By Brian Cleary,
RedPoint Global
The
number of customers that actively use their loyalty program memberships has
decreased dramatically. According to a study by
Bond Brand Loyalty, the average customer belongs to more than 14 loyalty
programs; however, they are only active in about half of them. The lack of
activity indicates that brands struggle to remain relevant with the customers
that have opted into their loyalty program. When it comes to customer loyalty
programs, it is essential that brands individualize the content and offers so
that they remain relevant to each customer based on past purchases, activity
and preferences in order to engage their loyal customers.
A “One-Size Fits All” Approach
Loyalty
programs have a growing problem with retention, and with only 25% of
customers indicating satisfaction with the level of personalization
within their loyalty program, it isn’t difficult to see why. Customers are
quick to sign up, but quickly forget the loyalty program once they get their
initial discount, and are far quicker to unsubscribe from email correspondence
when bombarded with irrelevant offers. A recent analysis conducted by FiveStars
indicated that the probability of making an additional sale or upselling to
loyal customers is between 60%-70%, compared the 5%-20% chance of making a sale
to a new customer. Businesses aren’t just dropping the ball when they fail to
build out their customer loyalty programs, they’re losing money.
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When
it comes to the rewards they offer their customers, brands need to recognize
that one size doesn’t fit all when it comes to the rewards they offer loyal
customers. Ultimately, the brands that use this “one-size fits all” approach
are doing so at the cost of a poor customer experience. According to a recent
survey, 91%
of consumers are more likely to shop with brands that recognized and
provide personalized offers and recommendations. In order for brands to
circumvent customer loyalty program desertion, they need to focus on creating a
personalized and relevant experience for their customers.
Utilize Customer Data
According
to research from Accenture, 83% of consumers that have indicated a preference
towards personalization are willing to share more of their data in order to
achieve this. Loyalty is ultimately driven by the underlying relationship a
customer has with a brand. The more a brand can utilize data to further
understand the customers’ wants and needs, the more relevant and personalized
experience they can provide through their customer loyalty programs.
Marketers
need to understand this data value exchange, and then implement these ideas
into their customer loyalty programs. They also need to look at how they are rewarding
customers, and ascertain which customers they should be rewarding. One of the
most effective strategies in determining how to reward loyal customers is
through profitability. The customers that provide the highest profit to the
company are the ones offered the most exclusive benefits and promotions. While
other loyal customers would receive personalized benefits and promotions, the
value of these offers are based on the value the customers provide for the
company.
In
order to delineate between loyalty program customers to determine who should be
rewarded and to what degree, it is essential for brands to understand all that
they can about each customer. Without complete data that informs a complete
customer view, it is nearly impossible for marketers to understand what rewards
they should be offering or what channel their customer is even using. An
effective loyalty program can be the means to driving further profitability. When
marketers know all that is knowable about a customer, they then have the
ability to create a relevant, personalized experience that engenders consistent
interaction and customer loyalty.
As VP of
Solutions Marketing at RedPoint
Global, Brian Cleary is responsible for ensuring that the voice of
the customer and RedPoint’s key markets are reflected in our technology
roadmap, as well as RedPoint’s go-to-market approach. Cleary brings more than
20 years of success in directing product management, marketing and sales
strategies for emerging software companies and top-tier enterprise software
vendors.
