In today’s fast-changing world, marketers need to re-evaluate how to reach out to and engage their audiences. They can do this through a customer loyalty program. Not only with the program help to engage their audience, but it will allow organizations to collect a wealth of zero and first-party data. This data can then lead the marketers and organization as a whole toward enhanced customer retention efforts by creating individualized communications and experiences.
Table of Contents
Utilizing RFM Analysis for Individualized Messaging
You’re probably familiar with the concept of RFM, which identifies customers based on recency, frequency, and monetary value criteria. These three variables are often standards for pinpointing where a customer is in their journey with your brand. Through RFM tactics, you can break your shoppers down into categories like the following, for example:
Recency: Purchased in the past 0-6 months, purchased in the past 6-12 months, purchased in past 12-24 months, etc.
Frequency: Purchased more than 6 times, purchased 2-5 times, purchased once, etc.
Monetary: Purchase amount or total spend with your brand: $500, $1000, etc annually
The Annex Cloud Loyalty Experience Platform has RFM calculations and a dashboard to make it easy for you to identify your Champions and those about to hibernate. With Annex Cloud you can adjust your criteria to make the most sense for your business.
Combine All Data to Be Data Led
Combining all collected data: Customer profile, transaction history, social behavior, etc. through a loyalty program allows for a 100% match rate on data collected across the customer journey. Now you can use this data to lead your marketing efforts; individualizing experiences at every touchpoint across the customer journey. Annex Cloud, the market leader in successfully implementing loyalty programs for over a decade, recommends brands to utilize an RFM to create and structure loyalty program marketing strategy as best practice. This not only makes the loyalty rewards program more engaging but also makes your communications individualized to each customer. One size fits all approach is a thing of the past and customers are demanding more.
For a while now, customer loyalty and advocate marketing platforms have enabled marketers to pinpoint users based demographic data as well as on actions or variables including:
- When a user has successfully referred a friend
- When a user has expiring loyalty points
- When a user’s product review is approved
When customer loyalty and advocate marketing data like this is supplemented with RFM data, brands also have the ability to pinpoint users based on a whole new dimension of information. Enhanced data sets can now include information regarding:
- Customer loyalty and advocate marketing data
- Location of purchase or delivery
- Type of product purchased
- Interactions with the brand in-store, online, in-app, or on social
- Any data imported from a client’s CRM, ERP, ESP, or personalization engine, among other third-party data sources
Today, brands are adopting RFM to divide their customers into multiple cohorts. As you can see in the picture, cohorts are scored across their recency and frequency of purchase from Lost customers all the way through to Champions that are frequent and high AOV buyers. Examples include:
- Champions: Frequent and high AOV buyers
- Loyal Customers: Customers that make repeat purchases
- Promising: Customers that are projected to make repeat purchases
- New: New buyers that have been acquired recently
- Abandoned Checkouts: Customers who added products to the cart but did not end up purchasing
- Warm Leads Cold Leads: Prospects that are projected to purchase in the future
- Need Attention: Customers could be lost if they are not engaged
- Based on past purchases: Past buyers that have purchased over 6-12 months ago but have potential to purchase in the future, if engaged
- Shouldn’t Lose: Critical customers that are on the verge of being lost
- Sleepers: Dormant customers that have registered on the website but have not taken any action or made purchases
- Lost: Customers that haven’t engaged, purchased, or been active over 12-24 months.
Once you’ve pinpointed which segments you want to engage, you have a bevy of options to entice them. Instead of just sending some emails, perhaps with a discount code or two, you can use the data to deliver individualized messages and experiences to each customer. For example:
- Give your strongest advocates extra “surprise and delight” benefits like points, rewards and perks.
- Challenge those on the threshold of becoming brand advocates to refer friends for extra benefits
- Save your most tempting promotions for those in the greatest danger of falling out of reach
Instead of merely having tactics like these as ideas on your whiteboard, you can easily put them into action with campaigns. Campaigns let you customize targeted offers within your customer loyalty program. More tangible examples include:
- Double points for people who try a new product or service offering
- “Surprise and delight” points for customers who’ve responded to multiple communications.
Between campaigns for special promotional actions, targeted marketing emails, rewarding special actions for a limited time, and other types of outreach, it only makes sense to have your loyalty program fully integrated with your advocate marketing platform.
The benefits of such targeted segmentation and actions are clear. 73% of consumers are annoyed when they see irrelevant content, and 75% recognize and appreciate it when businesses target messaging and offers for them.
The tangible outcomes from presenting the right content and offers to the right group of shoppers include:
- Heightened engagement
- Increased customer acquisition
- Dramatically improved conversion
- Boosts in average order value
- Greater purchase frequency and customer lifetime value
- Augmented ROI
Moreover, leaders in enhanced personalization and segmentation are 26% more profitable overall, according to Adobe.
Deliver Individualized Experiences for Success
It’s pointless to have any of these special segmentation and engagement solutions if you cannot measure their effectiveness. Marketers who are taking advantage of integrated RFM, customer loyalty, and advocate marketing segmentation can also take advantage of unified reporting between the three and will be armed with the knowledge of how well their campaigns are performing.
Annex Cloud customer loyalty platform encompasses all the above features in the platform as well as the strategy when implementing loyalty programs for varying needs of brands. Increased use of individualization tactics like adopting a data-led approach can only enhance customer engagement, increased customer retention, and lifetime value.