When Should You Start Thinking About Loyalty?
How do you know when it’s time to start thinking about loyalty? Investing in loyalty is a big decision but has great rewards if deployed correctly and efficiently. Loyalty is a solution for companies who want to drive incremental lift and better understand their customers. If you are contemplating whether or not loyalty is the right solution for your company, ask yourself these three questions:
1. Is your cost of customer acquisition high (and your customer retention rate low)?
Most retailers, if not all, will answer yes to this question. With methods like search engine marketing and paid search advertising, the cost of acquiring a customer is skyrocketing and hurting profitability. Today, brands must focus more on retention rather than acquisition. In the long-run, shifting your efforts towards retention will be more profitable as you will encourage repurchase rather than a one-time purchase with acquisition. So how do you keep customers coming back for more? Loyalty programs effectively maximize customer lifetime value by providing highly personalized user experiences and relevant rewards. In incentivizing a customer to return, you will continue to capitalize on your investment.
2. Are you giving away your margin?
Are you constantly relying on discount codes and coupons to incentivize customers to purchase? If so, this may be the perfect time to start thinking about loyalty. Loyalty trains your customer to repurchase, rather than to expect discounts. Substituting discounts and coupons for loyalty promotions will prevent you from giving away your margin, especially to customers who may already be loyal. An example of a loyalty promotion that preserves your margin is early access to products for members. While this comes at no cost to you, its initial exclusivity makes your loyal customers feel special and gives them the opportunity to buy. Offering double points, rather than straight discounts, is another example of a loyalty promotion that can save your margin. Consumers will earn a percentage in point value per dollar spent, which will go towards future purchases.
3. Are you having trouble understanding your customer across channels?
Nowadays, customers have the ability to shop online, in-store, through mobile, etc. However, the data is siloed and it is difficult to connect the dots between systems. Omni-channel loyalty programs solve this problem by incentivizing customers to self-identify and engage across channels. Loyalty is a hub for customer data as it gives customers a reason to say who they are and provides a richer understanding of how customers interact with a brand. Providing a consistent, omni-channel experience for your customer is mutually beneficial. Investing in loyalty will give you a complete view of your customers and allow for targeted campaigns. And in turn, your customers will receive rewards and benefits that are truly geared towards them.
These questions can help you begin to think about loyalty. Lylty Ltd has an array of benefits, from providing a holistic view of your customer to encouraging repurchase through the data it collects. A program that encompasses multiple channels has the ability to drive profitability may just be the solution you need to elevate your brand.