How to Use Loyalty Programs to Keep Enthusiastic Customers Engaged
strategy Posted on Feb 04, 2019
Take a look at your key ring, or in that one pocket in your wallet where you keep those “just in case” items. How many loyalty or rewards cards do you carry with you every day? And more importantly, how many of those programs actually make you feel…loyal?
Thankfully, the modern loyalty program for online businesses and direct-to-consumer brands is much more than a punch-card given freely to everyone. Instead, think of it as active outreach and a cultivation opportunity for the portion of your consumer base that’s already most loyal and ready to purchase. Don’t view the concept of a loyalty program to be another ploy to get people to spend more money, but rather as an exclusive trust agreement between a brand and its most satisfied users.
The benefit to your business is obvious. When you continue to engage loyal customers, you’re not just maximizing value, you're lowering acquisition costs. It’s much less expensive to keep an existing customer than acquire a new one.
Who’s it for? The target for a custom loyalty program is not anyone who’s ever bought a product from your business. Instead, it’s essential to focus on the category of top loyalists: a specially-identified category of your most regularly recurring customers. According to loyalty researcher John Larson, this group is already at least 40% more valuable than other repeat (but not necessarily loyal) customers. When you add in effective loyalty marketing, you can double that opportunity, making your top loyalists more than 80% more valuable (and profitable) than uncultivated repeat customers.
Of course, the best programs will also have plenty of on-roads for other customers to choose to become loyalists. But, first and foremost, we recommend focusing on cultivating the “best of the best” that already exist: your top loyalists.
Let’s look at how modern D2C brands can construct loyalty outreach/consumer engagement programs to maximize customer value.
The Basics of Effective Loyalty Programs
The Purpose: This part is super simple. Everything is focused on one, and only one, objective:
Highlight how the consumer is already satisfied with your brand and provide incentives to purchase again.
Whenever you are developing new loyalty marketing, ask yourself: Is my customer seeing content that reminds them of the high-quality experience they’ve already had with my brand? How can I entice them to buy it again?
The Focus: The most successful revenue-boosting loyalty programs focus on purchase drivers, and don’t emphasize rewards for non-revenue activity like social media shares, friend referrals, etc. Whether you incentivize with loyalty discounts, extra perks, or outreach/insider communication, everything should drive toward an objective to complete another purchase and repeat the cycle.
As Easy-to-Use as Possible: A study from Big Commerce suggests that, on average, a customer is already a member of fourteen loyalty programs, but will only have the bandwidth to actively engage with about half that number. Any friction regarding usability or utility is likely to drive loyalists away instead of turning them into valuable assets.
Use available data and digital solutions to make loyalty programs seamless, straightforward, and easy to use. Here are some ways to integrate data into your program.
Using Tech Tools to Drive Engagement
If you want to maximize return on loyalty investments — keep. it. simple. Let the tech do the work.
The most effective app and plugin solutions focus on automatically identifying existing loyalists and likely prospects, then pushing incentives for repeat purchasing that are precisely tailored to your product, market, and audience.
Start with Organizing Your Data: From your brand’s perspective, loyalty programs are all about gathering data about your customer base and using those insights to create the most compelling purchase drivers.
Begin with your CRM and sales databases, and use them to gather and organize data about consumer shopping activity and other segment indicators. If you’ve got a strong source of consumer data already (via social engagement, etc.), you can incorporate that into your loyalty system for more detailed results.
Integrate the Data to Create Top Loyalists: There are a number of existing apps, plugins, and analysis tools already out there that can interpret your customer data, and direct you on how to market your incentives. XenoPsi has some favorites that we recommend. We’d be happy to set up a call to discuss the best tools for your business.
Communicate, Communicate, Communicate: It’s not up to members to know the benefits of your loyalty programs. Every marketing message and update should focus on your key POV: reminding them how they are already satisfied with your brand, and provide incentives to purchase again.
To do so, make sure every tech touchpoint contains the proper messaging angles that will maintain an emotional and psychological connection with the customer and their identified purchase drivers. Consumers are hungry for value-added tech functionality, which both streamlines and enhances the conversation. Hubspot points out that 95% of existing loyalty customers say they actively want to engage with companies through next-gen tech avenues like chat assistance, full mobile integration, and even augmented and virtual reality.
But, don’t forget: email is still king and will always be the predominant way to connect with your top loyalist community. Organize your loyalty program as email outreach, and make sure to craft loyalty-specific emails to update customers about point totals, product launches, discount opportunities, and limited offer sales.
It costs five times less to retain customers than acquire new ones. With a properly scoped rewards or loyalty program, direct-to-consumer businesses can offer existing customers real benefits that aren’t just about getting them to buy again, but to become real believers and evangelists for your products.