In days gone by, customer loyalty initiatives made us feel like part of an elite club – the crème de la crème of a brand’s customer base. And brands rewarded us as such: points to redeem, heady exclusive discounts, even cold hard cash(back).
Today, loyalty is at risk of losing some of its luster. As the number of competitors has swollen, customer retention rate is only more important – and only harder to achieve. But with so many rivals using the same customer engagement tactics, brands increasingly find their customer loyalty program no longer stands out. Efforts to surprise and delight have become neither surprising nor delightful.
This is dangerous territory for brands. Nearly two-thirds (65%) of their customers say they expect to be rewarded for their loyalty, according to our 2024 CX Trends Report. That loyalty can quickly evaporate when special starts to seem the same. And as for attracting more loyal customers? This will only happen if your loyalty mechanisms are more personalized and meaningful.
Here are the strategies we recommend to help retain customers amid the noise of competition – and ensure your loyalty efforts aren’t getting drowned out by it.
Step up personalization
People are bombarded with ads and promotions from brands trying to attract and retain repeat customers. You can cut through all this by using predictive personalization to serve only the recommendations that are likely to appeal – something to complete an outfit, or a complementary product to get more out of a previous purchase. Predictive analytics suggest these products or services customers might like or value, helping your brand demonstrate an understanding of customers’ needs while removing the chance for your loyal customer base will even look elsewhere.
Twilio Segment found that although 85% of businesses believe they are offering personalized experiences, only 60% of customers agree. This is caused by a lack of customer understanding at an individual level. Take the travel industry, for example: customers might travel regularly, but that doesn’t mean they have any interest in it as a hobby. Using data, brands can identify behavioral indicators with which to tailor loyalty programs, so offers only go to relevant customer groups.
Your first-party transactional data helps you make crucial customer interaction discoveries and respond strategically – such as designing your new customer loyalty program around rewarding second purchases after identifying customer churn from the majority of people who only buy from you once. You can augment that data with propensity data on preferences and behavior, helping you incentivize brand loyalty by understanding what’s important to each customer. That gives you probabilistic inferences and triggers on the media and channels likely to gain new customer engagement, and their brand affinity with certain messaging, so you can predict the most effective loyalty incentives.
It’s also important to personalize the rewards themselves. Parents might value discounts on the everyday essentials they need to continuously replenish, for example, but luxury fashion brands will likely get more traction offering early access to new season launches or premium delivery. Your customers will benefit more regularly from a reward that’s relevant and useful, making them more likely to remember your brand when considering their next purchase.
Grocery stores are increasing customer loyalty with clubs offering dedicated rewards for specific groups such as gardeners or parents of babies and toddlers. This requires not just segmentation but micro-segmentation. It’s no longer enough to know just that a customer likes sports, for example, or even golf specifically. You need to know things like whether they’re a serious or casual player, so you can reach them with loyalty offers on specific, relevant products matched to their interests and lifestyle. In other words, you need to understand as much about each customer as possible.
Seek brand partnerships
Another way to expand your loyalty offering and brand advocacy is by leveraging the power of other brands. Companies are coming together in the ecosystem economy, where they’re finding ways to collaborate, cross-sell, and amplify each other’s brand awareness.
An airline and a hotel chain, for example, might compare (and share) their customer data securely and privately in a data clean room where they could uncover a strong demographic overlap to make a profitable brand partnership. By sharing data with a hotel brand, an airline can discover when a customer went on vacation but didn’t take one of its flights to travel there – identifying loyalty blindspots.
Share-of-wallet data, meanwhile, will show whether customers are visiting restaurants and hotels more, in which case it’s a good time to add those offers to your loyalty program.
Empower customers with customization
Brands can save some of the work of testing different loyalty mechanisms by letting people customize their own experience. A preference center allows customers to tell you what they want and helps you direct marketing spend to more fruitful loyalty programs. At the same time, you’re signaling to customers that you give them the opportunity to shape their brand experience and loyalty program – a mini incentive in itself.
In exchange, you gain invaluable data to fine-tune your personalization, segmentation, and customer experience. You can then create a cycle where you offer customers more meaningful loyalty programs, while they provide data your competitors are unlikely to have.
Be there when it matters most
Brands often think of occasions to foster customer loyalty as birthdays or customer anniversaries. But these are far from novelties.
Think wider to the sports tournaments, music festivals and seasonal events your customers enjoy. For parents, that might mean school holidays or the return to school.
First-party data can reveal whether a customer typically makes a purchase around events such as Valentine’s Day, so you can reach them with pre-emptive ads and promotional offers reminding them the holiday is approaching. Transactional data for business customers, likewise, can illuminate patterns from which you might deduce quarterly conferences they typically attend, and then promote your travel or accommodation.
These insights can feed into a marketing calendar of relevant key moments and customer needs to address – opportunities competitors might neglect. Then you’re not just popping up indiscriminately throughout the year when a reward might be less beneficial. Instead, you’re reaching out when it matters – and when they’re poised for purchase – rather than getting drowned out in the year-round noise.
With a more refined and rigorous approach to your customer data, you can also begin to draw insights into when your customers are approaching milestones throughout their lifetime, such as starting a family or moving. These present incredibly personal opportunities for building customer loyalty and making an impact at times they’ll remember for the rest of their lives.
It’s these more tactical and meaningful loyalty initiatives that will prove most successful in earning repeat customers and higher customer lifetime value. Then, no matter how loud your market and loyalty space gets, you’ll be one of the few with the ability to speak directly to customers.
You can only achieve this by using the right data, so take a look at how Acxiom’s customer retention solutions can help keep them from leaving.
