In this Cin7 Masterclass, Marsello CRO Rory Moss dives into the how-to of successful loyalty marketing.
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.
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.
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?
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.
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.
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?
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.
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.
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.
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?
Too many earn rules result in a term called ‘loyalty confusion’, where your customers don’t understand what they get in return.
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.
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!
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.
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