The art of expanding a business depends on a solid customer acquisition strategy. But while constantly shepherding new customers towards the business it is important not to lose sight of the ones that are already there. One of the most difficult parts of scaling is figuring out which channel is the most sustainable for bringing through new customers and which ones keep them coming back for more.

Companies spend millions of marketing dollars to acquire new users and tend to shave budgets for keeping existing customers engaged with the brand. 70% of companies have already implemented some form of loyalty program to encourage customers to stick with the brand but fail to create the magic that connects them to the brand mantra instead according to Cap Gemini. Today, let us break down the essential “must-haves” that loyalty programs should include.

 

1. OFFER VALUE NOT POINTS

The first step towards a successful loyalty program is to understand what drives customers to join one, to begin with.  Popular reasons that customers join loyalty programs are to save money, receive specialized treatment, collect rewards/ discounts, information about the brand, and elite customer status.

Looking beyond the free merchandise, rewards, coupons, or discount, marketers need to identify touch points that get customers to relate to the brand.  Consumers are undecided about what type of loyalty program they prefer. It’s time for companies to offer ‘actual’ value to customers who use their loyalty program. The offer must add utility to the main product or be a means to a re-purchase of the same.
From the types of loyalty programs, the biggest difference between the points system and the tiered system (as used by many leading airlines) is that customers extract short-term versus long-term value from the loyalty program. Tiered programs work better for high commitment, higher price-point businesses like airlines, hospitality businesses, or insurance companies.

 

2. CUSTOMER LOYALTY GOES BEYOND THE PROGRAM

Whether it’s a discount, a freebie, or special customer treatment, customers will enroll in loyalty program only if the reward is

  1. Easy to obtain
  2. Worth the effort
  3. Is meaningful

Although a points system is perhaps the most common form of loyalty programs, it isn’t necessarily applicable to every business form. It works best for businesses that encourage frequent, short-term purchases but long term purchases require a more sustained offering such as a warranty, a product trade-in or a complementary membership program that offers incentives for other products within the brand.

Consumers have begun to move towards the digital and mobile-first world, the nature and scope of loyalty programs have been shifting as well. Social media web rooming, mobile apps browsing and push notifications to evoke customer awareness and interest, post-purchase, which can help with retaining customers without spending any marketing dollars.

 

3. EXPERIMENTAL MARKETING CREATES LOYALTY

Truly understanding your customer means understanding their values and sense of worth. In a competitive industry, advertising has little advantage to sustain an edge over the competition. There is more value being given to ‘customer- driven content.’ Customer-driven content can be anything ranging from reviews, feedback, complaints or even personal social media content.

Social media platforms like Instagram, Twitter, Snapchat, and Facebook have a very powerful impact in driving potential leads into customers and retaining those customers who were having a weak degree of loyalty towards the brand.  Companies should tap into these influencer circles to increase ‘utilitarian and/hedonic’ awareness about the product(s). There is a strong likelihood that popular purchase behavior will evoke a crowd following as well as similar opinions too.

 

4. GAMIFY IT

Want to keep your customers addicted? Turn your loyalty program into a game to encourage customers to regularly accessing owned and earned media channels of the brand. There is an added advantage of the gamification element solidifying your brand’s image and voice, should the game be appropriately designed.

The difference between gamification and contests is that the former provides a platform for engagement, a progressive interaction that results in earned rewards whereas contests run the risk of making customers feel like the company is chasing them and urging them to participate to increase short term revenue. Gamification has a higher chance of creating long-term value as customers feel more comfortable to participate at their convenience.  If customized engagingly, gamification platforms could work for almost any type of industry, regardless of B2C or B2B models.

Experts on gamification note that the companies that startups offer smartphone applications that reward users for “checking-in” at physical stores or provide limited time discounts based on individual profiles (surveys etc.)  and data analysis (feedbacks and review etc.). Other platforms specialize in website-based loyalty programs (or communities) that offer points and rewards for site-interaction.

 

5.  BUILD YOUR PARTNERSHIP NETWORK

The best way for a company to beat the competition is to increase the network that it is affiliated to. Customers are more likely to enroll into loyalty program if the rewards or benefits are diverse and can be redeemed/ applied across multiple companies belonging to the network. Strategic partnerships can be effective for retaining customers and reducing the attrition rate of existing customers.

Companies need to be careful when deciding the types of partners to associate themselves with to protect brand reputation and portray a consistent brand message.

 

6. EXTRACT LESS MONEY, EARN MORE TRUST

Loyalty programs are meant to break down barriers between customers and the business and promote a more personal relationship between them, so charging them a fee to enroll is the last thing that is advisable, especially when the reward does not justify the cost.

According to Gartner, cart abandonment is often caused by “price shock” after tax and shipping prices are applied. Combat this issue offering a loyalty program with an upfront fee rather than charging shipping fees for every purchase. Such an offering will most certainly be chosen over the inconveniences that could impede future purchases.

 

If you want to learn how to apply this to your business, set up a call with our loyalty experts here. 

In the meantime, check out the 7 keys to a loyalty program that actually works! 

 

WRITTEN BY: 

Mridula Kolachina 

 

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Kelly Rogan
CMO Social&Loyal
Kelly is our VP of Business Development and a loyalty and customer retention expert having worked with large brands all over the globe to grow true brand loyalty. She’s written for media outlets such as Forbes, Inc and Startup Grind on topics related to digital marketing and brand loyalty. She is passionate about combining behavioural psychology and technology to boost results.

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