It’s hard to argue the importance of customer loyalty; after all, returning customers spend 67% more than first-time buyers. But, consumers’ mindsets and buying behaviors are undergoing a massive shift resulting in a significant drop in customer loyalty program participation, even when the popularity of loyalty programs is at an all-time high. After all, the average American household has membership in 29 loyalty programs but is only active in 12 of them.
So, back the first set of questions: can you count on your customers? While customer loyalty programs are growing in popularity, the actual definition of customer loyalty is becoming more and more vague. You may have some customers who consistently purchase from you but also buy from your competitors; is that loyalty? You may have customers who exclusively buy your products but infrequently. And you may have customers who are avid participants in your loyalty program, but the second a competitor has a better offer they move on; the lines are blurred.
While the first two questions depend significantly on the goals of your loyalty program, I think we can all agree that the answer to the third question is a resounding no. Unfortunately, this is the dynamic many loyalty programs foster. One in which the customer can earn rewards and discounts, but never really feel connected or invested in the brand.
So, how do you build a sense of investment through a loyalty program? Rewards and incentives, as always, are the first step to getting customers’ attention. 65% of customers say that rewards impact their frequency of purchases, however, at the same time, 79% of customers said brands have to actually demonstrate that they understand and care about them before they are going to consider purchasing regularly.
It really comes down to what you are asking your customers to do. Transactional, points-for-purchase loyalty programs don’t cultivate genuine loyalty. Engagement-based programs are the answer to building genuine and lasting loyalty. In an Advocate Loyalty program, customers can earn rewards for actions beyond just purchases, such as promoting a brand on social media, referring friends, writing reviews, sharing pictures and much more.
Check out Annex Cloud’s free whitepaper to find out what strategies make up an advocate loyalty program, discover what 4 steps you can take to optimize your loyalty program, and learn about examples of businesses who are already distinguishing themselves in the loyalty game.
This guest post was created by Erin Duff from Annex Cloud, the fully integrated Customer Loyalty, Referral Marketing, and User Generated Content solution.