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Years ago, to create successful customer loyalty programs, companies would just enroll customers and give them some discounts and maybe occasional free shipping. But today, customers have become more sophisticated and demanding. They expect a higher level of personalization and engagement that recognizes who they are and what they want. And they also expect brands to listen to them. In other words, today’s consumers increasingly want to be both seen and heard.
Direct-to-consumer (D2C) brands, which are enjoying phenomenal growth, are at the forefront of personalizing their customer loyalty programs, successfully building customer loyalty through interactions in multiple channels. Larger companies have noted the growth of D2C brands and want in on the action. For example, Nike’s D2C sales were $6.6 billion in 2015 but are expected to be $16 billion by 2020.
But it’s not easy to build your brand with D2C relationships. You need to deeply analyze your customer relationships and strategically determine the best ways to manage them. Let’s look at some basics of customer loyalty programs today.
Who exactly are we referring to when we talk about loyal customers? Who do you want to reward? Loyal customers are often defined as those who make repeat purchases, perhaps those who come back to purchase five times or more. But 38% of consumers say what they dislike most about many customer loyalty programs is that the only way to earn points is through making purchases. Although you should definitely be accounting for the people who purchase repeatedly AND those who make larger, less frequent purchases, I’d recommend exploring other ways to determine customer loyalty.
Beyond purchases, customers engaging with your brand in the following ways should also be considered loyalists:
Sure, look at what other businesses are doing with their loyalty programs, but you won’t achieve ultimate customer loyalty by just copying them. It’s all about connecting with YOUR customers. Develop a customer loyalty program that’s tailored to your audience. Here are some possibilities.
The usual — discounts and free shipping: No doubt about it, many customers will always appreciate discounts and free shipping. But you can engage your customers on a more personal, emotional level by getting a little creative.
Gifts: Earning points that can be redeemed for gifts is part of many customer loyalty programs. 45.8% of consumers expect this in a customer loyalty program. You might offer products not available to everyone, such as creating a special color for your VIPs. The more you can personalize gifts to your VIPs, the more loyalty you’re likely to gain.
Special access: Something that customers love and won’t cost you anything is granting your VIPs exclusive access. Give them first dibs on products going on sale. Invite them to VIP-only online or offline events.
Added convenience: If you can save your VIP customers time or grant them other conveniences, you’ll undoubtedly increase their loyalty. This might be a helpline with no waiting. In a physical setting, it might be a fast VIP check-out line, such as those commonly used by airlines and car rental agencies.
Customer loyalty programs enable companies to recognize customers who are already loyal to one or more of their products and amp that loyalty up even higher. In a recent survey, 59.5% of consumers said they would like to join a customer loyalty program of a brand to which they’re already loyal. They want to become more deeply involved with your brand, not just get discounts. 39.4% of consumers are willing to pay more for a brand they love.
Some brands, such as Apple, even achieve cult status among their followers. For example, at one Apple conference, people vied for the opportunity to spend their time being interviewed about how they loved their Macs. It was this kind of emotional attachment that enabled Apple to successfully expand into a variety of niches and take a base of loyal customers with them. Extreme brand loyalty has also allowed Amazon to grow into much broader areas without losing their customers or their credibility.
Some loyalty programs don’t let their customers use loyalty points across channels. In other words, they only let online buyers use their points online and not in brick and mortar stores or vice versa. This feels stingy to customers and can set back any loyalty you might have gained with your points program.
Your VIP customers want both respect and personalization. Give them both by asking for their opinions in surveys and giving incentives for reviews.
Partnering with another brand is one way some brands gain a quick infusion of loyal customers. However, you must be sure your partner’s brand complements your own. You could offer incentives from other brands for members of your customer loyalty program. Or sometimes a store will have a pop-up partner store on their premises, a store within a store. The lesser-known, newer brand might gain from the name recognition of their larger partner, and the older brand might gain a trendy buzz factor from a startup partner.
There are many ways to partner with other brands, but they all demand strategy and rigorous follow-up analytics. Some retailers, such as Footlocker, integrated a Nike app into their brick and mortar stores. Shoppers could use the app to scan products and get product information, win free merchandise, and get access to exclusive releases.
You may be wondering if customer loyalty programs are so great, then why doesn’t Amazon have one? To get increased access, a free new book every month, free shipping, and other benefits, you must pay for Amazon Prime. Yet Amazon has very high brand loyalty. How do they do it? They do it by putting the customer first in every aspect of their organization. Every decision made involves strategy about how it'll impact customers. Gaining customer loyalty isn’t just following a template. It’s considering the customer first in all your decision making.
Originally published on January 30th, 2020, last updated on August 16th, 2022.