Consumers are inundated daily with new brands vying for their attention. Whether in scrolling through their social media feeds, receiving special email offers, or even getting free products at a work conference, yoga class, or (insert just about any activity here), we’re constantly exposed to new products and services.
While having endless options is great (if not overwhelming) for consumers, it’s a bit trickier on brands. Getting in front of new customers is hard enough as it is. But what about keeping them? Well, for starters, it’s imperative your brand deliver a superb customer experience.
Of course, there’s a lot more to this than a customer loyalty program. You’ll need an amazing product, a backend operations system that supports growth and gets the right product to the right person at the right time, and catchy marketing, to name just a few things you’ll want to consider. But, once these critical processes are in order, it becomes easier to focus on customer loyalty.
Why Focus on Return Customers?
Approximately 10 percent of all customers make multiple purchases, and they account for over 20 percent of revenue. Despite this, most businesses spend the majority of their marketing budget competing to attract the other 90 percent—new customers who only make one purchase. Remember, every new customer is an opportunity to create a return customer. But most businesses under-invest in customer loyalty, putting all of their eggs in the customer acquisition basket.
Across all industries, return customers spend 15 percent more than new customers on any given order, and, if you’re not already convinced, consider this figure: over the course of a year, the average return customer spends over 120 percent more than new customers.
These people are critical to your bottom line, and it’s easier than you think to create a loyalty program that focuses on retaining their loyalty.
How to Create a Customer Loyalty Program
As with any new business initiative, you’ll want to start by focusing on your end goal when it comes to customer loyalty. For example, if you sell high spend items like furniture, your goal won’t be for a customer to purchase a new item from you monthly, it will be to ensure a seamless experience so they recommend you to friends and think of you next time they need a new bed or dresser, even if that’s years down the line. If you’re a makeup brand, your goal will likely be revenue-focused: can you send a sample size of a heavy, night-time moisturizer when someone buys a sunscreen, so they’ll use it, love it, and go back to purchase the full-sized item? Considering your unique business model and your goals will get you on track for a loyalty program that will work best for your business.
Once you’ve established some goals, you can consider various types of loyalty programs. There’s a ton of room to be creative here, but let’s take a look at how other brands have successfully implemented customer loyalty programs.
Types of Loyalty Programs
Rewards Points with Purchase: One of the most common customer loyalty strategies is to offer customers rewards points with every purchase or dollar spent with your brand. This is a strategy airlines have seen great success with over the years. The more customers spend with their company, the more rewards points they get to put towards upcoming trips with them, ensuring customers need to keep coming back to their airline. Make sure your rewards points are easy to use and valuable enough that customers will want to use them.
Exclusive Members-Only Offers and Events: Everyone wants to feel like a V.I.P., so start giving your customers this treatment. Instead of offering rewards points with every purchase, some retailers opt to provide repeat customers or loyalty members with exclusive discounts, early access to promotional sales and items, and/or invites to brand events. This is a great way to build a marketing database as people will be more likely to provide their email address if it comes with a discount, entry for an exciting contest, or the knowledge they’ll receive early invitations to exclusive events.
Free Lifestyle Gifts With Purchase: It’s likely unrealistic to send a full-sized additional product as a gift with purchase. However, Chubbies, a clothing brand with an emphasis on the weekend lifestyle known for their colorful shorts and hilariously quirky marketing campaigns figured out a way to send gifts without breaking the bank.
With their target customer in mind, they created add-on gifts like branded koozies, coasters, and baseball cards that fit within their lifestyle theme but are significantly less expensive than sending an additional item of clothing. In automating this process, they can quickly swap out a gift that isn’t garnering excitement and track orders so customers don’t receive the same gift twice. Their customers are surprised and delighted to receive add-ons and their loyal social media followers will often post their latest gift, thus increasing brand awareness in addition to fostering loyalty.
Many customers automatically assume that ‘freebies’ entail giving away expensive goods for free, but think about smaller items that complement your main offerings. For example, if you sell sheets and bedding, what about giving away an eye mask or lavender essential oil? If you sell luxury footwear, perhaps a branded pair of socks would be a good way to go the extra mile toward customer happiness while also making sure you stay top of mind when the customer puts on socks with your logo.
A Loyalty Program is Just one Piece of the Puzzle
Building a loyal customer base is no easy feat, but with some creativity and determination, the perfect loyalty program for your customers is well within your reach. However, it’s easy to destroy even the most thoughtful, well-crafted program if your customer doesn’t also have a seamless experience with your brand.
To ensure your backend operations can ensure that your customers get the right product when and where they’re expecting it, download our new guide, How to Grow Your Business in a Consumer Choice Economy.