Building Customer Loyalty: Top 5 Actions and Considerations
Author: Julian Marchiaro
June 1, 2021
Building an effective customer loyalty program requires far more than rewarding purchases with points. Sure, points are a bonus and can increase stickiness. But without ensuring great customer experiences, a unique value proposition, and data-driven agility, points and rewards can’t buy sustained customer loyalty.
Consistency, trust, frictionless experiences across online and offline touchpoints and channels are key to driving behavioral and emotional loyalty – and emotional loyalty can pay a huge dividend. Consumers spend twice as much or more on brands that stir emotional engagement. In fact, research shows that emotional engagement could drive a 5% uplift in annual revenue.
Investing in loyalty and customer experience represents an opportunity to drive acquisition, build advocacy and referrals, increase customer engagement with immersive experiences, and ultimately grow customer lifetime value.
Most brands employ some form of customer engagement or loyalty program, and while simple initiatives once may have been enough to drive engagement, today, standing out requires an original and unique experience. You must look for creative ways to reward your customers such as introducing new ways to earn points, offering must-have perks based on the customer’s loyalty status. Most importantly, stay focused on integrating your loyalty program into every touchpoint and across all channels to deliver a seamless customer experience.
Successfully going through this transformation requires an understanding of the deeper motivations behind customer loyalty. It’s important to take the following five actions:
- Prioritize customer loyalty as a key business objective.
- Invest in research to deepen your understanding beyond the makeup of your customer base, and identify motivations, triggers, rewards, competitors.
- Accelerate cross-departmental collaboration and the sharing of data and align on communication objectives.
- Invest in tools and projects that facilitate the activation of data to drive the desired business outcomes.
- Build an experienced team that understands how to drive loyalty or partner with an agency that understand your unique needs.
Rome wasn’t built in a day: Agile iterative approach
While there are many moving parts to a customer loyalty program, nothing should prevent you from starting now. No amount of research will empower you to design the perfect loyalty program, but an agile iterative approach will allow you to use your customers’ feedback, behavior, and engagement to guide you immediately – and to pivot when required.
To enable this process one factor to consider is your ability to scale your program and add extra features when you need them or when data points to an opportunity. It’s also key to consider what building out your loyalty program means in terms of internal resources when selecting the right technology. There are different options when it comes to implementing and integrating the technology necessary to develop and manage a program:
- Loyalty Management Service Providers (LMSPs) – Horizontally integrated set of technologies and services.
- Customer Data Platforms (CDPs) – Open data platform to support loyalty as well as personalization.
- Pure-play solutions – Focused, standalone solutions.
If your company has a development team to build a custom solution internally, you’ll need to consider the direct and indirect costs, including managing the solution after it is built. In most cases, stitching pure-play solutions together, stretching CDP capabilities, or identifying a loyalty management service provider that meets your requirements will offer the fastest and least risky path to standing up your program. Relying on your technology partners and involving them in these conversations early is the best way to quickly define a strategy and roadmap.
Teaming on loyalty is always smart. Here at LiveArea, we’ve partnered with Yotpo, a best-in-class loyalty solution provider. This has allowed us to develop unique solutions working with great technologies that empower our clients and deliver on ROI. In fact, we recently won Yotpo’s excellence award in Europe for the work on Nuun+. We started from a deep dive on analytics and data to define together a program that would deliver on business objectives. We leveraged Yotpo’s Loyalty and Referrals solutions to create a tiered, points-based program that rewards repeat purchases and encourages referrals.
Finding the right technology and architecture
Loyalty management technologies increasingly overlap with customer data platforms, marketing automation, as well as personalization platforms. Finding the right solution can be challenging in such a crowded space, which is why an increasing number of clients tap us for platform evaluation projects to help navigate the complexity and to identify simple, efficient solutions.
While the capabilities are evolving, customers’ expectations are as well, with most members wanting to connect through new technologies, such as: VR, Chatbots, Wearables, AR/VR, Biometrics. This forces us to think holistically in terms of customer experience and represents a unique opportunity to innovate.
Top 5 considerations when you are building a customer loyalty program
- Loyalty Management Platform vs. Focused Pure-Play vs. CDP
- Will the solution you selected empower business users?
- Does it integrate with your existing technology stack?
- Will it be easy to expand activation across channels and use cases?
- Will you have to purchase additional licenses? Add-ons?
- What are your customers motivations, triggers, choice factors, rewards?
- What keeps your loyal customer coming back?
- What actions, behaviors are you trying to encourage?
- What are creative ways you can reward them?
- What are you competitors already doing and how can you stand out?
- What is the best structure?
- Point-based? Spend-based? Tiered Based? Hybrid?
- Which metrics are you going to track and evaluate?
- A truly successful loyalty program goes beyond rewarding customers, it delivers an experience that builds an emotional and behavioral connection.
- The key to success is in the groundwork that goes into ideating a unique experience.
- Before you can start thinking about designing your loyalty program you need to align internally and define who your loyal customers are, what motivates them, what keeps them coming back, and brainstorm creative ways to reward them, connect with them, and spark conversations.
- Start now, you’ll never have all the answers. Your marketing platform or CDP’s capabilities can likely be stretched, and you can start learning what works and doesn’t. Sending a thank you note, referencing a customer’s history, rewarding repeat purchases, driving personalization can go a long way in building trust, loyalty, and emotional engagement.
- Involve your technology partners early, ask for help when evaluating solutions and technologies. Whether you are building a custom solution, stitching together systems, or investing in a SaaS platform it is crucial you ensure compatibility with your existing stack, as well as scalability and expansiveness.
Manager, Email Marketing