How to Create “Loyalty Love”

by: Tom Madden, Senior Vice President, Operations

These days, it seems that just about every brand has a loyalty program. Loyalty programs are recognized by smart marketers as effective ways to differentiate their brand and drive loyalty through repeat purchases or behaviors, while providing unique rewards or experiences to selected groups of loyal customers. These programs can keep you in close contact with customers who currently do or could care most about your brand, and allow you to tap their knowledge for valuable feedback and insights to keep that “brand love” going strong. Loyalty programs can drive sales, incent repeat purchases, earn a brand a greater share of wallet over other brands, and establish your brand as a product or service of choice.

Consumers see the value

If brands love loyalty programs, consumers often love them even more. Here are some insightful statistics:

  • Loyal consumers are worth up to ten times more on average, than the value of their first purchase
  • Nearly 90 percent of consumers say they want more loyalty programs
  • 83 percent of loyalty program members say those programs make them more likely to do business with that brand

Loyalty done right with smart segmenting

It’s clear that everyone loves loyalty, but not everyone does it right. Often, I talk with marketers who make the effort to build enrollment but then fail to follow up with ongoing, personalized and targeted communications to the consumer. That’s an acquisition program, not a loyalty program, and it’s missing the mark by not capitalizing on the excited consumer.

The brands that are getting it right see their programs as an opportunity to mine data and provide differentiated motivators and rewards for selected groups. One smart way to do this is to segment customer groups according to their current and potential value.  This is effective and maximizes loyalty to your brand while providing the strongest ROI on your efforts:

  • Base customers (Base): They spend a small amount with you annually, with no ability to spend more. Therefore, this group should be managed from a “maintenance” perspective.
  • Good customers (Good): These people are loyal to your brand, but you already capture your full share of wallet. Therefore, it is important to work to keep this group loyal, but also be aware at which point you are reducing your ROI.
  • High potential value (HPV): This segment spends a lot in your category, but only a small portion with you. Therefore, it is worth the extra effort (and budget) to convince them to move all their business to your brand.
  • Most valuable consumer (MVC): This segment of consumers is the Holy Grail to your brand. They are loyal to your brand and have great potential to buy more. This is the group of consumers most sought after by both you and your competitors because they can drive the greatest ROI.

Bonus tip: During enrollment or the first transaction, asking the right questions will help you better predict which of the four categories a consumers will align with, and allow you to begin marketing to them right away according to their potential value, which helps create a greater loyalty from the onset of the relationship.

Put some YA thought leadership into your loyalty program, contact me to begin the conversation. At YA, we understand how to find your most valuable customers and help them feel that “loyalty love” right away.

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