Editor's Note: Tips for Improving the Effectiveness of Loyalty Programs
Customer loyalty is increasingly sought by retailers and brands in today's challenged and hypercompetitive consumer landscape. However, attaining that loyalty is easier said than done. Here's some data to back that up:
- two-thirds of consumers are open to switching brands if a competitor offers a better experience;
- a third of consumers will abandon a brand if it fails to create a personalized experience; and
- the customer retention rate for the retail industry averages 63 percent, indicating there’s plenty of room for improvement for merchants.
With this data in mind, Total Retail decided to address the topic of customer loyalty, and more specifically through the lens of retailers' loyalty programs, for its newest research report, Tips for Boosting Loyalty Program Success: How to Acquire, Retain, and Engage Your Customers.
Not surprisingly, loyal customers are retailers’ most valuable customers. According to the 2022 Customer Loyalty Data Study from ebbo, 67 percent of consumers say they purchase from their favorite brands at least once a month. And they spend more on those purchases, too. Loyalty program members have a 40 percent higher average annual spend than non-members, and they make repeat purchases 28 percent more often than non-members.
Furthermore, rising online customer acquisition costs are increasing the pressure on retailers to convert one-time customers into loyal, repeat purchasers. If a customer acquired online doesn’t come back to make a second purchase, in most cases the retailer is losing money on that initial transaction.
You can see why customer retention is so critical to the future success of a retail organization. Which is why it's so important that retailers not only have a loyalty program, but have one that effectively engages customers throughout their relationship with the brand.
As such, the report offers tips across three distinct components to an effective loyalty program:
- acquiring members;
- engaging members; and
- executing upon the program's offerings.
To give you a sneak peek of the valuable tips that the report offers, I've shared a few of them below.
- Incorporate loyalty amplifiers to get customers to enroll in your program. For example, chance-to-win promos, rebates, special offers, etc., can be leveraged to boost loyalty program membership rates. Consider that 85 percent of consumers said they would join a brand’s loyalty program to receive a rebate or a gift with a purchase.
- Think beyond just transactions when rewarding customers. Use incentives such as rewards, special offers, etc., to get customers to take desired actions that benefit your brand in some way. For example, reward them for signing up for your email and/or SMS program, posting a customer review, watching a product video, posting on social media, etc.
- Make your loyalty program omnichannel, easily discoverable, and clearly defined. Consumers’ shopping experiences are nonlinear; they’re going back and forth between channels during their purchase journeys. Retailers must design their loyalty programs with this consumer behavior in mind. For example, allow for members to earn and redeem loyalty benefits across channels. Furthermore, make it easy to find loyalty program information across customer touchpoints, most notably your website and mobile app.
For more best practices like these, download the full report, Tips for Boosting Loyalty Program Success: How to Acquire, Retain, and Engage Your Customers.
Related story: Tips for Boosting Loyalty Program Success
Joe Keenan is the executive editor of Total Retail. Joe has more than 10 years experience covering the retail industry, and enjoys profiling innovative companies and people in the space.