In an increasingly competitive market, businesses must not only fight to attract customers, but to also retain them. And Millennials, who are quicker to switch providers and brands than previous generations, are making marketers’ jobs even harder.
Traditional tactics are failing to drive brand loyalty.
Most of us are familiar with customer loyalty programs, which reward customers who repeatedly buy from a brand. According to Experian, more than 90 percent of companies employ some form of customer engagement or loyalty program. However, these programs must be dynamic and adapt to shifting demographics and expectations.
Here are some tips on how you can start or reinvigorate an existing loyalty program.
1. Work across departments to create worthwhile incentives.
Typical programs allow customers to redeem loyalty points for discounts, free products, rewards, or insider perks. Create a cross-department team to craft experiences and innovative product features you can offer as rewards. Remember, your rewards should align with your company values. For example, Sephora allows shoppers to use their loyalty points to donate to the National Black Justice Coalition.
2. Understand the needs and motivations of your customers.
For example, if you’re targeting a Millennial audience, consider developing rewards that unlock access to exclusive offers, innovative experiences, or personalized products.
3. Stop cutting into your margins.
Businesses spend billions of dollars on loyalty rewards. Don’t allow your loyalty program to dilute your sale price or drain your resources. Instead, identify value-added experiences that you can offer customers without compromising profitability. For example, early access to new products and sales are perks that don’t cost you anything.
4. Focus on retaining the right customers.
According to Accenture, members of loyalty programs generate between 12 and 18 percent incremental revenue growth per year than non-members. If your loyalty program isn’t producing incremental revenue at this rate, it’s likely because you’re not targeting the right customers. Gain a higher ROI on your loyalty program by focusing on retaining your most profitable customers.
5. Gamify & integrate.
Are you a Starbucks addict? If so, you’ve probably used Starbucks Rewards. By integrating the rewards system into the app, Starbucks made collecting rewards seamless and fun. In addition, by centralizing transactions and rewards through the app, Starbucks can use customer behavior and preference to inform future business decisions. Use customer insights from your program to support new product development and other essential business functions.
6. Don’t start a program without a long-term commitment.
Once launched, loyalty programs are difficult and time-consuming to shut down. Without attention and intention, they become expenses rather than investments. Ensure that you have executive buy-in and the funds to support a program in the long term.
Executed well, a loyalty program can increase customer lifetime value and satisfaction; it can also create a differentiator your competitors can’t easily mimic. Use this opportunity to excite your customers and drive sales and loyalty.