What Is Customer Loyalty Marketing And How To Use It Effectively For Your Business?
Customer loyalty is like air for a business organisation. Companies or business organisations can not survive without it. Creating loyal customers for a business could be one of the most challenging things to do. Employing a well-planned customer loyalty marketing campaign can help you get closer to your customers.
It is vital to create an attractive loyalty program for your business before implementing a customer loyalty marketing strategy for your business. A recent survey found that 87% of customers prefer companies to have a loyalty program to buy from them again.
Below, we discuss what is customer loyalty marketing in detail. The article also discusses everything you need to know about loyalty marketing and how you can efficiently implement it for your business.
What Is Customer Loyalty Marketing?
A customer loyalty marketing program is a strategic marketing effort that lets you retain and grow the existing customer base. Customer loyalty can have a significant impact on an organisation’s marketing efforts.
An effective customer loyalty program can lead to the following outcomes for your business organisation.
Repeated Purchase
A loyal customer repeatedly purchases from your brand even when they may have similar or better market options.
Efficient Utilisation Of Product
An effective customer loyalty marketing program encourages customers to use your product or service efficiently. Loyal customers share a special love for the products and services they buy and tend to enjoy using them.
Multi-Channel Interactions
Another notable aspect of successful customer loyalty marketing is that it interacts with loyal customers through different channels. The best part is that loyal customers are happy to interact with their preferred brand in other channels, such as social media, direct mail, Etc.
What Is Customer Loyalty?
Customer loyalty refers to the emotional attachment or relationship between you and your customer. It shows the customer’s willingness to engage repeatedly with your brand and frequently purchases from your business. Therefore, it is no wonder that numerous business organisations now use customer loyalty marketing campaigns to boost their sales.
Loyalty is not something you can quickly gain from your customers. It may take months or even years of planning and work to convert a regular customer into a brand-loyal one. Most customer loyalty marketing campaigns are a part of a long-term plan to convert existing customers to loyal customers.
What Types Of Businesses Can Use Customer Loyalty Marketing?
One of the best things about a customer loyalty marketing strategy is that any business can use it. Even if your business organisation deals with one-time orders such as cars or jewellery, you can still use loyalty marketing to your advantage.
Suppose you are centring your customer loyalty marketing strategy around low-frequency products. In that case, the marketing efforts enable you to stay on the customer’s mind until they eventually replace their purchase. You can also use loyalty marketing to cross-sell products within a specific range.
The customer loyalty marketing program is also ideal for encouraging customer engagement and boosting referral rates. Businesses like car rentals, airlines, and even hotel groups efficiently use loyalty marketing in this manner.
For instance, a hotel group can provide a mobile app to customers that they can use to pick a room in advance. Loyal customers can use the app to ensure they always get their desired room in advance. Additionally, the app can also include additional privileges as part of your customer loyalty marketing strategy, such as early check-ins/check-outs
Different Types Of Loyal Customers You Need To Know
Your customer may have some common characteristics to be sharing the same product or service between them. For example, if you sell men’s shoes, it’s safe to say that your target audience is statistically all men. But that is just a generic categorisation of customers that you can use in your customer loyalty marketing programs.
There needs to be more than such a broad categorisation for an effective customer loyalty marketing strategy. You can find there are always sub pockets within sub pockets of your customer base. Identifying these subpockets and categorising your customer is essential for the campaign’s success.
Regardless of how niche your business is, all your customers are still unique individuals. Understanding the different types of loyal customers helps you create a better customer loyalty marketing strategy for your business.
Below we categorise loyal customers into-different categories and discuss their characteristics.
The Happy Customer
This type of loyal customer is happy with your product or service. These customers never complain because they are delighted with your product or service. It is also likely that such customers purchased from you more than once. These are the type of loyal customers you want to create using your customer loyalty marketing programs.
Happy customers are also delicate because competitors could swoop in and steal them anytime. The customer loyalty marketing strategy for these customers often includes incentives to ensure they stay happy.
The Budget (Price-Loyal) Customer
Budget or price-loyal customers stick with your brand because of the price you offer. If customers stay brand loyal purely for low prices, they will likely change their minds when they find a better or cheaper option. The customer loyalty marketing solution is straightforward in this case.
All you have to do to keep the business of a price-loyal customer is to provide them with the best price in the market. Even if you lose the customer to your competition, bringing them back to your team is easy. Suppose your customer loyalty marketing strategy offers a better price than your competitors. In that case, you can regain your (not so) loyal customers.
Most business organisations don’t prefer this type of customer loyalty marketing campaign because they lose out on profits.
The Loyalty Program-Loyal Customer
Another type of loyal customer that can quickly identify is the loyalty program-loyal customer. These customers love your loyalty program more than the product or service you are selling. We are not saying that your product or service does not matter in your customer loyalty marketing program but gets overshadowed by the loyalty program.
Starbucks, Sephora, The North Face, Etc., are some of the brands that have perfected their loyalty marketing programs over time. The loyalty program of these companies is so good that people care more about them than the product itself. In this case, the customer loyalty marketing approach involves offering additional loyalty program features or benefits.
The Convenience-Loyal Customer
Sometimes people stay brand loyal because they make life a more convenient option for the customer. The convenience here can have different interpretations. It could be that the customer finds your brand easy to communicate with, accessible to a physical store, and so on. The customer loyalty marketing campaigns targeting such customers should focus on convenience rather than price.
Typically, convenience-loyal customers only care a little for the pricier products or services if it provides convenience for them. The success of on-demand apps like Uber Eats is a testimony of how much people crave comfort. Using your customer loyalty marketing to show how your brand can make life more convenient for this type of customer is best.
The Freebie-Loyal Customer
Another type of loyal customer you can see is solely devoted to the freebies you give them. Such customers do not care about what you sell as much as regular customers. It is best to focus on something other than this type of customer for your customer loyalty marketing efforts.
A freebie-loyal customer is often happy to receive whatever freebie you give away, such as free Wi-Fi or product samples. The purchases of a freebie-loyal customer from a brand are occasional at best. It is best to focus your customer loyalty marketing efforts on something other than these customers, as they do not contribute much to your revenue.
The True Loyal Customer
The ideal or genuine loyal customer is the one that actively advocates for your brand. A dedicated customer can bring you more new customers than a sloppy advertising campaign. Typically, the customer loyalty marketing strategy for faithful, loyal customers also includes short and long-term goals.
A truly loyal customer makes repeated purchases from your business and shares their memorable experience with your brand with others. They also suggest your brand to their friends and family. By doing so, genuinely loyal customers tend to turn into valuable resources. Your customer loyalty marketing efforts should try to form a personal relationship with such loyal customers.
The Significance Of Customer Retention In Customer Loyalty Marketing
The concept or purpose of the customer loyalty marketing campaign is essentially customer retention. Customer loyalty and customer retention are two sides of the same coin. Loyalty is more of a mindset.
It is the part that makes a customer stick with your brand, engage with it repeatedly, and buy products from it. On the other hand, retention is a measurable metric that helps track your customer engagement and sales. Both of them are invaluable to your customer loyalty marketing efforts.
Converting a target audience into a customer is a challenging task. Some try for years and still don’t get the desirable results for their customer loyalty marketing efforts. The key to having a high customer retention rate is to provide memorable customer experiences and consistently offer value to customers.
Customer Service And Customer Retention
Your business organisation’s customer service is crucial in maintaining a high customer retention rate. Customers will likely judge your business organisation depending on their experience with your brand. If you have poor customer service, there is no point in shelling out your money on customer loyalty marketing campaigns.
Ensure that your business’s customer service focuses on customer interactions via various channels. The customer could interact with your company via phone, chat, email, or person. Prioritising your audience and addressing their issues is a form of customer loyalty marketing effort.
Customers are more likely to stay loyal to your brand if they feel you value their business. Your customer service is a continuously running customer loyalty marketing campaign which can determine your customer retention rate.
What Are Customer Loyalty Programs?
Customer loyalty programs essentially reward customers that frequently interact with a business brand. It could be an elaborate customer loyalty marketing scheme to boost customer retention. Loyalty programs encourage existing customers to buy from your business instead of your competitors.
The primary purpose of a customer loyalty program is to retain existing customers and gain new ones. Most marketing efforts focus on acquiring new customers. It is one differentiating factor that makes customer loyalty marketing unique from other campaigns.
Typically, every customer loyalty marketing campaign uses some form of customer loyalty program to incentivise the customer. The incentive you offer can be in any form as long as it provides substantial benefits to the customer.
Types Of Loyalty Programs
There are different types of loyalty programs you can use for your business. You can broadly classify loyalty programs into six groups and use them in your customer loyalty marketing strategy, and they are as follows.
- Paid loyalty program
- Point-based loyalty program
- Tiered loyalty program
- Coalition loyalty program
- Value-based loyalty program
- Game-based loyalty program
Paid Loyalty Program
You may know paid loyalty programs by a different name: VIP loyalty programs. The paid loyalty program may seem odd to you because it requires the customer to pay. A one-time or annual fee that the customer pays gives them access to benefits and bypasses purchase barriers. Ensure to highlight these customer benefits in your customer loyalty marketing effort if you feature paid loyalty programs.
Additionally, you must identify and eliminate anything in the loyalty program that could cause the customer to leave. For instance, online shoppers often abandon their cart after seeing the price for a product after adding delivery charges. A business can allow its premium or VIP customers access free delivery. Moreover, you can use this information in your next customer loyalty marketing campaign.
Point-Based Loyalty Program
A point-based loyalty program is the most common type of loyalty program you can find. Businesses award their frequent or loyal customers by rewarding them every time they have a meaningful interaction with them. It is one of the most convenient loyalty programs for customer loyalty marketing campaigns.
Make sure the customer can convert these points into something usable, like a discount code or a freebie. A way to redeem loyalty points is essential regardless of the pointing system you use for the program. For your customer loyalty marketing effort, send a direct mail to the customer once their point becomes redeemable.
Direct mail adds a nice touch to your customer loyalty marketing strategy. It can create an emotional impact on the recipients. With advanced direct mail automation software like PostGrid, you can schedule when to send the mail. Direct mail for eCommerce and other businesses keeping point-based loyalty programs is highly effective in getting the desired results.
Tiered Loyalty Program
A tiered loyalty program is a perfect way to ensure a loyalty program that strikes a balance between achievable and desirable rewards. How does it achieve this? In Layman’s terms, this loyalty program rewards customers for establishing loyalty and encourages more purchases. The loyalty program works well with your customer loyalty marketing campaigns.
Typically, companies offer a baseline offer which includes low-value rewards. They then increase the value of the prize for repeat purchases encouraging the customer to buy more. The value of the loyalty reward keeps on rising with more investments. It is one of the most effective programs to use in your customer loyalty marketing efforts.
Coalition Or Partnership Loyalty Programs
Coalition or partnership programs involve loyalty programs which use deliberate partnerships to retain customers effectively. It may take a little more work than standard loyalty programs, but it is often worthwhile. The trick is to find the right partner for the job and use it in your customer loyalty marketing campaigns.
An ideal partner for a loyalty program depends on your customers and their day-to-day lives. Your partnering company should be relevant to your customers’ everyday lives or can help them in one way or another. How well your organisation fits with the partnering organisation can also affect your customer loyalty marketing efforts.
For instance, a gym can partner up with a sports store in the same building or locality where the customer can get fitness equipment and accessories. A co-branded deal can benefit both organisations. It means your customer loyalty marketing effort can benefit your partnering entity as much as it can help your organisation.
Value-Based Loyalty Program
A value-based loyalty program involves identifying the needs and desires of your customers to understand them better. The information you gather for value-based programs can also help you streamline your customer loyalty marketing efforts. You can use the program to encourage brand loyalty by using things the customer profoundly values.
These programs are highly effective because they ensure that customer loyalty rewards are worthwhile. Value-based loyalty rewards are much more enticing than standard rewards programs that offer promo coupons and discount codes. A customer loyalty marketing strategy that features a value-based program is more likely to yield the desired results.
Game-Based Loyalty Program
Everyone loves a good game, whether on their phone or the web. A game-based loyalty program lets you tap into the potential of games and use it for your loyalty programs. The game-based program is one of the best ways to boost customer engagement and create a successful customer loyalty marketing campaign.
One challenge you may face with game-based programs is that the customer may think it is a hoax. Numerous reward-based games keep the customer running in circles without giving any rewards. Ensure the customer doesn’t feel like you are pitching a customer loyalty marketing campaign to dupe them.
A rule of thumb you can follow with game-based loyalty programs is to ensure the games have at least a 25% winning rate. You should also make sure that the game has attainable purchase requirements. Additionally, get the go-ahead from your legal department before launching the gamification element in customer loyalty marketing campaigns.
Top 5 Customer Loyalty Marketing Trends For Your Business
You can use numerous customer loyalty marketing strategies to boost customer loyalty and retention. Below, we discuss some of the most effective marketing trends to culture and grow loyal customers for your brand.
#1 Personalisation
Personalisation is always a key element in every marketing strategy. One of the good things about customer loyalty marketing is that personalisation can be simple and effective. You don’t have to needlessly complicate your marketing effort by trying to perfect your personalisation game.
Personalisation in customer loyalty marketing can include the following.
- Personalised recommendations.
- Personalised storefronts.
- Personalised rewards on regular purchases.
- Personalised cross-promotion (based on lifestyle and purchase history)
One of the finest examples of personalisation in customer loyalty marketing is the My Starbucks Rewards program from Starbucks. The program allows Starbucks customers to gain customised offers based on their purchases. Such personalisation ensures that your customer only gets personalised and relevant orders from your business.
#2 Gamification
According to The Loyalty Report 2019, 53% of loyalty program customers wish to see gamification in their programs. We are not saying you should develop a full-fledged game for a customer loyalty marketing campaign. The games we are talking about include things like
- Simple daily challenges.
- Rewards for engaging with the game.
- Daily or weekly quizzes.
- Progress tracking.
- Etc.
The gamification type of customer loyalty marketing (especially quizzes and tracking) can work perfectly for healthcare and education organisations. Games are more engaging to the users, and the prospect of a reward pushes the customer into taking action and boosting their interactions with your brand.
#3 Partnerships
Another excellent idea for your customer loyalty marketing strategy is establishing strategic partnerships with other firms. It enables your business to provide newer and broader loyalty perks to your customers. Through partnership efforts, you can also access and share combined customer bases from your different partnering organisations.
Another significant advantage of partnerships is that you can also combine your marketing efforts. You can extend the reach of both brands by offering complimentary rewards or services to your customers. Implementing a customer loyalty marketing strategy that offers additional benefits or experiences can positively influence customers.
#4 Localisation
Consider using a hyperlocal marketing strategy to target customers via push notifications. The notification typically uses the customer’s location. It could be a shopping mall, a restaurant, or an arcade building. With geofencing, businesses can extend their customer loyalty marketing efforts to reach specific groups of qualified audiences in particular areas.
Moreover, it is relatively easy to focus your marketing efforts towards smaller or more local groups. Localisation can help you target audiences you may otherwise miss with a regular customer loyalty marketing approach. As a result, you can boost your marketing reach and increase potential interactions with loyal customers.
You can even give your customers special walk-in discounts to anyone who wants to visit your location. Once the customer steps into the store, converting them using relevant products and offering discounts becomes significantly easier. Every organisation with a physical store should try this customer loyalty marketing strategy for their business.
#5 Voice Search
Business organisations should focus on creating customer loyalty marketing strategies that use advanced capabilities like voice search. With voice assistance technologies like Siri, Google Home, Alexa, Etc., gaining popularity, it is high time to include them in your marketing strategy too.
Voice search is all set to become a big part of the shopping experience, whether you like it or not. The safe approach is to set up a voice search capability for your business. You must then integrate the feature with your customer loyalty marketing strategy to better interact with your audience.
How To Implement An Effective Customer Loyalty Marketing Using Direct Mail?
Creating an impactful customer loyalty marketing strategy is about forming that emotional connection with the audience. It is not easy to emotionally impact your audience if you communicate via digital mediums like email or text messages.
However, things are a little different with offline communication channels like direct mail. Most people associate direct mail marketing materials like postcards with fond memories. Receiving direct mail is somewhat exciting to people as opposed to feeling nothing when they receive an email. Hence, a direct mail campaign is ideal for your customer loyalty marketing campaign.
That’s not all. Thanks to advanced software solutions like PostGrid, personalising your direct mail and sending it to your target audience is significantly easy. You no longer have to spend hours preparing the direct mail for your customer loyalty marketing campaign.
Here are some reasons to make direct mail a part of your loyalty marketing efforts.
Fully Automated And Error-Free Direct Mail
Advanced direct mail automation software solutions like PostGrid enable you to automate your mailing process fully. You can integrate PostGrid’s direct mail API into your website, including its CRM solution, to quickly personalise your mailers. Since the whole process is automated, there is no human error in your customer loyalty marketing campaigns.
Superior Personalisation
Direct mail personalisation is the best way to ensure the success of your customer loyalty marketing campaign. As mentioned above, PostGrid can connect with your CRM and effectively personalise your business mailers. The more personalised your direct mail material, the more chances of getting the desired reaction from your customers.
Emotional Impact And High Open Rate
An offline marketing channel like direct mail is no longer a mainstream approach to communicating with your customers. The audience tends to notice your customer loyalty marketing efforts more efficiently via offline media like direct mail.
In addition, direct mail has an incredible open rate of 90%, more than any digital medium. The customer loyalty marketing campaign via direct mail is even more effective for loyal customers as they already trust your brand.
Conclusion
Loyal customers are one of the primary pillars of success for a business. Companies of all sizes need a solid customer base they can trust. You can effectively retain your existing customers and grow your customer base with customer loyalty marketing.
The key is to form an emotional connection with the customers. You can use a customer loyalty marketing strategy using direct mail to create an emotional impact on customers. Pitching timely and relevant offers to your loyal customers helps you stay on top of their minds.
An advanced automation tool like PostGrid can quickly personalise your customer loyalty marketing message. Personalised messages and offers significantly impact customers, especially from their favourite brands.
You can implement advanced direct mail marketing as a part of your customer loyalty marketing campaign using PostGrid. Get a free demo from PostGrid to check how you can automate your direct mail campaigns.
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