Successful businesses dedicate their time not only to figuring out how to attract new customers but also to retaining the ones they already have. Studies have shown that gaining a new customer is actually five to 25 times more expensive than keeping an existing one, which means that marketing dollars are often better spent nurturing your relationships with people who have already purchased from you.
Improving customer retention rates by just five percent has shown the potential to grow profits up to 95 percent, and 80 percent of a company’s future revenue comes from just 20 percent of its existing customers. Loyalty programs are one of the best ways to make sure that you are rewarding your customers and keeping them interested in your brand and products.
However, according to a study by CapGemini, a high percentage of loyalty programs are failing. Fifty-three percent of consumers stated that they abandoned at least one loyalty program within the last year. That means that companies are putting money and energy into programs that aren’t hitting the mark. The key reasons for this are:
Companies need to make changes to their programs in order to improve these numbers and leverage the full power of loyalty marketing. Let’s take a look at four things that the world’s most successful loyalty programs have in common.
One of the biggest problems with loyalty programs is that customers don’t care enough about the perks and rewards that are offered. Many programs will offer chances to earn a prize, such as a product or points toward a trip. Research shows 57 percent of customers sign up for a program to save money, so bear this in mind when choosing your reward structure.
Discounts on products, cash back, and other money-savers will compel more customers to take part in your program. To differentiate yourself completely, ensure that monetary rewards enhance your brand experience too. You can use unique rewards like custom products, exclusives and merchandise to motivate your customers to engage and interact with your brand.
Customers also remain in loyalty programs because they feel a sense of connection to a brand. According to a report published by Forrester, emotion — and an emotional connection to a brand — is a stronger driver of loyalty than factors like “ease” and “effectiveness.”
Customers are looking for a full experience rather than just a company they are purchasing from. A 2017 study found that the top five reasons customers gave for feeling a connection with a brand were all related to “caring”:
Furthermore, 89 percent of Americans are willing to switch brands in order to support a cause, and 76 percent of consumers would think more highly of a company that helps them support a cause they care about.
A great example is TOMS Passport Rewards. Members have the option to redeem points toward a charitable cause or initiative. Currently, members can redeem points for a $25 donation to help TOMS support U.S.-based after-school groups and community development programs. TOMS has found a way to make their company appeal to customers because, when they sign up, they are taking part in a bigger cause.
Another important way to connect with customers is to make sure that your program is easy to navigate on mobile. Many companies run into trouble when users have a bad experience with their mobile app or when their website isn’t fully responsive. Mobile was responsible for 64 percent of sales during Black Friday 2017. That means that in order for customers to get excited about using a program, they have to be able to easily use it on mobile. And apart from being mobile-friendly, the program needs to be interactive. Fill it with standout features and make it fun to use.
It’s also helpful to have integrations with mobile-specific features like Messenger and WhatsApp. The more seamless a user experience is, the more popular the app will be, and if they can easily share info with friends and communicate back and forth with your brand, they will be more likely to use it. Page speed optimization is also essential. Every second of delay can result in a 7 percent reduction in conversions. Make sure that your site is running without any glitches and that pages load quickly and don’t keep customers waiting.
Basing a program merely on transaction doesn’t create a feeling of connectivity among customers. You don’t want them to feel like you are simply just selling to them. It’s important to reward activities other than purchases to keep them engaged and also to further promote your brand. Activities such as writing product reviews, following your social channels, sharing your pages, completing quizzes, watching your product videos and downloading your apps are all great examples of things customers could be rewarded for.
Check out Bebe’s customer loyalty program. They do a great job of making sure the customer gets rewards for various activities, like referring friends, hashtagging photos on Instagram and Twitter, and even just visiting their website.
Loyalty programs are a fantastic way to engage customers and spread the word about your brand at the same time. Follow these four tips from the most successful loyalty programs to make sure that you are getting the most out of yours, and get in touch with a product specialist or schedule a demo to learn how Annex Cloud can help you make a major impact with your loyalty program.