In today’s retail world, customer retention programs can really strike a chord and make a huge positive difference in a company’s overall annual sales. The only way to a better customer retention program is to create a robust loyalty program.
According to Pareto’s classic principle, 80 percent of your sales come from only 20 percent of your customers and various data suggests that most profitable businesses are modeled on the loyalty of these customers. There are three key components which play an eminent role in a brand’s efforts to cultivate long term adherence: Promotions, Continuity Initiatives and Loyalty Programs. Read on to see how these three tactics can interplay to build long lasting loyalty.
Promotions are the offers given by the brands in the short run for bolstering sales, getting rid of existing inventory, and sometimes to introduce customers to a completely new product or service. They may continue for few weeks to typically a month. For instance, “buy one get one free” is one of the most common promotions that everyone will be familiar. However, promotions can get a lot more sophisticated: there is a whole ecosystem of technologies, offers, rewards, and timing that can contribute to a promotion. The power of the promotions is clear: 80% of the customers would switch stores or brands if offered an attractive promotion. Promotions are also the best way to reduce the barrier to entry for new customers.
Heineken recently reaped the benefits of a seasonal-based promotion to lift shopper excitement around gifting and engaging them with friends and family around holiday season.
The aim of a continuity initiative is to engage customers with a brand for a longer term period than a promotion would. This allows brands to accomplish numerous objectives, from collecting more data by way of an increased number of touchpoints, to increasing the likelihood of long term brand affinity and loyalty. In recent times, we can see that some popular continuity solutions include mobile punch cards and location-based geo-targeting to enable real-time promotional offers to be sent to the repeat customers that venture back into specific store locations. Continuity initiatives eventually expand a customer’s experience and can even persuade them to enter a loyalty program down the line.
A great way to illustrate continuity initiatives is to share Snipp’s program executed for Kimberly-Clark Depend brand. Consumers who bought 4 qualifying products over 6 months received a code to redeem gift cards. To suit the Depend brand goals, rewards and communications were centered around a confidence-building theme, motivating users to get out and do what they love, such as going to movies and going out to dinner.
Loyalty programs are the ultimate marketing goal of many brands. These programs are devised as a part of marketing strategy to evoke customer relationships over a long-term period with the objective to retain, gain deep insights and encourage lasting brand loyalty. Members of loyalty programs are bound to generate 12% to 18% more revenue for a brand than to customers who are not members. Indeed, the positive impact of loyalty programs has come to such an extent that 76% of the customers would expect loyalty programs as part of their regular interaction with brands and a whopping 75% of them have claimed that they are more likely to refer a brand with a suitable loyalty program to their friends, peers, colleagues and family.
And as a result of the customer data insights obtained by loyalty programs, personalized offers become a reality, which encourage higher spending by the customers, especially by millennials. Millennials expect brands to care not only about them but also share their values. Thoughtful, personalized programs offer points and rewards for participation in social causes which prompts deeper connections with members that go way beyond mere transactions.
We hope this article will help you determine when to execute each kind of initiative at your company. Each has its place in the landscape of marketing offers; it all comes down to the overall strategic direction and challenges you are facing. To go more in-depth on the Promotions to Loyalty continuum, please check out our white paper. And feel free to contact us if you have any further questions on deciding the right marketing tactics to elevate your brand or agency.