Turbocharging Loyalty Programs With Social Media
As access to product price comparisons has become quicker and easier than ever, customer loyalty has increasingly become a challenge for retailers. Although traditional loyalty programs that reward spending may help retain customers, there's an even better way to combat this issue — engaging customers and rewarding both spending and influential behaviors.
The basis of old school loyalty programs is simple: award points for purchases and allow customers to turn those points into rewards. The goals of these programs include increased purchase frequency and average order value, ultimately leading to increased customer lifetime value.
While this method has proven to be valuable, there's a newer and broader way of thinking about the worth of individual customers. Some customers are good at talking, which may actually create more value by influencing others rather than through their own personal purchases. All consumers can potentially become brand ambassadors. By encouraging a talking social loyalty program, you can increase the total value of each customer relationship.
Social loyalty programs make it easy for customers to engage in such activities online, and there are many socially oriented customer actions which add value and should be encouraged. These include the following:
- writing reviews;
- participating in an online community;
- answering questions of other customers;
- tweeting about a purchase;
- commenting about a shopping experience on Facebook;
- uploading a product photo on Pinterest;
- sharing a deal with a friend via email;
- checking in to a brick-and-mortar store via foursquare; and
- downloading an app.
Traditional rewards programs offer financial incentives. This can be effective, but also can be augmented with social motivators. Social motivators include badges, leaderboards and public mentions. Badges offer visible recognition of accomplishing a specific goal. Leaderboards can highlight top influencers (based on referrals), the most helpful (based on answers) and the most engaged (based on overall program participation). Leaderboards introduce an element of competition among customers. Public mentions may include featuring a "customer of the month" or specific contributions such as the best review or the most insightful feedback.
Encouraging a broader set of customer interactions combined with social motivators promotes customer engagement. Increasing the number of customer touchpoints has a stimulating effect. Higher engagement increases loyalty, which in turn can lead to higher engagement. It's a win-win, positive feedback loop. In addition, social chatter and generated buzz have a positive brand amplification impact. Last but not least, by pulling their circle of friends into a brand conversation, customers drive referrals and create a very cost-effective acquisition channel.
The increased value offered by social loyalty programs is very compelling. They're poised to become the norm, overtaking traditional "points for purchases" programs. By incorporating social elements into your loyalty program, you can influence not only spending behavior but also brand advocacy. Using social motivators in addition to traditional financial motivators can amplify results at a low cost. Incorporating referral elements adds acquisition to traditional retention-oriented program metrics. The bottom line: Social loyalty programs can increase total customer value, impacting not only how much they spend on an individual basis but also how much they influence others.
Bob Tekiela is co-founder and CTO of 500friends, the next generation of loyalty marketing with its white-label social loyalty software-as-a-service platform LoyaltyPlus. Bob can be reached at email@example.com.