Loyalty vs Acquisition: Who Wins Where?

by Group Manager Amey Shivapurkar  Each year the line between traditional retailers and digitally native brands becomes exponentially blurred. Customers expect the same experience no matter where they shop (in-store or online) and companies that struggle to adapt to these shifting demands will ultimately fall behind. Our recent B2C Buyer Report looked at two types of companies – digital natives and traditional retailers – and found that traditional retailers exceled at customer loyalty and retention while digitally native brands were better at customer acquisition. Taking lessons from both types, companies that put strategic effort into elevating convenience, personalization, and consumer confidence will be able to improve on both customer loyalty and retention as well as customer acquisition.


Digitally native brands are winning on convenience through easy checkout and fast/free shipping. 76% of consumers believe fast shipping speed creates a positive experience with an online brand or retailer. This convenience is driving better customer acquisition for digitally native brands or traditional retailers. Their smaller footprint enables digitally native brands to invest heavily in marketing to acquire new customers and make their first transaction seamless. Where digitally native brands excel in convenience, traditional retailers win loyalty. Customers prefer traditional retailers’ loyalty programs 1.6x more than digitally native brands. Unfortunately, customers also said earning loyalty rewards on purchases only came in ninth out of 12 options for what customers most love about shopping online at traditional retailers. This means traditional retailers can be more effectively targeting their efforts elsewhere.

How can digitally native brands lean into customer loyalty and retention?

Digitally native brands must understand that while acquiring each new customer is important so is retaining that customer. Digitally native brands need to make subsequent actions just as convenient to the customer as their initial transaction, so it becomes part of their life. This can come in the form of making delivery and returns extremely easy. Additionally, digital brands can partner with traditional retailers to establish a brick-and-mortar footprint that provides customers an even more instantaneous and convenient experience in person.

How can traditional retailers lean into customer acquisition?

Traditional retailers must put more emphasis on acquiring new customers otherwise they risk losing market share to the digitally native brands. This can be done through investing in both offline and online experiences to entice new customers. Digitally native brands beat traditional retailers by a factor of 1.6x when it comes to having a streamlined online shopping experience. Traditional retailers should examine how they can use brick-and-mortar footprint to make the shopping experience more convenient. For example, invest in real-time inventory so customer can see if items are available in stores near them or use stores to fulfill local orders and reduce shipping times. 71% of consumer said a memorable online experience drove them to shop at the brands brick-and-mortar store. By improving the online experience, traditional retailers can drive more traffic to the stores.  


Personalization is no longer a nice to have. Customers are expecting it. 36% of customers expect personalized product recommendations on the website’s homepage in 2020 (up 29% from 2019). While important, companies must make the right investments in personalization that enable sophisticated and accurate personalization activities.

How can digitally native brands lean into customer loyalty and retention?

Leading brands are exceeding the personalization baseline expectations. They are not just providing generalized discounts or standard recommendations but also using elevated data insights to generate real-time personalized recommendations to the user experience. Brands can take this one step further with marketing automation and deliver communications that anticipate customers’ individual preferences and needs. Enabling a better user experience that makes product discovery easier for the customer will increase customer retention.

How can traditional retailers lean into customer acquisition?

Traditional retailers need to leverage their brick-and-mortar footprint to personalize content and messaging to the customer at the right time. This can come in the form of using geo fences that send marketing material when customers fall into certain radius or even in the store, tailor recommendations based on what climate/region that customer is in or utilize data points from loyalty program to elevate the surprise and delight model. Again, providing an exceptional digital experience will drive more traffic into the store and increase customer acquisition.  

Consumer Confidence

Online reviews are the number one way customers learn about digitally native brands and traditional retailers. This means the customer’s shopping experience is key for both types of retailers. It is important to build confidence in product quality.

How can digitally native brands lean into customer loyalty and retention?

Where traditional retailers provide customers the ability to touch and test products, the same opportunity is not available to most digitally native brands. This makes reviews instrumental in establishing both product quality and brand credibility. Digitally native brands can lean into this by partnering with brick and mortar stores or investing in pop-up space to provide physical inventory customers can interact with in their everyday life. Additionally, make returns hassle-free so customers do not feel trapped into a bad purchase. Consider partnering with a traditional retailer’s physical store to provide a return drop off. By establishing product quality and brand credibility, companies can minimize the number of unsatisfied customers and feed into customer loyalty and retention.

How can traditional retailers lean into customer acquisition?

It is imperative for traditional retailers to understand that current customers have the power to drive further customer acquisition. 67% of survey respondents said unfriendly or unhelpful store employees would make them unlikely to return to a brick-and-mortar. Traditional retailers must lean into what they are already doing right and use their brick-and-mortar stores and product quality to generate organic social reviews. This helps increase brand awareness, which has a positive impact on customer acquisition.   As customers increasingly expect the same experience no matter the type of retailer, one thing remains clear, both traditional retailers and digitally native brands can improve customer loyalty and retention and customer acquisition respectively by placing strategic efforts on boosting convenience, personalization, and customer confidence.

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