Personalisation in retail is changing how retailers reach, interact with and utilise data to optimise campaign journeys. A one-size-fits-all message is unlikely to have a high success rate, especially with customers today having a plethora of choices. In order to capture the full power of today’s advancements in AI, tech & digital, McKinsey reveals that personalisation in retail will be the prime driver of marketing success within five years.
With Capillary, the personalisation process has 3 key components:
- Customer data, like location, browsing patterns, gender, engagement time, product affinity, store preferences, and more
- Dissecting that data to determine individual preferences, and creating segments of customers
- Delivering relevant, personalised and seamless experiences based on the data
Brands across the globe are increasing focus on offering the most relevant customer experiences. Here’s how personalising your campaigns can help increase the RoI you’re so looking to drive.
1. Increase emotional connect with customers— 1:1 behaviour-based interaction
Customer experience is a key metric while measuring brand success. Brands that promise compelling experiences have come a long way by building long-lasting customer relationships. Interacting with customers based on their behaviour and actions is best implemented with a direct-to-consumer mindset. 51% of companies today use at least eight channels to interact with customers (Aberdeen Group) and 48% of shoppers will share their data for more personalized service (Deloitte).
Every opportunity a user gets to interact with a brand is an opportunity to enhance the brand image, curate relevant customer journeys, and provide personalised experiences. Personalisation in retail through relevant messaging helps gather information about the user’s navigation flow, product interests, product volumes vs. sales, potential loyal members, and personalise recommendations.
For example, Sephora gets this right:
Behavioral marketing typically involves the following phases—
- Onboard – Trigger an onboarding message, preferably personalised to the channel the user interacts with first
- Educate and Incentivise – Feed users with relevant information that elevates their experience while providing immense value through pure content, or discounts.
- Capture attention – Reclaim lost revenue by nudging visitors to get back to their abandoned carts, wish lists, or messages based on their personalised behaviour on site. Use strong CTAs that won’t give them a chance to ignore.
- Remind – Make yourself useful to your customer. Remind consumers when free trials are about to end, when there is a shortage of their favorite product, when an item from the wishlist is already in stock, etc.
- Surveys and feedback – After leads or customers take action, provide spaces where they can leave their feedback. This information will assist marketers in improving user experience.
2. Increase in-mail click rate with personalized CTAs
Brands often focus more on landing pages, and unwittingly give less attention to the top of the funnel: the Call-to-Action.The CTAs primary objective is to convert your website’s visitor into either a subscriber, buyer or a qualified lead.
There are three major types of CTAs –
- Basic CTA – This CTA does not change based on any attribute of the visitor
- Multivariate CTA – Usually used for an A/B test. 3 to 4 CTAs based on audience segmentation, and a winner selected based on which converts better.
- Smart CTA – Tailored to an individual, based on visitor’s country, device type, referral source, lifecycle stage, contact list membership, behaviour analysis or transaction history.
Point No. 3 is where retailers should be investing their time, effort and money. Let’s assume your company delivers financial and accounting services. If a user lands on your website with the search term, “how to avoid an audit”, an apt CTA you should be delivering is “Show me how to avoid an audit” or “Read this step-by-step rulebook to avoid an audit” not “Learn more about our services” or “Explore our financial services”
And if you currently don’t have massive design support, a great way to personalise your CTA is simply through plain hyperlinked text for nurture campaigns.
3. Increase newsletter’s impact across geographies with personalized time of delivery
60% of marketers admit that they struggle to personalize content in real-time (Neil Patel). Not everyone visits your website for the same reason, yet sometimes users (irrespective of their geo location) receive the same email, sent at the same time. Nurturing customers doesn’t stop after acquiring new ones. For transforming subscribers to buyers to loyal customers, you must provide value throughout the lifecycle journey.
It’s no secret that certain times of day are tested better than others when it comes to email personalisation for retail, or email marketing for that matter. Segment your subscribers into different time zones, with the aim of sending emails to be received at a reasonable time for all subscribers, with personalised content too.
75% of consumers ignore or opt-out because of frequency overload, and 55% blame lack of relevance. To solve this, a time timestamp (based on when emails are opened) allows for personalised communication with your consumers based on the time they are most likely to check emails. You can determine the content of the message at the time your recipient opens it too. This helps send relevant information to customers and build long-lasting relationships.
4. Increase effectiveness of in-store sales promotions
Have you ever received an email from your favorite retailer promoting a sale that was happening “in-store” only? Have you been directed to a store to buy a product, and when you reach there, it’s out-of-stock? Promotions are always part of a retailer’s sales and marketing mix— they drive sales and help you move inventory.
Discount sites flood inboxes with daily in-store promotional offers. This is often frustrating for users, unless the offers and products match their individuals requirements. The key to personalisation (for retail and in-store commerce) is identifying your audience based on their interests and geographical location, so you can send them to a store that works best for them with the assurance of product availability.
Here are a few ways you can drive in-store sales:
- Multi-channel percentage discounts, redeemable only in store
- “Flat XX” dollars off
- Buy One Get One
- Buy 2 Get 1
- Multi-save and conditional promotions
5. Increase in-store sales with personalized POS offers
Personalized one-on-one experiences can increase sales & influence consumer behavior. Almost half (40%) of U.S. consumers say they’ve purchased something more expensive than they originally planned because their customer experience was personalized. Assuming the POS is integrated with the online store, store-staff should be able to access all customer history across sales channels for a holistic view, especially when delivering personalised offers or incentives.
In the case of a POS Advert, let’s say you run a paid online advertisement for your grocery shop, promoting 25% off on certain items. The ad will probably reach only those who have searched the web, and or are in the same location. With POS Advertisements, a customer will walk into your store and see that there is an additional offer coupled with that 25% for a larger purchase order value. The customer lands up walking away with a larger, more economically valuable deal than originally intended. Directing your customers to a location that’s most convenient to them offers you a higher buying propensity – it’s a win-win.
6. Multiply first time purchases with personalized product recommendation emails
Open rates for welcome emails are on average, 50%. Compared to standard newsletters, they are 86% more effective. However more than 50% of brands don’t leverage this opportunity. Whether it’s an interview or your first attempt at tap dancing, first impressions go a long way. If you sell products that are personalized at start, show your customer what they could look like before purchase as well as photos or words related to their lifestyle. Welcome emails are a great way to cross-sell and up-sell your products.
60% of marketers admit that they struggle to personalise content in real-time (Neil Patel). The nurturing process doesn’t stop after acquiring new customers. For transforming subscribers to buyers to loyal customers, you must provide value throughout the lifecycle journey.
Segment your subscribers into multiple time zones, with the aim of sending emails to be received at a reasonable time for every subscribers, based on personal preferences.You can also determine the content of the message at the time your recipient opens it. This helps send relevant information to customers and build long-lasting relationships. Capture the big idea of your message with a bold image and a strong headline, something that’s relevant to how that user landed on your page – personalise it.
7. Win back lapsation-prone customers with personalised messaging
Radicati Group estimates that by 2021, the number of business and consumer emails that are sent per day will reach 319.6 billion. Customers often drop-off because they feel your brand is no longer relevant to them and there are tons of brands competing for it. They understand and seek two-way communication because after-all they invest their money and time in your product. Personalise triggers based on your customer’s latest actions – a good start would be to engage them in a 1:1 communication journey, integrated across all channels in real-time. More than often, customers will forget the existence of your brand, don’t wait for their purchase, personalise your prompts. If you see the click-through rates dipping, try incentivising till you find the path to conversion. For example:
Make each email individually relevant at open time
Survey forms and collecting routine customer feedback are great ways to stay on top of relevant and trending customer demands. An email preference centre is a simple way to gather this information and makes sure your communications stay closely connected to what they want to hear about by building an emotional relationship.
8. Monetize out-of-stock pages
Out-of-stock pages conventionally become a dead end. This leaves the prospect barely any other option than to leave. What if personalization could help you convert this visitor? Journey workflows that are relevant to each individual’s real-time behavior, interests and purchase history have the potential to convert even your out-of-stock pages. Use your “out-of-stock” page to:
- Recommend similar products to the product that’s out-of-stock
- Upsell or Cross sell products within the same category
- Recommend the most popular or highest selling products
Out-of-stock pages have a higher propensity for users to bounce off. The main goal is that the page should be as relevant as possible to encourage visitors to keep exploring your site.
With so much noise, getting customers to give you the attention feels like yelling at a band during a sold out concert. Build strong and meaningful relationships with customers on a personal level, it’s the next big thing, we promise. Personalisation in retail becomes increasingly more personal as a customer progresses through the sales funnel. Keeping up with them, is what brands need to crack.
Can’t wait to launch your first personalised campaign? Sign up for a demo or explore the new Engage+
The Blurring Lines between Ecommerce & Social
Sometime in mid-2017, Amazon quietly rolled out Spark – an Instagram-like platform for Prime members. The idea was to help people connect with those with similar interests, increase product discovery and boost customer engagement.
Fast forward to March 2018.
Instagram, the social network that was responsible for ‘sparking’ the inspiration for millions of dollars worth of ecommerce sales launches a new feature that allows users to make purchases and complete the checkout without leaving the app.
In 2019, 130 million Instagram users click on a shopping post every month to learn more about products. And a whopping 81% of brands said that integrating social channels with ecommerce will be a priority.
In a sense, both ecommerce brands and social networks are venturing into each other’s turfs to blurry the lines and create this hybrid experience known as social commerce.
Simply put, social media is an experience-driven, community-influenced form of shopping that is rapidly emerging as a third buying channel, next to retail stores and ecommerce platforms, with shoppers seamlessly switching between the three.
Advantage of Social Commerce for Brands
The single biggest advantage of social commerce is its ability to simplify and unravel a complex and entangled purchase journey
There was a time when the purchase journey was linear and straightforward. But the digital explosion and changing consumer behaviour has reshaped it into a pretzel-like structure that twists and turns in unpredictable and complex ways.
The implication of a complex purchase journey is massive for brands. For one, it becomes increasingly difficult to predict and influence customer behaviour. But more importantly, it creates a highly perforated purchase journey which exponentially increases the chance of losing a customer forever.
Social Commerce, in many ways, simplifies and linearizes this complex funnel by tracing a direct path between discovery and purchase. Here are some of the other advantages of social commerce
Top Social Commerce Platforms
Facebook currently leads the social commerce pack for multiple reasons: they were the first platform to introduce the ‘Buy’ button and have the first-mover advantage, it has the highest number of users, and finally, they make it super easy for anyone to setup shop directly within the platform. And to top it all off, Facebook allows shoppers to pay directly through the platform which makes it convenient for both the user and seller.
Pinterest has always been a retailer’s favourite, primarily because of its user base – 18 to 30 year old, affluent, tech-savvy women. The visual platform hosts shoppable pins from thousands of brands and businesses and small entrepreneurs. The platform recently launched ‘Buyable Pins’, which allow users to shop directly on the platform without being redirected to another website. Businesses can promote these pins, and add details to it like product photos, availability, price, and a ‘Buy it’ button to attract more customers.
Instagram’s young, hip and affluent audience renders it the perfect platform for social commerce. It’s no surprise that it leads Facebook and Twitter in engagement rates. Another reason Instagram is getting popular for shopping activities is its mobile-first architecture. Most of the social commerce taking place these days is on mobile devices. But when it comes to implementing commerce features, Instagram is still lagging behind. After introducing the ‘Shop Now’ button, which takes users to the brand’s website to make a purchase, Instagram is working on their new ‘Product Tag’ feature. Once launched, the feature will let brands add multiple product tags to photos displaying prices and clickable links. Users can click on the links to view more details about the products and buy them through the brand’s website.
Best Practises to Ace Social Commerce
Seamless Purchase Experience: Users are no longer comfortable leaving the social platform to complete purchases. Brands that are seeking to leverage social commerce as a major sales channel, will need to enable a seamless purchase journey within the platform.
Know the channel & the audience: Before venturing into any sales channel, it’s important to understand the audience, the channel itself and what type of products work best in that specific channel. In the case of social commerce, the audience tends to be younger and certain items like consumer packaged goods, beauty products and fashion/apparel usually find more traction. Luxury brands and other big-ticket purchases which involve lots of research and interactions with a sales associate might not be suited for social selling.
Embrace the Power of Personalization: Ironically, as shopping is getting heavily infused with technology, customers are increasingly craving personalization and a human touch in their experience. This is simply a reiteration of the fact that ultimately, shopping is a social experience. Brands should, therefore, make it a priority to understand their customer’s preferences and interests through omnichannel data collection and personalize all aspects of the experience, starting from recommendations, to after-sales support.
Ditch the Sales Pitch: Social channels are by nature casual and community-driven, so pushy sales pitch will stick out like a sore thumb in your customer’s feed. To excel in social commerce, brands will need to reframe their promotions and offers as helpful guidance rather than a sales pitch.
Understand & measure the KPIs: Some brands make the mistake of treating social commerce just like an ecommerce channel and measure only sales and conversions. To be successful, brands will need to analyze a range of mid-funnel metrics like click-through rates, visit frequency, time spent on the site; and user interaction with ratings and reviews on product pages.
Data Security: According to a survey by Sumo Heavy, 71% of users reported that the primary concern around purchasing from social sites is weak data security and privacy violations. Brands will need to alleviate people’s fear of security through constant engagement and transparent communications.
Superior Mobile Experience: Social media sites are mobile-first platforms that users instinctively know how to browse and navigate. Brands will need to ensure the transition from the social platform to their own website is smooth, simple and superfast by using mobile technologies like PWAs. For digital natives that grew up with the internet, loading times and buffering can be a big turnoff. PWAs is an opportunity for brands to boost conversion and engagement within the social commerce universe. For instance, when Lancôme converted its mobile site to a PWA, conversions went up by 17% and mobile sessions increased by 51%.
Focus on Visuals: Brands looking to leverage social commerce will need to adopt an authentic and relatable visual aesthetic. Ultimately, the visual content is the one that will build your top funnel and encourage users to learn more about your brand/product.
Ecommerce-like Customer Support: Research shows that 42% of followers expect a response within one hour and 32% expect to hear back within just 30 minutes. A great way to enhance brand trust on social media is to double down on customer support. Facebook live chat is a great platform but several brands have started creating dedicated Twitter account only for support issues.
Leverage UGC: Ultimately, social commerce is about the users and the community, and brands will need to interweave this into the purchase experience. A great way to achieve this is through User Generated Content. The reasoning is simple: 92% of consumers worldwide say they trust word-of-mouth more than any kind of advertising and positive consumer reviews can result in 70% higher conversion.
For social commerce to truly flourish and become the norm, social networks and brands will need to keep optimizing the infrastructure and customer experience. Until recently, social networks hadn’t provided retailers with the necessary tools—like buy buttons across content types and sophisticated checkout options.
While that’s now resolved, there remains an additional obstacle: consumers’ discomfort with buying on social networks. The next step for brands and social networks is to build trust and authenticity around social commerce through constant engagement and transparent communication.
The business dictionary defines a hypercompetitive market as a rapid escalation of competitive tactics used by direct business competitors. Brands embroiled in a hypercompetitive market typically use a combination of strategies including price wars (such as discounts), blitzkrieg marketing (such as using 360-degree campaigns) and improving the basic product itself.
Surviving a Hypercompetitive Market
Surviving in a hypercompetitive market is a challenge in itself for most brands; but when you throw in highly demanding, hyperconnected customers into the mix; you have a whole new set of barriers and problems to tackle.
For a brand, it can be tempting to try and attack the market with gusto, trying all of the abovementioned strategies to compete for business, but in order to be effective, the company has to follow a sequential, step-by-step process to understand customers, acquire them and effectively convert them into returning customers.
Brand Stickiness vs Brand Loyalty
There are two types of affinity a customer can have towards a brand – brand stickiness and brand loyalty. The two are certainly similar but there are a few minor differences as well.
Brand loyalty is when a customer is actively choosing a brand; maybe because he/she relates to what the brand stands for or finds utility in the brand’s product offering. An example of brand loyalty would be a customer who chooses TOMS shoes solely because of the company’s promise to deliver a pair of free shoes to a child in need for every sale of their retail product. A more mainstream example would be Apple and its ability to create a strong and very obvious divide between the brand and its competition. This, coupled with the feeling of luxury and exclusivity is part of the reason why Apple’s products are so well received despite the steep price tags they often come with.
Brand stickiness is when you set up your customer to return to your business because you create convenience. In this scenario, it becomes inconvenient for your customer to migrate to a competing brand. The classic and oft-cited example of brand stickiness is Amazon Prime. The program packs a winning combination of convenience, savings, and trust; which has rendered Amazon the default online shopping destination for millions across the globe.
Ultimately, the end goal of creating both brand loyalty and brand stickiness is the same – to acquire a customer and retain them in a setup that makes it convenient for a customer to choose a business repeatedly and in the long run, it becomes profitable for the business to retain loyal customers and serve them to their satisfaction. And the best brands manage to build stellar brand loyalty while focussing heavily on brand stickiness.
Who is a sticky customer and how do you retain him?
Every business encounters two types of customers – transactional customers and sticky customers. A transactional customer is one who is clear about what the needs and is not necessarily keen on getting it from one particular brand. A transactional customer tends to weigh the different options that he has in front of him before he makes his decision and most of his decisions are purely cost and efficiency driven.
A sticky customer is one who finds value in your business and because he relates to your brand offering on a personal level. A sticky customer is one who continually returns to your business and the best way to retain him, beyond loyalty programs and discounts is to build a long and lasting relationship with him. If you can serve the customer’s needs beyond his own expectations and deliver efficient grievance redressal, then you have won your customer’s loyalty.
It is also important to strike the right balance between continuously communicating with your customers and over-communicating with them. Since we live in a hyperconnected world, it becomes easy to reach a customer through every medium of communication that’s available but the flip side of doing that is that you risk spamming a customer. Therefore it becomes vital for brands to strike the right balance through hyper-targeted, personalized and high-value engagement that’s a win-win for both customers as well as the brand.
How to Boost Brand Stickiness
Here are some of the ways that a company can introduce stickiness into their brand offerings.
Think of gym and fitness centres that charge a customer on the basis of 6 months- 1 year. Ensuring that a customer has recurring transactions with your company is a way to ensure that the customer interacts frequently. In a market that is hypercompetitive, it helps to have a customer think about your brand repeatedly because being forgotten is one of a marketer’s biggest nightmares.
A brand can only be sticky if it’s consistent. Keep your communications and marketing messages consistent in their language, style, and design. Consistency also helps a brand build recall, something that is crucial in a world that currently has a lot of clutter in terms of the number of brands present in each category. There is a concept of ‘headspace’ that each brand takes up – this concept is directly linked to recall and brand recognition.
The quality of your end product, the ease of transaction and the efficiency of your customer service all play important roles in retaining a customer. The easier it is for a customer to integrate your brand into his life, the higher are your chances of retaining a customer and possibly converting a transactional customer into a sticky one.
It’s a popular technique employed by many brands in order to create a connection with their customers. This has more to do with marketing than with efforts to retain customers but nevertheless, it is an important way of nurturing a customer connection. A brand can make a customer feel as if they are supporting a cause by supporting a brand that stands for a cause itself. If a brand can succeed at pulling at customer’s heartstrings, they can create a connect and once the customer is happy with the quality of the product offering, they will willingly convert into returning customers.
A membership program or a loyalty program that offers benefits to customers and incentivises their participation in your business can help make your brand sticky and memorable.
Build a relationship with your customers
Beyond loyalty programs, there needs to be an element of personalisation to grab the customer’s attention. This personalisation helps customers feel as if the brand cares about them and thus builds a rapport with them. We live in an age of social media, therefore if a brand goes the extra mile to reward customers for using their products, it will result in positive conversations around the brand which will be beneficial for the brand its reputation in the long run. Also, intelligent retail analytics platforms and campaign managers powered by Big Data and AI can automatically target the most receptive customers with hyperpersonalized communications to achieve your business goals.
Efficient customer support
It’s important to remember that a customer’s experience with a brand or a company does not end once the product has been sold/the transaction has been made. If a customer reaches out to the company with a complaint, a grievance or feedback, it is the company’s job to ensure that they get quick and efficient resolution. Many companies are leveraging Artificial Intelligence and Chatbots to serve customers and help address their grievances on a 24*7 basis.
How Digitization Impacts Brand Loyalty & Stickiness
Digitization can empower brands with an array of tools and technologies that are effective in driving brand loyalty and stickiness. The majority of solutions are focussed on convenience and personalization as a means to achieve the end result.
Take the example of global coffee brand Starbucks. One feature they introduced that the customers truly loved was their mobile order and pay feature. This allowed a customer to place an order for a beverage or a food item and then go to the nearest Starbucks and simply pick up their order. In this case, Starbucks made its product offering both convenient and accessible – two very strong pillars in improving a customer’s experience with a brand.
At the crux of this, is integration. If you can find ways to integrate your brand offering into your customer’s daily life, then stickiness and thereby loyalty can be easily achieved.
How to Measure Brand Stickiness
A key aspect of measuring brand stickiness involves analyzing customer behaviour and purchase patterns. So it’s vital to have closed-loop testing systems and retail analytics platforms to determine if the strategies that you are using are effective in driving higher sales and revenue.
Your customer understands you
When your customer understands your brand offering, brand cause and can effectively evaluate why your business works better for them than your competitors, then you have not only successfully retained a customer, they then become patrons of your business. For this reason, it’s important for brands to convey their vision and value in a simple and clear manner.
Your customer actively chooses you
We live in a hyperconnected world and consumers everywhere are bombarded with choice. If you can convince a customer to choose you amidst all the clutter, then you have succeeded in making a mark in your brand segment.
You have a high percentage of returning customers
Studies show that it is easier to retain a customer than to convince a new customer to choose your business. There are various customer loyalty programs and schemes that can be used to retain your customers – pick the one that has the most benefits for your customers in order to keep them happy and entice them to return. Also, ensure your loyalty program software gives you insights regarding the number of repeat visitors and what offer/communication led to the repeat visit.
Your customers talk about you
Now, with the help of social media and other broadcasting tools, a customer can talk about their experiences with brands and companies and if the user has beyond 10,000 followers on any given platform, they even have the power to influence customer decisions to buy a brand or to avoid the company. It’s imperative for a brand to implement social listening and social analytics tools to track these conversations.
Creating brand stickiness and loyalty in a hypercompetitive market is a herculean task to say the least. Thankfully, businesses now have access to powerful and highly effective tools powered by AI and Machine Learning that maximizes the success rate by revealing Where, When and How to engage with their customers to achieve the desired results
Decoding the Connected Customer
There is a new breed of human that has emerged in this millennium; one whose smartphone is a vital extension of their limbs. They run their lives on technology. They can’t be fooled by a business’s deceptive advertising, fake promises, or substandard products because, like everything else they encounter, they will look it up. They know how crucial it is to share information with the rest of their world, so they will leverage the right medium and they will make sure their opinion is heard–which could be them singing praises for a new product they just tried, or exposing and mocking the bad business or service they received. They navigate even the most complex networks of the internet like it’s a walk in the park because they’re always connected.
Although it is predicted that generation Z will account for more connected customers than the generations before them, connected customers can be found across all existing generations. In fact, they are usually identified by a common set of characteristics:
- Connected customers are those who leverage mobile, tablets, social media, IoT devices, and other digital channels to understand a brand’s functionality, features, pricing, promises, etc.
- Connected customers share their personal experiences and feedback on their interactions with brands and products on various social media platforms.
- Connected customers expect swift results and time-efficient experience. Delivery times across top vendors are becoming increasingly competitive and with so many brands offering same-day delivery, customers have become spoilt for choice.
- Connected customers utilize multiple devices to connect to their favorite sites, and expect a seamless, consistent experience between various devices.
- Connected customers value personalization. They value brands that customize product recommendations and services keeping in mind their individual preferences and behaviours.
There is a frenzy amongst businesses to have connected consumers on their side, and for good reasons :
- Firstly, because it is now known that evangelistic customers boost sales much more than marketing can ever do. According to Harvard Business Review, acquiring a new customer can be anywhere between 5 to 25 times more expensive than retaining an existing one.
- Secondly, connected customers are active customers. Research concludes that having reviews on your site can increase the likelihood for visitors to make purchases; products with reviews have a 270% greater likelihood of being purchased than products with no reviews.
- Finally–and perhaps most importantly–connected customers can empower businesses by giving them insight into their direction for growth. By virtue of perpetually being connected, they offer immense data over time that can help businesses learn about customer engagement patterns and preferences. Analysing this data, can help businesses answer crucial questions, such as what devices do customers prefer to engage on?; what products receive most engagement?; what are customers greatest pain points, and how can the company address them? Businesses can use this information to prioritize their focus.
Decline of Brand Loyalty Among Connected Customers
Although connected customers are becoming must-haves for businesses, they don’t come easy. After all, unlike people who are timid of technology, these savvy customers are aware of the spectrum of choice they have before them through the internet. Customers today are equipped with vast amounts of information and experiences thanks to the easy availability of the internet and have less incentive to be loyal than the customers of yesteryears.
However, as you’ll find in this article, there are ways to attract and retain highly valuable connected customers.
Why Connected Customers Are Vital for Businesses
In recent years, revered industry leaders and notable thinkers are vocally accepting, understanding and preparing for the Fourth Industrial Revolution, in which unprecedented technological breakthroughs and billions of people being connected by mobile devices will fundamentally alter the way we live, work, and relate to one another. We are already seeing the advent of the Fourth Industrial Revolution in the high adoption rate of the Internet of Things (IoT), and the integration of artificial intelligence with our everyday lives. IoT devices–or devices that function and connect via the internet–are becoming standard in a wide array of fields, such as healthcare (with examples like activity trackers, and sensor-enabled pills), household (smart washing machines, heaters, locks), manufacturing (digital twins), and agriculture (drones that monitor soil or weather conditions).
For e-commerce businesses, the amount of information being collected from IoT devices can be processed and analyzed to paint an accurate picture of various users and their lifestyles. Today, the number of IoT devices (not including phones, laptops, tablets) is over 7 billion, and that number is projected to cross 21 billion worldwide by 2025.
It is also common knowledge that smartphones are no longer limited to the upper strata of society. With several tech companies providing increasingly affordable options of smartphones in recent years, the number of smartphone users worldwide is over 3 billion and expected to cross 3.8 billion by 2021. This, combined with the fact that the reach of social media has been rising, is further increasing the connectivity of the world.
It has also changed the way marketing departments operate. Today, brands find it imperative to have their presence on Facebook, the most popular social network worldwide with more than 2.3 billion monthly active users. Eastern Asia and North America have the greatest social media penetration, with penetration rates of 70 percent, while the global average penetration rate is 45 percent. Social networking usage has also become increasingly mobile – in January 2018, mobile social media had a 58 percent usage rate in the United States.
All these signs point towards an increasing number of connected customers in the future. The evidence is apparent in the digital divide between baby boomers and millennials. A vast population of the youngest generation today, Generation Z, have been navigating apps since their infancy, and are more deeply connected to the web than generations before.
Clearly, connected customers come with a set of high expectations. It can be daunting for an e-commerce business when they realize the level of effort they must invest in engaging these customers, but it would be a mistake to dismiss them, given their impact. On the bright side, connected customers allow brands to save on marketing costs by prioritizing social media advertising, which is inexpensive in comparison to traditional marketing formats, such as print, TV or radio. Brands can also benefit from the ability to communicate with consumers in real-time, in a two-way format, and they can swiftly promote new products and services through social media.
Today, given the high competition e-commerce brands face, many companies strive for customer attention and loyalty by slashing prices, but this only attracts consumers whose loyalty is fickle and price-based. While price and product quality will always be relevant, the new differentiator for companies comes down to the customer engagement experience. Customer engagement can be defined as the emotional connection a company creates in customers, based on their experiences with the company’s people — and those emotions strongly influence their buying decisions.
According to studies by Gallup CE, customers who are fully engaged represent a 23% premium in terms of share of wallet, profitability, revenue, and relationship growth over the average customer.
Maximizing Engagement with the Connected Customer
Develop Emotional Connections
Far from just incorporating discounts and satisfactory customer service, companies must strive to resonate with the emotions of their ideal customers. This goes against the belief that customers’ purchasing decisions are guided primarily by rational thinking.
Higher customer engagement is driven by the customer feeling valued, the customer’s relationship with the brand representative, and the customer’s trust in your service. A good way to do this is by creating an effective loyalty program that makes your customers feel valued, or by associating your brand with certain values that you want your customers to be invested in. For example, the outdoor and recreation company REI makes a donation to the National Forest Foundation every time their customers use REI’s Co-op World Mastercard. They have seen tremendous success through their loyalty program and brand cause.
As the tides of technology change, brands must keep up with tech innovation to stay ahead of the game. 59% of customers say companies need to provide them with innovative digital experiences to keep their business. Customers are already aware and impacted by technologies like cybersecurity, the Internet of Things, and Artificial Intelligence (according to global research firm Gartner, by 2020, 85% of customer interactions will be managed without a human.). With more operations and every-day functionalities being executed online, cybersecurity is a top concern that businesses should address. Additionally, businesses should leverage Artificial Intelligence to sift through complex amounts of data and uncover relevant business opportunities.
Connected customers do not want to lose access to their favorite brands when they’re on the go. A massive 79 percent of smartphone users have made a purchase online using their smartphones. Google also reiterates the importance of mobile-friendly sites and prioritizes mobile-friendly content with higher SEO rankings. All this means one thing: mobile matters.
To be mobile-first, businesses must optimize their content to load fast on mobile devices and create a consistent experience with other channels. Moreover, brands should invest in an omnichannel e-commerce platform to deliver a seamless experience across channels.
In today’s highly individualized climate, people are finding it increasingly difficult to form social connections with others. Brands fostering a sense of community are seeing deep-rooted loyalty and emotional connections from their customers. They give their customers a common ground–online or offline–to encourage one and other in their art or athletic progress, which also allows for customers to share their experiences and provide support for other customers. For example, the athleisure brand Lululemon offers their members yoga sessions, run clubs and other classes and events, which creates a strong differentiator from other brands offering just run-of-the-mill services.
Deliver Personalized Engagement
Based on the immense data collected from connected customers (such as their preferences, behaviours and shopping history), brands can offer personalized customer engagement and loyalty programs that are customized for them. Afterall, everyone likes to feel special!
Create Experiential Events
When Red Bull offered live coverage of Felix Baumgartner skydiving from 128,000 feet, they–quite literally–took their marketing drive to new heights. Experiential marketing events like these get people buzzing for a long time. Do not fret if your marketing budget does not allow you to put a man into space; create local events and experiences that are relevant to your brand, and give your customers reasons to get excited. Not only do 98% of consumers create and share their experiences at branded events, but 74% say engaging at these experiences makes them more likely to buy the products being promoted.
When it comes to engaging customers, brands must unleash their imaginations. By using the power of data analysis, businesses today can know their audiences better than ever before. This is the key to knowing what excites customers, and how to retain them. In a world where competition and pricing are cut-throat, tomorrow’s winners will be businesses that learn how to maximize engagement with their customers. Those that don’t will be left behind.
If you have any questions or queries, do drop in a comment, and we’ll get right back to you.
It is no secret that a well-executed loyalty program has the ability to transform a business and fast-track growth. After all, 40% of revenue today for US e-commerce retailers comes from returning customers who represent only 8% of all visitors. As the tides of technology change, so must loyalty programs merely to stay afloat. With mobile commerce accounting for over 30% of e-commerce sales in 2017 (a number predicted to increase to over 50% by 2022), brands and their loyalty programs must incorporate deep retail analytics and the omnichannel experience to remain in the top tier.
Consumer preferences vary across countries and cultures, from the technology they utilize to what they seek from a loyalty program. Instead of casting a vague wide net to rake in sales, retailers must identify their ideal customer group and strategize accordingly.
Far from just incorporating discounts and satisfactory customer service, companies must strive to resonate with the emotions of their ideal customers.
The ability to bank on an impersonal, one-size-fits-all approach to loyalty rewards is quickly fading, and customers are looking for rewards that are relevant to their specific tastes and purchasing behaviors. Of course, this implies that a loyalty program platform today must be intelligent, and dynamically predict a customers’ changing preferences.
So how do successful loyalty programs create customers that are eager to return? Below, we peek into the inner workings of best loyalty programs in 2019 and what makes them tick.
REI Co-op offers a lifetime membership at just 20$, and members frequently rave about how swiftly they see returns for the money spent. With an incredible selection of outdoor and wilderness gear and a unique loyalty program, REI has quietly earned its place as one of the best recreation services corporations. Their message is clear from the very first visit—choose nature and get outside more.
Members get special prices on adventure trips curated by REI, and heavy discounts (think 50% and more) on gently used gear being sold online. If you opt for REI’s Co-op World Mastercard, you receive a $100 REI gift card upon joining, and REI makes a donation to the National Forest Foundation every time you use your card. The most unique aspect of this program is that members can influence the direction of the company by voting for the company’s board of directors, based on their profiles and values. Members also receive an annual dividend that they can cash in, use in-store or donate towards causes for nature and the environment.
And apart from all this, they still offer excellent customer service with free shipping over purchases of 50$, and replacements and refunds within one year (!) of purchasing.
Key Takeaways :
- REI focuses on loyalty from an emotional perspective. The brand resonates as an organization that truly cares about their cause.
- They give back nearly 70% of their profits to outdoor stewardship projects, and offer events of stewardship where members can volunteer to protect and expand trails.
- More than just highlighting the financial gains of being a member, they give their customers certain values to be invested in.
In just over a decade, Nike’s loyalty program—Nike+—has grown to over 100 million members. The brilliance of Nike’s marketing is that they don’t focus on selling the apparel itself— rather they create an emotive story around the sweat, determination and absolute high that an athlete experiences.
Using the concept of gamification, Nike tracks the workout routines of members and rewards them for it. Nike+ also offers its members a community where they can meet and train with other members, and it doesn’t do this alone.
The brand has partnered with others giants for their rewards program, including Apple Music (giving members access to curated workout playlists), the mindfulness service Headspace (where members can access guided meditations), and the education service ClassPass. Besides that, members get sweet perks like free shipping on all orders, early access to top-of-the-line gear, a month of birthday discounts and gifts, and a 30-day “no questions asked” return policy.
- Nike does a great job of getting into the mind of their customers to understand what makes them tick and incorporates that into their loyalty offering
- Create a reward and experience ecosystem by partnering with synergetic brands
- A great mobile experience: the loyalty program incentivizes app usage to access special perks, discounts, guided runs, and exclusive experiences.
Sleep Number, the mattress company, has been driving customer engagement and increasing revenue through its loyalty program, the Inner Circle.
The loyalty program encourages members to participate in surveys and polls in exchange for points. Sleep Number uses the information gleaned to advice insiders on improving the quality of their sleep, and for creating educational blog posts.
Members enjoy discounts and are the first to know about new products, but the true differentiator of their loyalty program has been the incentives they offer for referring friends and family. They are credited with points for sharing referral links, and for every successful referral, they earn a 100$. After the 10th successful referral, they receive an additional $799.
Lisa Erickson, Director of Customer Relationship Management & Loyalty, says “you’d be amazed how many referrals we get. Our customers are engaged in the program and we get more than 1,000 digital referrals a month, that’s really important to our business because your best customers bring more best customers. Testimonials are our most powerful form of marketing.”
- Incentivizing your customers to refer their friends is a cost-effective way to drive more engagement and grow your following.
Athleisure brand Lululemon’s loyalty program may be young, but it has already attracted some positive attention. As far as loyalty programs go, the annual membership is rather steep at $128, but active members will quickly see the value—Lululemon members receive an exclusive pair or pants or shorts on joining, which already make the membership a good deal (considering that most pants are priced around the 100$ mark).
The real value of the program lies in the community they create for you through yoga sessions, run clubs, and other classes and events. Striving to inspire viewers, Lululemon collects the stories of driven athletes working on bettering their communities as part of their “ambassador” program.
Their membership also includes free expedited shipping for online orders and no-questions-asked return policy.
- In today’s highly individualized climate, people are finding it increasingly difficult to form social connections. If it suits your brand, move away from run-of-the-mill rewards and foster a sense of community using your loyalty program
- This community-driven customer loyalty program will inculcate an emotional connection to your brand.
Swarm is a social networking mobile app where users can share their lifestyle with friends by checking into the locations they’ve visited.
After Facebook created a similar check-in feature, Swarm saw a daunting drop in popularity. But in recent years, it has reinvented itself with Swarm Perks. As the name suggests, users can earn perks (significant discounts, points, and real-world freebies) for checking in at participating locations. They can earn extra bonuses for checking in with friends, and are awarded ‘mayorship’ when they visit a venue the most number of times. Swarm Perks offers these discounts by partnering with existing discount networks.
Swarm Perks users highly anticipate the weekly sweepstakes challenges, where participants get the chance to win grand prizes (for example, $10,000 towards a dream vacation) by checking in at specific locations. According to Jonathan Crowley, vice president of product, the introduction of such features in the beginning of 2015 has seen the number of check-ins per user triple in the US.
- Gamification is a tried and tested concept in the loyalty space and it still works
- The human psyche is driven by competition and the glory of winning. Gamifying user engagement can lead to soaring popularity for your brand and, in turn, revenue.
Although CVS Health has been around for decades (since 1963, to be precise), it’s market share has been threatened in recent years. After Amazon acquired online pharmacy PillPack, CVS launched its loyalty program CarePass to secure its customer base. The membership costs $5 a month, or a discounted rate of $48 a year. Members receive free 1-2 day delivery on most prescriptions and purchases, 20% discounts on certain CVS Health-branded products, and $10 in monthly promotional rewards. They also have a 24×7 dedicated phone line to a pharmacist so that customers can consult a professional who has access to their prescription history with CVS Pharmacy.
- Choose experiential rewards that your customers will value and that your competitors are unlikely to offer, such as CVS’s pharmacist helpline.
Sephora’s Beauty Insider is arguably one of the best loyalty programs ever implemented. To stay in line with their image as a luxury brand, they rarely offer discounts and price slashes. Instead, they run on a point based system that segments customers into tiers depending on their annual spending. Higher tiers offer greater rewards and more point accrual for every dollar spent.
Based on the customer’s preferences and shopping history, every member receives personalized rewards and customized promotions. The brand stays relevant by offering beauty enthusiasts what no one else is doing, such as the augmented reality feature that allows users to virtually try on various products. It has created an air of excitement by knowing what drives top customers in their industry—exclusivity. Sephora teams up with brands to offer products first before they are even released through the brand’s own channel. Depending on the tier that a customer falls into, Beauty Insiders get access to a wider range of gifts and early access to new products, exclusive events, and one-of-a-kind experiences. A glance at their twitter mentions makes it obvious how excited customers will go above and beyond to secure bragging rights.
- Sephora delivers a great omnichannel loyalty experience. The program does this seamlessly and extends the loyalty program across all platforms (be it mobile app, website, in-store or even in-partner-store JC Penny).
- Tiered loyalty programs are one of the most effective ways to motivate desired behaviors from customers, especially when the upper tiers convey a sense of exclusivity.
- The level of personalization makes every customer’s reward relevant to them, which is highly important for any loyalty program. You want your most loyal customer to feel like they have achieved something that others could not, and inspire your other customers to strive to get there.
- Offer a strong online community where users can have discussions, get advice and shop makeup looks.
Jim Sinegal, Costco’s Co-Founder and Former CEO, explains how the wholesale giant consistently offers lower prices and better values: “by eliminating virtually all the frills and costs historically associated with conventional wholesalers and retailers, including salespeople, fancy buildings, delivery, billing and accounts receivable.”
The Costco shopping experience is only open to members, who swear by their savings and frequently return for all their household needs. Costco banks on their annual membership fees to maintain profitability. Costco’s entry-level “Gold Star” membership costs $55 per year with additional cards for anyone living at the same address. At $110 every year, the executive membership costs double the gold star membership but provide additional benefits and discounts and 2% cash back on qualified Costco purchases. Members are also eligible to shop at Costco gas stations, Costco Optical, Costco Pharmacy, and Costco Travel.
- Costco’s success stems from the fact that they thoroughly know who their customer base is. Their members usually belong to large households or are those that benefit from buying in bulk.
- The company crafted a successful loyalty program by giving customers just the bare essentials of what they need by knowing their purchasing behaviors—and by cutting out the fluff that doesn’t really excite them.
With the plethora of loyalty program options only increasing, it can be tempting to emulate successful programs that already exists. But you’re more likely to attract a loyal customer base through experiential rewards that only you can offer, rather than just discounts and monetary rewards which can frequently be undercut or copied by competitors.
Brand Loyalty as a product presents unique opportunities which make for a ripe Artificial Intelligence (AI) and Machine Learning (ML) functionality.
Building brand loyalty is a multidimensional phenomenon. Many businesses and research professionals consider Customer Satisfaction and Brand Loyalty as their primary marketing goal. Bringing in new consumers is a give-in target for any business, the challenge lies in finding innovative ways to retain existing consumers. A truly satisfied consumer presents the brand an opportunity to build a long-term relationship, and in time will aid in yielding long-term profits.
Now, we know what you’re thinking – it is not just about the money a business makes. Loyalty also involves keeping customers happy, adapting to their changing needs, and keeping up with technology and innovation. It is imperative to dive deep into purchase patterns and user behaviour to be able to deliver a wholesome satisfying experience.
With the big sharks already swimming deep in the market, how can marketers make their product stand out, surprise and delight the customers and deliver a return on investment? Simple – Data and the use of Artificial Intelligence (AI). Brand Loyalty programs can be custom developed so that members are engaged and loyalty delivers positive results for their company.
In this article, we will be talking about:
1. The Importance of Building Brand Loyalty
2. Ways to Create an Effective Loyalty Program
3. Hacks to ace your Loyalty Program Management
4. Loyalty programs through Smartphones, and its benefits.
5. Latest trends in Customer Loyalty programs
The Importance of Building Brand Loyalty
Let’s start with the basics.
There will always be competition – never forget that. Selling your product in a market where there is competition is no child’s play. You want your product to stand out, you want it to be consumed by every individual who possibly requires it, and you want to reach out to those who aren’t aware of its existence, yet. When consumers commit to a brand, always assume they have done their research and that they ‘chose’ you instead of your competitor.
Businesses use creative marketing strategies to build a sense of attachment between the consumers and the brand – in this case, companies build loyalty a.k.a. reward programs, brand ambassadors, trials and free samples. It is important to keep in mind that however lucrative your offers and services may be, you need to at all times keep up with the consumers changing needs and mindset. You may have been able to retain them for say 6 months, but customers are like cats – it only takes something flashy to distract them. So if you fall back on keeping up with the changing trends, technology, and innovation – you will be at the end of the line before you know it!
Building brand loyalty is a win-win – and it all depends on how you choose to place your product in the market.
Need a few examples to understand why building brand loyalty is imperative? Read on.
Ways to Create an Effective Loyalty Program
77% of customer brand loyalty programs fail in the first two years. The primary reason is the lack of sync between customer perception and the company objective. 73% of customers feel that the company should be loyal to them and 66% of marketing executives from the company feel that customers should be loyal to them. Only 25% of loyalty programs reward customers for some form of engagement with them. 85% of companies are always in search of ways to reward customers beyond promotions and discounts. Take the case of Amazon Prime. For a yearly subscription, customers can get access to free shipping, exclusive content and more.
Some examples of the brand loyalty programs that have been very successful are :
- Swarm Perks
- American Express Plenti
- REI Co-op
- TOMS One for One
- Amazon Prime
- Virgin Atlantic Flying Club and
- Sephora Beauty Insider and VIB
Want an in-depth insight into the types and effectiveness of customer and brand loyalty programs? Read on.
Hacks to Ace your Loyalty Program Management
Loyalty programs are nothing new, but this does not mean that they are going out of fashion anytime soon. Based on the research conducted by the group Colloquy, there are 2.65 billion brand loyalty program memberships in the U.S. alone. On average, US households are involved in 21.9 loyalty programs, yet only actively participate in 9.5 of them. There are about $48 billion allocated toward loyalty programs each year, in the form of discounts, free rewards or special promotions. Out of these, only two-thirds of the amount is ever redeemed by customers. That might sound great from a company perspective, but it is indicative of poor loyalty program management and worse, bad customer engagement. A loyalty program that is well designed can boost customer satisfaction and repeat business.
Given below is a comprehensive loyalty checklist developed by a top Ogilvy & Mather strategist, Michael Szego. Do note that there is nothing called a perfect brand loyalty program, even if you follow the below list, to the T. You need to keep evolving and changing with the market and your customer. In fact, you need to be a few steps ahead of them, in order to make your loyalty program management a success. Here are four things you need to keep in mind while developing an effective brand loyalty program:
Simplicity = Make my life simple, don’t confuse me with too much information
Benevolence = Understand my issue and take my side in finding a resolution
Trust = Doing what’s right, honouring promises and protecting customers privacy
Transparency = Rates and fees are crystal clear and comparisons are available
To read more on the if’s and but’s to creating an effective loyalty program, read on.
Loyalty Programs through smartphones and its benefits
The use of mobiles has changed the name of the game for loyalty programs; especially when it comes to creating more ROI. Nowadays, brand loyalty amongst customers is on the decline due to intense competition and a plethora of choices. While loyalty programs are a great way to increase brand loyalty, most brands still treat their rewards program as an excuse to get an email address instead of adding value to the customer. But when a business gets their mobile loyalty program right, they get a 13.3 million-user-strong success story like Starbucks.
We’re sure you would have heard the old adage – ‘It’s is easier to get an old customer to come back than to ask a new customer to transact with you’. This is a retention strategy that every marketer worth his salt knows. This high acquisition cost is the primary factor why brands need to build relationships with existing customers and reward them
Here are a few benefits of inclining your loyalty strategy to be mobile-centered:
> Convenience – anytime & anywhere access. Real-time updates on offers and discounts.
> Staying ahead of the competition – having the leverage of being able to communicate via mobile phones, keeps things instant. Say your customer was looking up a product that your competitor sold as well, but your message with the discount reached him on time, and that turned him in your favour.
> Reduced Operational Costs – Offers can be changed instantaneously and sent to all users within seconds. The time spent is less and it works out to be economical than paper-based loyalty programs.
Want a detailed write-up + examples on the benefits of mobile brand loyalty programs? Read on.
Latest trends in customer loyalty programs:
Customer loyalty is changing constantly. Customers are increasingly demanding to be seen and heard as individuals, with specific needs and requirements. Using AI in loyalty programs can solve a whole lot of issues and concerns that plague the existing system.
How is AI used in these programs?
It is the only way to reach out to huge numbers of customers that run into thousands and millions. It is the best way to capture an individual’s need, intentions or preferences, in real-time. Each individual’s data is captured, thereby putting together a collective database that delivers information which goes far beyond numbers. Technology like speech recognition, dialogue management, natural language processing etc. are used to create intelligent assistants. These intelligent assistants can interact easily and naturally with human beings and can help them with accessing information and completing tasks.
For example, AI can help power Virtual Assistants who can monitor specific customer behavior and reward them for it. This in-turn inspires loyalty in customers and all this can be done without the intervention of human beings.
Another good feature of the integration of AI is that it offers security against cyber-crimes, fraud, and theft. AI systems can also augment employee performances, which frees them from mundane tasks so that they can focus on important areas that maximize customer experience.
Want to know more about the latest trends in AI-powered brand loyalty programs? Read on.
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