalty loop better represents the ongoing experience a customer has with a brand over time. It’s those experiences that create loyalty.

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.

Merchants who own the post-purchase experience do so by adding maximum value.

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

How product protection aligns with the customer loyalty loop

Product protection drives the customer loyalty loop by keeping customers using your products.

Product protection was previously only available to the top 1% of merchants, but now, thanks to providers such as Extend, it has become easier than ever for merchants in a variety of verticals to offer comprehensive plans.

Modern product protection plans are able to put the customer first like never before. They help merchants win the battle for customer loyalty because they turn customers into advocates.

1. Consideration stage: product protection drives conversion

As customers begin researching brands in the Consideration phase of their buying journey, they tend to gravitate to merchants that stand behind their products.

A merchant may offer a high-quality product, but customers want assurance they’ll be able to enjoy their product for years to come. Take that away, and customers will look elsewhere. Product protection plans provide that peace of mind. Extend’s data from its 500 merchant partners shows that on average 11% of customers buy product protection.

Online jewelry retailer Jewlr makes it clear up-front that they offer product protection through Extend, a clear indication that they care about worry-proofing their customers’ happiness. Product protection guarantees that customers can confidently enjoy their rings for years to come, and Jewlr can hand off much of the plans’ administration to Extend.

2. Evaluation stage: product protection motivates purchase decisions

A merchant may have won a spot on the customer’s short list in the Consideration stage because they offer product protection. But then the Evaluation stage begins. Is this the right product for them? What is covered in the protection plan? How will issues be resolved?

Assurant has found that extended warranties can motivate a purchase by about 25%. This is not surprising given that customers feel more confident in their purchase decisions if they know that a quick and easy resolution exists in the event of a mishap. 

In fact, BlendJet saw an 11% sitewide sales conversion increase after adding Extend protection plans.

“Everything Extend has done has been incredible for conversion rate and top line revenue. We’re happy to see a little bump to our AOV, and we’re happy to see a great bump to our conversion rate as a result of our relationship with Extend." 

— Ryan Pamplin, co-founder and CEO, BlendJet

3. Purchase stage: frictionless purchases keep customers and merchants happy

Everyone knows that a frictionless and fast check-out experience is critical, which means that product protection offers need to be seamlessly and elegantly integrated into merchants’ ecommerce platforms.  

Integrating Extend does not complicate a merchant’s shopping cart experience; rather, Extend enhances it. Our API integrates with a variety of ecommerce platforms, which makes adding a protection plan to a shopping cart as easy as choosing a shipping option.

That high-quality API ensures that the correct Extend plan appears with the correct merchant product.

Merchants can place Extend’s offers on their product pages, shopping carts, or on a pop-up modal.

Extend is also able to use machine learning to test the pricing, placement, content and creative of its respective plan offers to optimize for customer conversion. 

Many of Extend’s more than 600 merchant partners has seen conversions hold steady or rise after its integration. Those who leverage all three placements have sold 1.9x more warranties and in some cases enjoyed an 11% average increase in site conversion.

At this point, the merchant may have acquired a customer, but the real work of retaining that customer has only begun. Unless the merchant optimizes the post-purchase experience, especially when it comes to protection plan claims, the customer could move to a competitor.

4. Advocacy stage: post-purchase customer service as the ultimate loyalty driver

Product failures lead to customer frustration. They may have been enjoying a nice glass of wine after a long day when the cat appears out of nowhere and knocks the glass out of their hand onto their new designer sofa. What now?

This is the critical moment for a merchant to turn a potential detractor into an advocate. If the customer purchased a plan with a legacy insurance provider, their frustration would likely double. Customers often have to wait on hold for hours trying to reach an agent, only to have their claim denied over a technicality.

A poor claims experience discourages the customer from ever shopping at a merchant again.

On the other hand, customers who have a positive claims experience are two times more loyal to the company.

Merchants can turn the claims experience into the ultimate loyalty driver by putting the customer first, using digital tools to speed the claims process. An Accenture survey reports that 94% of participants consider speed of claim settlement the critical contributor to customer happiness and loyalty.

Speed is where Extend excels. Kaley, its automated claims adjudicator, processes 98% of claims online in 90 seconds or less. Once approved, customers may receive a promo code to redeem a replacement product or be directed to schedule an in-home, in-depot, or on-site repair.

“The thing we hear the most is just how easy it is to file a claim with the automated attributes of Kaley,” said Bobby Shomrony, VP Sales Operations & Strategy at Felix Gray. “No back and forth emails, no need to call. Today, everyone’s looking for self-service and ease of use, so our customers love the experience.”

That’s the kind of experience that drives positive customer word of mouth. 

A positive purchase experience creates a satisfied customer, but it is a positive post-purchase experience that creates an ongoing customer who will advocate for a brand. Extend’s data shows customers who purchase a warranty repeat purchase at a rate 4.5% higher than customers who haven't purchased a warranty from that merchant.

Drive your customer loyalty loop with Extend Product Protection

Product protection is no longer a “nice to have.” It is now a crucial element of a merchant's customer experience.

With Extend product protection plans, merchants are not just giving customers something they already want; they are delivering an exceptional customer experience from Consideration to Post-Purchase. 

Happy customers might purchase again, but loyal customers repurchase and refer others. According to American Express, happy customers will share their positive experiences and refer approximately eleven people. This is how great brands get built.

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