Loyalty programs have been around for decades and span various industries – from airlines to retail and beyond. While these programs have evolved in some ways, many of them still stick to a standard rewards system that’s consistent across the whole customer base. But with personalization built into so many of our marketing strategies, brands are starting the shift towards a more customized experience for their best customers.
Brand Loyalty, Retention & LTV
Acquisition costs are rising, making retention a key focus for marketers. But in our 2023 benchmarking guide, we found that across industries, brands’ retention rates actually dropped compared to the year prior. With such emphasis on retention, why are we seeing a decline in retention rates?
In a recent report by Yotpo, they surveyed global customers to answer top questions about the state of customer retention & loyalty. The report states, “Consumers made it clear that customer loyalty and retention are harder to win with cheap tricks and gimmicks, like overgeneralized messages and lackluster loyalty perks.” Further, they say that “Over 50% of global respondents said a loyalty program would make them continue purchasing from a brand, topping even good customer service (36.5%) and positive on-site search experiences (35.1%).”
It’s clear that loyalty programs are important, and generalized mass messages aren’t going to sway today’s customers – who are already overwhelmed each day with messages from hundreds of brands. Rather, these programs need to speak to each individual customer. After all, if Sophia and Henry have different buying habits, why should they receive the same perks – some of which don’t resonate? Creating personalized VIP moments will keep buyers engaged with your brand and boost loyalty, retention and LTV – the ultimate win for your brand’s profitability.
Implementing a Successful Personalized Loyalty Program
Utilize first-party purchase metrics and third-party demographic data
The best way to learn about your customers is through your most valuable marketing asset – your first-party data. This includes information that they’ve provided to you – like email address, name, mailing address, purchase history etc. However, this information alone doesn’t give you the full picture of who they are. By enhancing that dataset with third-party attributes, you’ll be able to gain an understanding of what their interests are, if they’ve previously purchased a product in your vertical, their age, household income, and hundreds of other data points. This information can be leveraged to segment your customers in a more advanced way and provide an individualized customer experience.
Tailor your rewards
A personalized loyalty program can quickly get derailed if it doesn’t offer the “Three Rs” of customer loyalty: rewards, relevance and recognition. Easier said than done, right? With the right software in place, you can quickly determine the most appropriate rewards for each customer segment. You can segment and personalize in several ways, including:
- Based on brand engagement
The most popular approach to loyalty is offering rewards points for each dollar spent with your brand, which can be redeemed for discounts on any item, free products, etc. Oftentimes, points can also be earned for specific actions, like initial signup to the loyalty program, social media follows, reviews, or birthday points. These programs can be tiered to add an element of gamification. Who isn’t guilty of spending just a little bit more to get to the next tier – and access better rewards?
- Based on product interest
Which products has a customer purchased in the past? What are they likely to purchase next? You can tailor exclusive discounts to loyalty members based on products or product categories that they are likely to purchase in – or invite them to exclusive/early access sales that are within their categories of interest. If you’re offering rewards points, you can even offer double points on the products you know they’ll love to encourage additional purchases.
- Based on demographic
Let’s face it, different generations have different preferences. You may find that your Baby Boomers are most incentivized by product discounts, Millennials by free shipping, and Gen Z by exclusive products that are only available to loyalty customers. Whatever reward they value most, all customers want to feel that they are understood – and that includes meeting them where they’re at when it comes to perks.
Make your rewards worthwhile
However you set up your loyalty program, be sure to make the rewards something customers will get excited about. It’s unlikely that a customer will become a repeat purchaser based on something like a free sample alone. Each brand – and their customers – are unique. Take the time to tap into what matters most to them to create customized experiences that have meaningful impact – both for the customer and for your brand.
Want to access the info you need to build a personalized loyalty experience for your customers? Connect with us today!