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Loyalty Marketing has been a part of marketing strategies for years. Recently, it has started to emerge as a new wave of marketers turn their focus towards retention and loyalty.
But, customer acquisition is everything, right?
Nowadays, marketers are still investing the majority of their time and budget in the big question: “How do I gain more customers and achieve growth?”.
This is how loyalty marketing got pushed aside by the rush towards customer acquisition and growth.
However, 44% of companies have a greater focus on acquisition vs only 18% that focus on retention, despite the well-known fact that existing customers are more likely to spend more and try new products than new customers!
This leaves you, the smart marketer, with an amazing opportunity. We’re going to guide you through loyalty marketing trends and strategies to help you exploit this often overlooked channel.
It’s time for loyalty marketing 101!
Loyalty marketing is focused on growing and retaining loyal customers. This is done by offering them points, rewards, and discounts for their purchases and online interactions.
Think of when you take a simple loyalty card to your local coffee shop, get it stamped each day, and enjoy a free coffee after returning 10 times. It’s all about retaining returning customers by rewarding them for their regular patronage.
Let’s say if you got your coffee shop card stamped 10 times, and then they offer you a free croissant if you brought 3 friends with to sign up, now you’ve just unlocked another loyalty tier.
Summary: What Is Loyalty Marketing?
Loyalty marketing is focused on growing and retaining loyal customers. This is done by offering them points, rewards, and discounts for their purchases and online interactions.
A loyal customer is typically defined as a repeat buyer of the same product or a regular shopper at the same online store. They interact with you on social media, they actively leave reviews and testimonials and at most times, cost is not an issue.
To summarize the Six Types of Loyal Customers by Shep Hyken:
To segment your customers based on these 6 types, start by creating a set of questions on a survey – this will reveal what type of customers they are.
In Short – 6 Types of Loyal Customers Are:
A loyal customer is typically defined as a repeat buyer of the same product or a regular shopper at the same online store. There are 6 types of loyal customers:
The definition of a loyal customer is quite broad and really depends on the context of what you’re looking for.
But, for example, Adobe Analytics defines a loyal customer as a website/app visitor who has made 3+ purchases in the reporting period.
Here are a few definitions (including the one mentioned above).
Well, it really depends on the brand, but there are a host of other factors to consider. Start to identify your loyal customers by looking at the following:
We review and rate peer to peer marketing software that enable you to launch a successful program and drive results for your brand.
I need a platform for:If you shop online, travel frequently, frequent the same restaurant, or shop at the same supermarket regularly, you’re likely to belong to a loyalty program. If being remembered and rewarded for your loyalty influences your decision to shop at a particular store or buy a certain brand over another – it’s working!
You have probably heard this before, and we have certainly mentioned it on the blog before, but it still rings true for loyalty marketing: it costs 5-times more to attract a new customer than it does to retain an existing customer. Doesn’t that put your marketing efforts instantly into perspective? Well, it certainly should.
Loyal customers are also more likely to refer their friends and family. This is an excellent way to harness the word-of-mouth marketing power of your regular customers.
Summary: What Are the Benefits of Loyalty Marketing?
It costs 5-times more to attract a new customer than it does to retain an existing customer and Loyal customers are also more likely to refer their friends and family.
Are your products low frequency purchase items such as cars, statement jewelry, luggage, and furniture, or frequently purchased items such as groceries, beauty products, travel, or clothing?
Any business can have a loyalty marketing strategy, even those with one-time items can utilize a loyalty marketing strategy – but with more of an allocation towards acquisition. A loyalty marketing strategy for once-off or low frequency purchase items can be centered around making sure they come back to replace their purchase in time, cross-sell other items in a range, or to encourage online engagement and referrals.
Businesses such as airlines, car rentals, and hotel groups are some of the earliest pioneers of loyalty marketing strategies and are now at the forefront of many innovations in the space. Hilton Honors now lets guests choose their room ahead of time through their member’s app, which, according to Think with Google, led to an over 90% retention rate.
Summary: What Types of Businesses Use Loyalty Marketing?
Any business can have a loyalty marketing strategy, even those with one-time items can utilize a loyalty marketing strategy – but with more of an allocation towards acquisition. Businesses such as airlines, car rentals, and hotel groups are some of the earliest pioneers of loyalty marketing strategies.
How can you take all this information on loyalty marketing, and implement them in your business? As we mentioned, it doesn’t have to start with huge programs, but with simple tactics that could lead to larger implementations.
Outline what you want your loyalty marketing to achieve. Are you looking to grow sales, online engagement, or brand loyalty? This will give you a good idea of where to start with your overall strategy and what types of tactics you can employ.
Using the guidelines above, outline what your ideal loyal customer profile looks like. How many purchases, online interactions, or subscriptions qualify them to be a loyal customer to your business?
Take the time to accurately identify and profile your most loyal customers and brand ambassadors. You can use a number of tools to plug into your online store and pull out these customer profiles based on the parameters you set up in step 2, above.
Once you identify those customers, you’ll be in a better position to judge the true scale your loyalty marketing strategy, delve into their shopper behavior, and deliver personalized content.
Everything you’ve put into loyalty marketing can be damaged by poor customer service. Work with your staff and fulfilment centers to ensure that customers experience the very best support and service possible, before you launch. You can implement this in a few ways:
Based on your objectives and the number of customers you are targeting, you can now start to define what rewards are affordable and impactful enough. This can be in the form of:
When developing a loyalty strategy, it’s important to plan how you will interact with customers on a long-term basis. You can implement this with a regular newsletter, monthly push notifications, or social media campaigns. Whichever you choose, make sure that your communication is regular and consistent.
Pro Tip
A gift voucher sent on a customer’s birthday or membership anniversary goes a long way. It shows your customers that you are loyal to them too, and adds a human touch to your business. This has a great impact on the emotional loyalty that customers feel when they have positive interactions with brands.
Lighten this up with some quirky gifts on days like National Hot Chocolate Day, Talk Like a Pirate Day, and so on.
Invest in great analytics for your loyalty marketing strategy. This will help you to optimize your strategy and scale faster based on actual data.
Don’t overlook the importance of gathering meaningful, actionable, insights from your one-off and loyal customers. Use surveys or polls to gather information about their shopping experiences, and ask what made them come back or leave. Use these insights to improve and build upon your strategy.
Pro Tip
High-valued loyal customers will often come back to leave reviews about their experience. Showcase these testimonials and reviews on your site or social media platforms as a way to use the power of word-of-mouth marketing and to celebrate those customers.
If you’re ready to go straight into an advanced loyalty marketing strategy, consider developing a loyalty marketing program. This will take most of the manual work off your hands if you use an out-of-the-box solution to build upon, as these already have built-in customer journeys and points structures ready to be customised.
According to WordStream.com, Sephora receives 80% of their transactions through their Beauty Insiders Program. Top that with personalized offers and great customer service and you have a recipe for a successful loyalty marketing strategy. Therefore, it will be a good idea to enhance the opportunity to transact within your own brand’s environment by adding payment options to your loyalty program.
Summary: Develop and Implement Your Own Loyalty Strategy
“Personalization doesn’t need to be complex. Loyalty marketers just need to do it and not let striving for perfection get in the way of getting started.” – Scott Robinson, VP, Design & Strategy at Bond.
In loyalty marketing, this can look like personalized recommendations, personalized storefronts, rewards on products you regularly buy, and cross-promotion between products based on your shopping history and lifestyle choices.
Starbucks is a great example of personalization in loyalty marketing with their My Starbucks Rewards program. Customers are rewarded with customized offers based on their purchase history.
In the 2019 Loyalty Report by Bond, 53% of loyalty rewards program members said they were interested in using game mechanics.
Think of simple daily challenges, games, badges, rewards for engagement, quizzes, or progress tracking – which work well for health or education products.
Strategic loyalty partnerships are a cost-effective way of broadening your loyalty perks and tapping into combined larger customer bases.
It makes perfect sense for brands to combine their efforts and extend the reach for both brands by offering complimentary experiences and rewards. Look at how airlines often partner with car rentals and hotel brands to retain regular business travelers.
“As smart home devices continue to grow in popularity and use, finding new ways to engage with consumers by leveraging voice as a channel will become a must-have for marketing initiatives, including loyalty”
Hyperlocal loyalty marketing allows you to target audiences with push notifications based on their location, whether it’s within a shopping mall, near a restaurant, or along a popular wine route for example. Marketers can “geofence” their content to only reach a specific group of people in that area.
Going forwards, we’ll be seeing mobile loyalty rewards programs ramp up their local experiences to capitalize on this trend.
With the emergence of voice assistants such as Google Home, Alexa, Bixby, and others, voice search will form a big part of the shopper experience. This could lead to great opportunities to integrate this with your loyalty marketing strategy.
Summary: Loyalty Marketing Trends to Look Out For
Personalization, Gamification, Partnerships, Localization and Voice Search are growing trends to look out for in loyalty marketing.
(Credit to Fundera )
TLDR? 11 Ways to Make Your Customers Love You:
Loyalty marketing focuses on growing and strengthening existing customer relationships within a business through various types of incentives. The primary aim is to grow the volume of loyal customers, by rewarding regular patronage. While marketers often focus on customer acquisition and growth, in most cases it is the existing customers that will more likely return and increase spending, if there are worthwhile incentives or rewards. These incentives can include any type of loyalty reward, such as a point system, discounts, coupons etc.
Loyalty status in marketing assesses the degree to which a customer will return to the same brand, from the same manufacturers, rather than going to an alternative brand. Each status is based on four different loyalty categories:
• Hard-core loyal- these customers show a strong desire of loyalty to one brand and will only purchase products or services from one particular brand. They tend to exhibit a strong sense of pride in one brand.
• Split loyal- these are customers who show loyalty to two or three brands at one time.
• Shifting loyal- these customers tend to shift from one brand to another. This can occur for a number of different reasons, but generally if they are not satisfied with a particular purchase from one brand they will shift to another.
• Switchers- these are customers who do not show loyalty to any particular brand, but purely make purchasers based on prices and availability.
A loyalty marketing program is a marketing strategy or plan of action implemented, in order to grow and retain existing customers. A loyalty program will typically assess the loyalty status of existing customers and see what steps could be taken in order to improve customer retention and to attract more loyal customers. For instance, a loyalty program can implement some of the following strategies:
1. Include customer feedback- this can bring about some great opportunities for growth and development.
2. Celebrate loyal customers on social media platforms
3. Implement and incentivize a loyalty rewards program- identify what type of rewards would mean the most to your customers.
4. Encourage loyal customers to share your product/service through a referral program.
Level up your customer loyalty with gamification: https://postfunnel.com/level-up-your-customer-loyalty-with-gamification/
7 Biggest trends driving customer loyalty: https://marketingland.com/7-biggest-trends-driving-customer-loyalty-232518
Customer loyalty programs: https://blog.hubspot.com/service/customer-loyalty-program
Loyalty programs for low frequency purchase items: https://www.annexcloud.com/blog/loyalty-program-for-low-purchase-frequency-goods/
What does customer loyalty really look like: https://365retail.co.uk/what-does-a-loyal-customer-look-like/
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