So now a business has a loyal customer who returns to them to make those specific purchases. What can they do to bring in more customers and retain existing ones?
Customer loyalty programs are a great starting point for this conversation. The benefits of most customer loyalty programs are long term, so it ensures that the probability of a customer associating with you for years is higher as well.
However, the problem with many customer loyalty programs that businesses offer, is that they tend to have an outdated, one-size-fits-all approach.
This defeats the very purpose of a loyalty program. For example, if a customer finds that the reward system that the program uses is inflexible or inconvenient, with little scope to change according to a customer’s preferences, then it’s more likely that they’re not going to return. A KPMG survey found that 80% of the respondents said they prefer surprise deals or personalized gifts to information on sales, special privileges, time-saving opportunities, or other traditional program benefits.
Perhaps the biggest benefit a loyalty program offer a brand is the spike in engagement. Research has shown that the customers who actively engage with brands make 90% more frequent purchases. That’s not all, they also spend 60% per transaction and are five times more likely to choose the same brand in the future. Unfortunately, traditional loyalty programs fail to leverage the full potential of this engagement goldmine due to the generic rewards and marketing communications.
Another major advantage of a loyalty program as a marketing channel is its demographic agnosticity. Customer loyalty isn’t just limited to the baby boomers. Millennials are the target audience that most companies are after, and they’re equally likely to respond well to personalised customer loyalty programs. 90% of millennials surveyed by KPMG were a part of at least one reward program and are more likely to participate in reward programs at places like restaurants, gyms, and grocery stores. Interestingly, the same survey found that millennials are actually less likely to associate with a customer loyalty program if it comes attached to a credit card, a big box retailer or while traveling.
This study clearly hints at consumer distaste for conventional loyalty programs and a preference for personalized, experiential programs that adds true value.
The concept of customer loyalty eventually ties back to the value that the said customer brings to the table. There are many ways in which personalisation can help increase the value of CLV. If there are higher store/website visits, then the chances of the customer engaging meaningfully with your business are higher.
Personalization also has a major impact on the Average Order Value (AOV); a study reveals that product recommendation contributes up to 30% of revenue for ecommerce sites. It also ensures that customers have a higher brand affinity and are more likely to convert, even when they’re faced with a competing brand.
When you consider all the factors at play, it makes sense that a personalised loyalty program plays a pivotal role in keeping your customers happy and constantly coming back to the business.
At the core of a successful personalized loyalty program is a solid understanding of your customer, their needs, preferences and offline/online behaviour. So the first step any marketer must take is that he needs to create a centralized pool of data.
Thanks to the prevalence and ease of use of omnichannel customer analytics software, obtaining the data from multiple channels, analysing and understanding it is no longer a tedious task. The next step is to leverage an AI-powered customer engagement platforms with smart segmentation capabilities to help you understand what rewards and communications resonate best with each customer segment. These omnichannel platforms help you to track communications across different marketing channels to determine the engagement rate and the overall ROI. They also measure campaign impact and enable you to implement incremental changes to reach set business goals over a period of time. If you are not willing to invest in separate analytics and engagement platforms, there are personalized loyalty program software that comes prebuilt with these capabilities.
At the beginning of the article, we’d mentioned that the customer is at the core of everything that a business does. And one way brands can truly build a relationship with their customers is through 1:1 communication and engagement. Companies need to keep this in mind and ensure that they place the customer and his/her experience at the centre of everything they do.
It’s important to understand a good loyalty program will multiply the impact of a good customer experience, and it is not meant to compensate for a bad one.
And finally, to make a personalized loyalty program truly successful, companies need to equip themselves with the right metrics to measure customer experiences and evaluate feedback accordingly in a multichannel retail marketplace.