Make your customers smile with tips on rewards programs, customer retention, and commerce in general.
In today’s highly competitive business world, a loyalty program can be a crucial asset to a company’s success. Loyalty programs are now offered by most mainstream retailers, and with the rise of e-commerce, loyalty program adoption is expected to skyrocket in the next three years. According to The Neilson Company survey, 72% of consumers agree that all other factors being equal, they’ll buy from a retailer with a loyalty program over one without. In effect, any business that does not add loyalty to its spectrum of offerings will have lost to the competition.
Modern loyalty software is the most effective way to increase customer spend, drive traffic, and boost customer engagement. The collection of customer data and the ability to target and customize your rewards program based on any multitude of behaviors, whilst providing powerful incentives, motivates customers to spend more, more often.
I met with Valerie Smyk, the Marketing Director of Kangaroo Rewards, to discuss the latest trends in customer loyalty and the benefits of implementing a customer loyalty program. Smyk also offered up some advice to ensure your program is a success.
Q: Please tell us more about Kangaroo Rewards.
A: Established in 2012, Kangaroo Rewards is an industry leader in loyalty and retention. Kangaroo’s loyalty software services thousands of small and large businesses worldwide. Kangaroo is quite unique in its ability to merge both loyalty and marketing capabilities to fully action on sales trends and customer segments via email, SMS, promotions and contests. Kangaroo’s customer-facing interface and mobile app is completely white-label, available in four languages, and integrates with many popular North American point-of-sale and e-commerce platforms.
Q: I notice more and more stores launching loyalty programs. Why are loyalty programs so popular and what sort of value does it bring to a retailer?
A: That’s a great question. Most businesses rely heavily on advertising to increase sales, boost brand recognition, and drive traffic into their stores. Acquiring a new customer can be quite expensive and there is no guarantee that the customer will return to your business after their initial visit or purchase. A loyalty program provides customers with a value-added experience that rewards them for purchase behavior and brand engagement. In addition, it is an effective way to increase marketing ROI by capturing the data of new customers and empowering the business with the ability to re-market at a much lower cost
Q: Aside from maximizing the marketing ROI, what other benefits are associated with having a loyalty program?
A: A loyalty program is a great tool to action on sales trends and drives customer engagement. For example, if your average order value is $30, you can create a reward or offer to help increase spend. We often see this with luxury cosmetics brands that offer a gift with purchase for spending over a certain amount. Another popular feature that increases sales is the ability to target and segment promotions to customers based on their spending history. For example, if a customer shops a specific retail or brand category, you can target them when a new product is launched and include a call to action that is relevant to their profile.
Personalization of offers and content bolsters customer engagement and fortifies the relationships that your customers have with your brand. According to research executed by Bain & Company, 20% of the most loyal customers account for 80% of a business’ total revenue. In terms of strategy, it makes sense to boost customer engagement and turn regular customers into loyal customers to lift sales revenue.
Q: Experiential marketing is all the buzz lately. How would a loyalty program contribute to the customer experience?
A: Experiential marketing is a marketing strategy that many of today’s top brands are using to increase brand engagement and emotional connectivity by marketing a product or service via unique brand experiences. Kangaroo’s loyalty program complements experiential marketing strategies through gamification and personalized marketing. Gamification is the process of rewarding customers for specific behaviors or for performing certain actions. Some examples of gamification are bonus rewards for purchasing during certain timeframes, filling out additional profile information, contests, surveys, sharing offers and, my personal favorite, tier rewards.
To keep customers engaged you have to offer the “Big Three”: personalization, surprise/delight, and entertainment. Like any relationship, before you start investing time, energy, and money, you want to make sure it’s going to be worth the effort. That’s where the benefits of tier rewards really shine.
You can use tier rewards to grant special privileges and experiences to your best customers, such as sending special invitations for a product launch party, entertainment/sports event tickets, special services, pre-launch product purchasing privileges, and more. All of these actions work to boost brand engagement, raise brand awareness through social media, and ultimately strengthen the emotional connection to the brand.
Q: You mentioned earlier that 80% of sales are generated by the top 20% of loyal customers. It makes perfect sense that a business would want to invest in increasing that 20% spend bracket. How would you use Kangaroo to bolster customer loyalty in that customer segment?
A: Fantastic question. This is where you can really profit from the value of a loyalty program. Earlier we discussed how tier rewards can be used to reward customers with experiences based on their engagement level. The key to increasing sales is to drive engagement. Customer engagement is the process of having customers interact with your brand. Marketers measure engagement by the level of email opens, coupon/offer redemptions, social media comments, likes and shares, photo posts, contest participation, and event participation to name a few.
Back to the question; to gain more loyal customers, you must increase brand engagement. This means that as a strategy, you must focus your efforts on increasing the ease in which points are earned and redeemed in order to effectively push customers from tier to tier. In a typical three-tier loyalty program, the goal should be to grow and reward customers to encourage top tier attainment. Once a customer attains tier three, you have developed a highly engaged cohort of customers who have essentially become brand ambassadors. Not only will they purchase frequently and spend more, but they will also refer to friends and family and speak positively about your brand to others.
Q: Another huge trend in marketing right now is personalization. Business Insider reported that 44% of shoppers would become repeat buyers and 40% reported having spent more money on a purchase than planned because of personalized shopping experience. How does a loyalty program enhance personalization?
A: Now, those are pretty large numbers. Roughly half of the shoppers reported spending more money, more often than planned; this is due to a personalized shopping experience. Now I would say it’s even more than that because those shoppers only reported on the influences they were aware of; great marketing will influence you without being overt. For now, let’s explore some straightforward examples of how loyalty personalization can increase spending.
Let’s imagine that you own a pet store and advertise a sale on pet food. The customers who come in to take advantage of the discount can later be sent automated emails or texts with promotions related to their purchases. Or perhaps they might receive a campaign suggesting a subscription program, wherein they can have their pet food delivered automatically at regular intervals for a special price.
The second example of an even deeper level of personalization occurs during the purchase process. Let’s imagine that the customer purchases dog food. A product tag is automatically entered into their profile allowing you to immediately group that customer into a ’Dog Owners’ segment to send him/her targeted emails focusing on their specific interests. In this case: dog-related products, services, and events.
On the flip-side, imagine if you had only captured that customer’s email address and you were sending him general promotional offers for cat food, fish products, and bird cages. That customer would likely unsubscribe from your mailing list because the content is not relevant to them. You would lose their business to the competition who is better at keeping them engaged with pertinent offers & content. Customers prefer brands that take time to personalize their offers and communications; they, in turn, show their appreciation by engaging with the brand and buying more, more often.
A loyalty program is the easiest and most cost-effective method to engage, retain and grow your business by maximizing the customer relationship. Data-driven personalized rewards and marketing is the proven way to ensure that you get the most out of your advertising investments. 80% of your sales are generated from 20% of your best customers. There’s a reason why so many large successful brands like Sephora, Starbucks, and Amazon have loyalty programs; imagine what you can achieve if you turn average customers into your best customers.
Valerie Smyk is the Marketing Director at Kangaroo Rewards. Smyk has been a marketing professional for over ten years with a specialization in customer loyalty and retention. She has researched and implemented the customer retention and loyalty strategy at the national level for both restaurant franchises and the Royal Canadian Mint. Passionate about marketing, Smyk enjoys creating and nurturing growth opportunities in all facets of the brand and often provides leadership in product innovation and operations.