Customer loyalty programs are crucial.
The goal of loyalty initiatives is to engage, not pander more products to frequent buyers.
But how do you determine if your loyalty program is working well?
Use data to steer your customer loyalty program in the right direction.
McKinsey found that “executive teams that make extensive use of customer data analytics across all business decisions see a 126% profit improvement over companies that don’t.”
“By instituting a loyalty program, you not only improve customer appreciation of your business, but you also increase the chances that existing clients will share this joy with those close to them,” says Steve Olenski , a senior creative content strategist at Oracle Responsys.
Upgrade yourloyalty program. Let’s explore how.
Focusing on Retention
One primary mission of loyalty programs is to increase customer retention. You want buyers to remain with your brand after they make a purchase.
For your business, higher retention means a steady flow of revenue. And it cuts down on your costs to constantly acquire new customers.
Therefore, your loyalty programs must be effective. They need to serve a real purpose for the consumer, not just your bottom line.
To provide the best customer experience, fuse data into your retention strategies. It will impact how your team approaches the buyer.
“Influencing customer loyalty in this way doesn’t require magic, it requires data – usually data that you already have but aren’t using to full advantage. Regardless of industry, most organizations today generate mountains of data,” writes Mike Flannagan , vice president and general manager of Cisco.
Uncover the correlation between customer characteristics and purchasing behavior. Assign your team to analyze the current data of your most valuable customers. And learn which characteristics these customers have in common and which traits are dissimilar.
Consider data an ongoing process of observing, acting, and learning. Improve your loyalty programs by taking action on your insights. Measure success by monitoring your customer lifetime value, loyal customer rate, and redemption rate.
Start with retention. And let the data guide you to customer loyalty.
Targeted Product Recommendations
Research shows that “ customers that are actively engaged with brands and their loyalty programs make 90% more frequent purchases, spend 60% more in each transaction and are five times more likely to choose the brand in the future.”
Sending targeted product recommendations is one way to keep customers engaged. Because if they are not receptive to certain products, consumers will feel more inclined to take their business elsewhere.
Integrate real-time purchase data with historical purchase data to make specific recommendations. For example, if a small business bought payroll software from you, their team might be interested in purchasing your series of on-demand accounting webinars.
“Consumer data must be analyzed to create highly targeted product recommendation offers. Analyze consumer data such as demographics, lifestyle, products purchased by category and type, frequency of purchase, and purchase value,” states Larisa Bedgood , director of marketing at DataMentors.
It’s key not to draw wild conclusions from one piece of data. Just because a Florida resident buys a winter coat doesn’t mean he wants to be flooded with similar recommendations. The consumer might have bought it as a gift for a friend living in Michigan.
So, gather multiple data points in order to make intelligent recommendations. You don’t want to frustrate loyal customers.
Your brand also can take a different approach. Use social proof to your advantage. If consumers are hesitant about particular products, remind them that other people are buying the product, too.
Home Depot uses this tactic by displaying a list of bestselling inventory. It persuades the customer to join the crowd.
Sift through your analysis reports. Uncover the best product recommendations for your customers.
For customers, loyalty takes effort. They receive lots of promotional ads everyday to try products from other brands. Appreciating your consumer’s urge to resist the hype is important.
Mobile phone carriers lead the way in baiting consumers to switch their services. AT&T offers cell phone users up to $650 in credit just to say bye to T-Mobile, Sprint, or Verizon.