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How to Create a Loyalty Marketing Program That Works

By Dave Taylor

What does it mean to be a loyal customer? Does it mean that you purchase from a brand more than once? Does it mean you have a specific brand that immediately comes to mind when you need something? Or does it mean that you’re willing to spend a few extra bucks just to support a certain brand?

It’s all of the above. Loyal customers are a commerce company’s bread and butter.

The reason customer loyalty marketing is so important is because the right loyalty program will fuel itself. Meaning it not only provides more value to your customers through rewards and incentives, but it generates a constant stream of data that can be leveraged to make constant improvements to the customer experience.

Loyalty programs help to create long-lasting relationships between brands and customers, as they enable a more personalized experience.

An effective loyalty marketing program can minimize customer churn, increase your revenue, attract new customers, engage existing customers, and improve your bottom line.

What Is Customer Loyalty Marketing?

Studies show that 57% of customers stopped buying from a company because a competitor provided a better experience.

Commerce companies are fighting for their customers’ attention every day as customers are constantly exposed to a multitude of other brands offering similar products or services. Just because a customer is showing loyal behaviors this month doesn’t mean that the same customer will be declaring their loyalty to you next month. Things change quickly— including customer churn.

Loyalty marketing includes the incentives, programs, rewards, and exclusive perks that a company offers its existing customers in order to drive desirable behaviors, increase customer retention, and keep customers engaged over time.

An effective loyalty marketing program can minimize customer churn, increase your revenue, attract new customers, engage existing customers, and improve your bottom line.

Why Your QSR Needs a Loyalty Program

Building customer loyalty is the single most important aspect of retaining business and boosting profits in the long run.

Treated Like Loyalty: The Power of Loyalty Programs

Customer expectations are higher than ever. As commerce companies exceed their customers’ expectations, they increase the bottom line for all retailers and commerce companies around the world.

There’s no shortage of companies to buy from, and your customers know this. They know that if you don’t deliver the experience they’re looking for, they have plenty of other brands vying for their attention.

When brands put energy into their existing customer base, this doesn’t go unnoticed. Customers feel appreciated, which makes them more apt to return the appreciation in the form of repeat purchases and ongoing engagement.

As reported by Small Biz Genius,

  • 75% of consumers say they favor companies that offer rewards
  • 65% of a company’s business comes from existing customers
  • Over 70% of consumers are more likely to recommend a brand if it has a good loyalty program

The numbers don’t lie. Building a quality customer loyalty program is one of the most rewarding things you can do for your business.

Loyalty marketing isn’t just the type of rewards program you offer, it’s the customer experience and the quality of engagements you deliver too. In today’s digital world, customer loyalty and mobile marketing go hand-in-hand. Customers have come to expect a personalized customer experience, optimized for their personal mobile devices.

Your brand’s ability to predict what each customer wants to purchase and when creates brand loyalty. Treating customers like the individuals that they are, and tailoring messaging and offers specifically for them is the recipe for building profitable, stickier relationships.

Couple this with a loyalty rewards program for maximum effect. With a loyalty program solution, your marketing team can create custom loyalty incentives and configure them to be delivered at critical moments in the customer’s buying journey.

As your customer interacts with your mobile app, clicks on specific products, makes transactions, and redeems offers, data is automatically generated and relayed to your marketing team in a user-friendly dashboard with data visualization tools that support complex data analysis.

The more your customer engages with your brand, the more data they generate, the more insights your team receives, and the more personalized you can make each customer’s experience.

Customer loyalty programs hit the sweet spot between innovation and personalization, as they give your brand the resources and data points you need in order to supercharge your marketing efforts and ensure an increasingly personalized experience every time your customer interacts with you.

Fortunately for commerce companies, non-cash loyalty rewards have proven to be 3x more cost-effective than discounts or cash prizes (The Aberdeen Group). You don’t have to give away free money to make your customers happy and boost overall sales.

Loyalty marketing is a fundamental part of an effective customer retention strategy. Well-developed loyalty rewards programs can be leveraged to attract new customers, make existing customers happy, and win back lost customers.

Say one of your customers goes inactive. They haven’t interacted with your brand in over a month, and customer journey analytics shows that you’re on the verge of losing them. Your marketing team may create personalized push notifications to be delivered to your inactive customers’ mobile devices, reminding them of their loyalty status:

“Hey Josh, you’re one purchase away from reaching the next tier status!”

“Don’t forget to redeem your free bagel by 10/21!”

Customers can be segmented by their level of engagement and by a number of other criteria too, so your marketing team can create relevant messages and deliver them through efficient, timely automation at critical moments in each customer’s journey.

How To Create a Loyalty Marketing Program

Simple, convenient, and frictionless are always best when it comes to customer-centric companies. Make it easy to earn rewards and redeem rewards. Don’t make your customers jump through hoops to take advantage of the incentives, or they’re likely to abandon their buying journey and leave earned points unredeemed.

Stamp cards or earn and burn points-based rewards are two effective but simple variations on loyalty programs.

Earn & burn loyalty programs use a point system to redeem or “burn” points in exchange for rewards. These rewards can be customized by your marketing team to align with your business goals, support your marketing strategies, and evolve as your strategies evolve.

You may reward customers after a number of purchases or a number of interactions in your mobile app. Points can be used to incentivize a multitude of consumer behavior, from filling out the customer profile, select purchases, and fulfillment channels.

When your customer reaches a predetermined number of points, they’re eligible to redeem a gift, a discount, an add-on, free promotion, or any other custom incentive. These incentives and rewards or perks can be delivered through automation and triggered by a specific behavior or transaction.

Use Data To Fuel Your Programs

Building customer loyalty requires access to quality data. To provide a personalized loyalty program, your marketing team needs the data that reveals each customer’s needs and desires, so you can surprise and delight your customers over and over again.

Based on each customer’s past offer redemptions, purchase history, recent behaviors, demographic information, and contextual information, your team can craft highly-personalized, relevant loyalty offers and messaging that leaves your customers no choice but to earn those points and redeem them for enticing rewards.

Customers can be segmented based on critical characteristics to enable your brand to create an experience that feels as though it was created just for that customer.

Customer Loyalty Programs: Best Practices & Strategies

Set up your loyalty programs for success with the right usability, quick and relevant rewards, and other best practices.

How Loyalty Programs Supercharge Your Marketing Strategy

Data generated through your customer loyalty programs can inform other areas of your overall marketing strategy.

Studies show that 83% of customers are willing to share more customer data if it means that they receive a more personalized experience in return.

Customer data is fundamental to creating the best possible customer experience. The majority of your customers are willing to give you the data you’re looking for if you use that data to deepen your personalization. It’s truly a win-win for your customers, your marketing team, and your overall business health.

As customer data continues to aggregate into your CRM, you can pull from this database to inform your content strategy and business goals. Our machine learning and artificial intelligence engines will also pull from this data automatically, to continue refining and optimizing your campaigns to satisfy each customer.

Satisfied customers are engaged customers, and engaged customers bring in more revenue.

Loyalty Programs Create Brand Advocates

The goal of loyalty marketing is to convert your customers all the way from new customers to brand advocates. When your mobile app demonstrates that it knows your customer, it’s listening to your customer, and it’s continuously refining the experience for your customer, trust is built.

Your customers begin to trust your offers and recommendations, and they appreciate the relevance in your messaging. If you offer your customers completely irrelevant promotions (like discounts on meat products to a vegetarian customer profile), your customer loses trust in your brand and they don’t feel like you understand what they’re all about.

When it’s obvious that your brand dedicates time, energy, and resources to its customer experience, customers are more likely to recommend your brand to their friends and family. Word-of-mouth marketing is still incredibly valuable to a company’s success, and as long as people continue to network and communicate with each other, it will always be an integral part of a powerful marketing strategy.

Invest in Loyalty To Build Long-lasting Relationships

Tapping into real customer interests and preferences and reflecting those desires in a personal way can help your brand create lasting loyalty. Instigating a positive emotional reaction from your customers goes a long way – and over time, you’ll see higher customer retention rates, repeat visits, and personal referrals to your brand.

If your brand is giving your customers what they need, they have no reason to seek out your competition. Loyal customers will continue to nurture their relationship with you if you do the same. 

To build better relationships with your customers, invest in the tools to enhance loyalty. Creating a marketing plan based on long-term retention will help continuously boost sales, improve customer experiences, and grow your brand’s footprint.