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Watch the Loyalty Marketing Masterclass


In this Cin7 Masterclass, Marsello CRO Rory Moss dives into the how-to of successful loyalty marketing.



Quick Links:


What is customer loyalty?


Are you part of a loyalty program? Your answer is probably “yes”. But does it make you more loyal to that brand? According to CRO Rory Moss, it actually doesn’t.

Customer loyalty is all about customer relationships with your business. The positive interactions you have with customers every day and the relationships those interactions build create measurable value that you can continue to grow.

And customer loyalty is not necessarily transactional; it’s about the experience your customer has when they walk into your store, shop online, read an email, or have any other interaction with your brand.


For a loyalty program to work...

      • Your product/offering must be consistent.

      • Your product/offering must be valuable.

You don’t need a loyalty program to differentiate and compete.

You do need a deeper understanding of your customer base and a reason for your customers to keep coming back.


Marsello infographic showing that customers are more likely to purchase when brands offer personalised experiences


Why deploy a loyalty or rewards program?


There are lots of ways to give customers a good experience and keep them coming back - loyalty marketing is just one. Before you make the call, make sure a loyalty program is right for you and your business objectives.

So, why would you choose to deploy a loyalty program?

      • Gain a deeper understanding of your customer base to augment your marketing mix. The data you collect will empower your marketing team to deliver more personalized, targeted customer experiences.
      • Mitigate price perception and influence perceived value. Smaller brands can’t compete with more prominent enterprise brands on price alone. Loyalty programs are one way to attract customers from your larger competitors.
      • Formation of customer ‘clubs’ which reflect your brand values. Your loyalty program is an extension of your brand. You can tailor your rewards to your customer and personalize automations to augment your brand experience.
      • Steal market share from existing programs. For example, fuel retailers use loyalty marketing to attract customers from competitors. Fuel retailers don’t make their money on fuel, but they do make money on people walking in and buying products in-store.
      • Enhance the customer experience with personalization. Birthday messages, post-purchase automations, data-driven product recommendations, merge tags within campaigns – adding personalization to your marketing will improve your customer’s experience with your brand and help you build long-lasting relationships.
      • Surprise and ‘delight’ with personalized moments. Keep your rewards program up-to-date. Don’t do one big launch then set and forget it – plan campaigns, add new rewards or run competitions. Give your customers new things to engage with (see more ideas in the checklist below).

Ultimately, data is all about retention. But smaller retailers can’t shell out for expensive coalitions or big agency-led research projects. Loyalty programs make it much cheaper and easier to get that data yourself.


Why focus on repeat customers?

Marsello infographic showing how customer loyalty leads to a disproportionate increase in revenue

Did you know 61% of retailers cite customer retention as their biggest obstacle, and a 5% increase in customer loyalty can increase the average profit per customer by 25% – 100%? (Source: Invespcro.com)

Developing customer loyalty is critical to long-term customer retention and loyalty programs can be a great marketing tool to really strengthen those feelings of brand loyalty.


Checklist: How to develop a successful loyalty program


So what questions do you need to be asking and what steps do you need to take to help you develop a loyalty program that your customers love and that sees long-term success?


Ask: do I need a loyalty program?

  • Analyze your NPS or CSAT scoring. Are customers satisfied with your offering? 
  • Would deploying a rewards program diminish your brand or enhance the experience and value proposition? 
  • Understand your customer’s needs, their values and ask them about their rewards preferences. 

Any brand can deploy a rewards system, but it needs to complement your offering to be successful. Make sure you know your problem and make sure loyalty marketing is the right solution. Sometimes, it might be a marketing problem; other times it could be a problem with product-market fit. Deploying loyalty marketing is not always the right solution.


Study your competitors


Look towards your competition, and distinguish whether loyalty tactics would steal market share – a common tactic in Fuel Retail. 

If all of your top competitors have implemented loyalty programs, this could be a good indication that they believe loyalty marketing will increase their market share. Of course, that does not necessarily mean it’s right for your brand! 

Alternatively, if you can’t see any of your competitors doing it, maybe there’s a reason why. Again, this is not conclusive evidence – your brand could be ahead of the curve, which could be a very rewarding opportunity to increase your market share.


Do your loyalty platform research


Custom-built loyalty marketing tech can be costly. While some brands have implemented custom-built programs really well (for example, Mecca’s Beauty Loop), we recommend choosing a platform that integrates with both your POS and eCommerce platforms and enables easy set-up straight off the bat.

Ensure your chosen platform works across your tech stack and don’t invest in programs that don’t scale with your customer database growth. Make sure you provide an omnichannel experience – customers expect to redeem online.


Set up a pilot store


Before any go-live, ensure you’ve set up a single site to test and measure your loyalty program success. Are customers responding to your program and the points values you’ve set?


Keep it simple


Too many earn rules result in a term called ‘loyalty confusion’, where your customers don’t understand what they get in return.


Look at your data and adjust your program accordingly


Once you’re transacting and issuing points, measure sign-up rates and ‘point breakage’ (the % of points earned and spent) monthly. Your point breakage rate will tell you pretty quickly whether or not the rewards program is working.

If your customers aren’t spending their points, they’re not engaging in your program. Customer engagement is essential if you want to build long-term customer relationships that result in growth.


Start small and introduce new campaigns quarterly


Keep your program fresh by introducing new rewards, double points days, or VIP tiers. You want to ensure your marketing team has a constant stream of new things to shout about!


How to measure the success of your loyalty program

      • Customer Feedback
        Are your customers engaging with your loyalty program?
      • Point Breakage
        Are customers spending their points? Track your Point Breakage rate monthly.
      • Loyalty program Return on Investment (ROI)
        Cost of the loyalty program vs. increased revenue since implementation.
      • Customer Lifetime Value (CLV)
        How much, on average, your customers are worth to your business throughout their relationship with your store.
      • Repurchase Rate
        The % of your customers who complete more than one purchase.
      • Average Purchase Frequency
        The average rate at which customers shop with your store.

Segment and delight customers with RFM analysis


Smart retailers use RFM analysis: Recency, Frequency, and Monetary value.

Segment your customers into different buckets – a new customer has very different needs from a regular or loyal customer. Treat each customer’s needs differently, rather than applying a standard experience in one broad stroke. Incentivize each segment to come back and reward those who do.

These days, people expect this kind of brand experience.

Illustration showing Marsello's default customer segments


Success Story: Merrell NZ 


Example of how Merrell NZ is using Marsello's Abandoned Cart automations to increase revenue


When COVID hit, Merrell NZ knew they needed to grow their eCommerce presence and encourage customer engagement. To do this, they began testing automated campaigns, one-off emails, and a detailed loyalty program that was designed to attract their in-store customers to shop online.

By ensuring their marketing changes were recognizable, appealing, and informed from customer data, they were able to grow their customer loyalty program and VIP memberships, improve conversion rates, and increase repeat purchase rates. So far, they’ve seen an ROI of 969x – for every $1 they’ve spent on their marketing initiatives, they’ve earned $969 back.

“[…] the Merrell Rewards program means a lot to us – it gives us the opportunity to link customers from our retail and web stores, work around customer retention and automate email marketing flows in a really clever way.” - Merrell NZ

Read the full story


Key takeaways

      • Deploying a loyalty program won’t lead to loyal customers, but it will help you develop loyalty program tactics.
      • Loyalty programs mitigate price perception.
      • Use personalization and automation to delight customers.
      • Be consistent across your sales channels and marketing.
      • Prioritize memorable customer experiences.
      • Start small and build on your program.

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