A well-run loyalty scheme can boost brand revenue by more than 10 percent, and loyal customers visit and spend an average of 20 percent more than others. If appropriately nurtured, loyal fans may also become brand ambassadors, taking to social media to promote the brand and corralling their connections to try new products and services. According to Deloitte, customers acquired through recommendations have a retention rate 37 percent higher than average.
Data from Accenture shows that upwards of 90 percent of businesses operate some sort of loyalty scheme and that the average US household is a member of 29 loyalty programs. The market is packed with uninventive, cookie-cutter loyalty efforts, but brands that apply creativity can break free of the crowd and make a real connection with customers – here’s how.
What do customers want from a loyalty scheme?
As the name suggests, a loyalty scheme needs to reward customers. But it should go beyond just rewarding shopping; schemes that reward customers for recommending friends, leaving positive reviews or tagging the business on social media should also be considered. After all, the most successful programs develop an emotional and personal relationship with shoppers, and truly loyal customers will go out of their way to buy from their trusted retailer, even if prices are slightly higher or delivery times are a little longer.
For customers to commit to a loyalty scheme, they need to feel like they are getting a good deal, a member of an exclusive club, and part of a community that aligns with their values. Customers want to feel that the brand appreciates their repeat business and that they’re not just throwing money into the void.
Offering customers a good deal is a matter of identifying thoughtful discounts, loss leaders or gifts that the business can afford to give away without undermining the bottom line. On the other hand, exclusivity involves making rewards slightly harder to obtain to create a sense of deeper involvement.
One effective way to balance rewards with exclusivity is to introduce membership levels with better perks at every tier. Understanding the right benefits to offer requires in-depth research and analysis of behavioural data, but organisations that successfully set up a multi-tiered membership scheme find that it has a powerful motivating effect on shoppers.
Creating a community based on shared values is another opportunity for brands to differentiate themselves. Quality and price can only go so far, and modern customers are also keen to positively impact the world and gather with like-minded people. Integrating social elements and highlighting the brand’s genuine commitment to the causes shoppers care about are effective ways to differentiate a loyalty scheme.
Lessons in loyalty logistics
There’s room in just about every business for a loyalty program, but brands occasionally struggle to get started. Many businesses have a hard time identifying the types of customers to focus their efforts on. Repeat buyers who choose a brand based on convenience aren’t the same as loyal fans, so over-investing in the former group won’t yield long-term results.
Fortunately, segmenting customers and forecasting purchases is common practice in data science. Solutions designed for the loyalty sector take the guesswork out of operating a loyalty scheme by identifying the right customers to target and automatically building a personalised relationship with them. This is an increasingly competitive space: our data shows that the number of personalised fields in brand emails increased by 76 percent between 2020 and 2021.
Another common issue is market saturation. If every brand is competing for mindshare on loyalty, some will lose out. To compensate, businesses need to target their efforts precisely on the few customers who are really excited about a given product or service.
Many of the loyalty programs that inundate the market are remarkably uncreative, offering near-identical stipulations, purchase requirements, and rewards. These rigid, impersonal systems don’t create positive feelings or lasting loyalty towards the brand. At best, they are a more complex version of a coupon system that customers learn to manipulate in exchange for discounts.
To set themselves apart, brands should instead focus on creative loyalty efforts that emphasise ways to delight customers. Modern systems enable brands to customise messages, offers and online interactions on an individual level, ensuring that every customer’s experience with the brand is fulfilling and engaging. These should be the kinds of messages that customers enjoy receiving, such as tips about caring for an item that they recently purchased or exclusive access to new content that aligns with their interests.
Creating a scheme that suits your business
Every business is unique, and its loyalty program should be too. Still, the fundamentals of operating a successful loyalty scheme are universal: a company must demonstrate that it understands its customers and offer them something they want as thanks for their commitment to the brand. Loyalty goes beyond just repeat business, and loyal customers can act as brand ambassadors by promoting to friends, family and colleagues.
Understanding customers depends on a robust data gathering and analysis operation, and modern tools make it easy to put the insights generated into action with direct, personalised outreach. Adding value is about more than just discounts, and businesses that integrate branding elements with advanced software and creative framing will stand out in shoppers’ minds.
Credit: Jennie Gerum, CMO at Voyado
Voyado is the Nordics’ leading Customer Experience Platform with a sole focus on e-commerce and retail. It brings together six major features to empower international brands to collect and segment customer data, manage churn scoring, automate marketing, optimise omnichannel communication, and work effectively with unified commerce. Voyado is headquartered in Stockholm and has 125 employees and customers across the Nordic countries, the UK, the Netherlands and Canada. www.voyado.com