The importance of rewarding new customers to build lasting loyalty

By integrating rewards into the shopping experience, brands enjoy not only repeat business but also the perks of customer loyalty.

Initially attracting and retaining customers

Shoppers rarely hit the Buy Now button after encountering a brand for the first time.¹ Instead, they journey through a marketing funnel that comprises several main stages.

Here's how rewards can play a pivotal role in each phase:

• Attract. Whether through innovative marketing or the unique appeal of your products, you’ll need to first capture a potential customer's attention. Incentive rewards, like sign-up bonuses or first-purchase discounts, can make your offering more enticing.
• Engage. In this stage, shoppers explore and evaluate. Use rewards, such as exclusive access to new products, to deepen their interest and build a connection to your brand.
• Convert. As shoppers make their purchasing decision, offering special discounts may nudge them across the finish line.
• Long-term retention. Here, the focus shifts to encouraging  new customers to stay loyal to your brand. From freebies to anniversary bonuses, continuous rewards can encourage customers to continue choosing you over competitors.

Offering rewards to build positive first impressions

First impressions matter more than ever when attracting shoppers. One 2022 study found that Gen Z, for example, gave ads an average of 7.6 seconds of passive attention and just 1.3 seconds of active attention.²

Use rewards to:

• Deliver memorable onboarding. Whether it's a welcome discount, exclusive access, or personalized offers, rewards cement positive impressions that lay the foundation for a strong relationship.
• Differentiate your brand. In a crowded market, unique and thoughtful rewards can distinguish your brand from competitors. Try to tailor rewards to customer preferences or offer something unexpected to create a lasting impression.
• Build customer trust. By offering genuine value from the start, customers feel appreciated and more confident in choosing your brand over other alternatives.

Fostering customer loyalty

After you’ve done the hard work of attracting new customers and closing a sale, how do you keep your brand at the forefront of customers’ minds?

Enter reward programs. By offering ongoing freebies, points, or exclusive benefits, you can use reward programs to help engage with customers, encourage repeat business, and boost customer retention.

More importantly, rewards can do more than just provide a financial benefit — they may help forge an emotional bond with customers. Personalized rewards, like anniversary gifts or surprise bonuses, make customers feel valued and more connected to your brand.

Encouraging repeat business

Diversifying your rewards can keep customers on their toes and spark renewed interest in your brand.

Consider customer discounts such as:

• Incentives for repeat purchases. For example, a coffee shop may offer customers punch cards that allow them to redeem a free drink after a certain number of purchases.
• Exclusive offers for loyal customers. This could be a special discount at a salon for frequent visitors, encouraging repeat business.
• Referral programs. By rewarding existing customers for bringing in new ones via word-of-mouth marketing, brands can expand their customer base while reinforcing loyalty among current customers.

How PayPal can help customer retention and growth

PayPal isn’t just a payment solution. It’s a comprehensive business tool that can help transform one-off customers into brand advocates.

Here’s how:

• PayPal builds trust. PayPal's reputation for security and convenience can help drive sales and boost consumer loyalty. “Like many small businesses, when we first started out, offering PayPal as a payment option was important because it helped us build trust with our customers,” says Chris Link, co-founder of Plant Addicts. “Customers felt a sense of security because, even if they weren’t yet familiar with our brand, they trusted that PayPal would keep their financial information safe and would help protect their purchase if things went awry.”
• PayPal supports your everyday solutions. From managing risk to simplifying order fulfillment, PayPal helps streamline these critical tasks, freeing up your time to focus on growing your business. 
• PayPal helps you resolve customer issues easily. Whether it’s managing customer disputes or tackling “Where’s my order?” messages, PayPal offers tools to help you transform customer frustration into an opportunity for customer loyalty.

Ready to elevate your customer experience and boost retention rates? Learn about PayPal Complete Payments.