Customer loyalty: More than just a newsletter subscription
25 January 2022 • 4 min read
It’s no secret that a critical key to success in any business is keeping customers content.
Not only is a happy and loyal customer base great for your brand image, it’s cost-effective too. Research shows that acquiring new customers can cost up to five times more than nurturing and retaining an existing client. It’s little surprise then that as technologies progress and we learn more about customer behaviour, customer loyalty schemes are fast becoming a core element of many brand strategies.
But the organisations successfully harnessing loyalty schemes don’t simply throw endless offers out there in the hope that one sticks. They first lay the crucial groundwork, ensuring they fully understand the needs of their customers. They analyse buying patterns and provide audiences with incentives that will resonate, and keep them coming back for more. A perfect example of this is ASDA and the use of their ‘Rewards’ programme, built by our team at AND Digital. This scheme takes a refreshed approach to customer loyalty, the details of which you can find in our whitepaper “Exploring customer loyalty in the ecommerce era”. The Rewards scheme at ASDA actually credits customers with cash for their purchases instead of points, as well as gamifying the experience for shoppers in order to encourage repeat purchases.
Although new approaches to customer loyalty programmes are being introduced year on year, the concept of these schemes certainly isn’t a new one.
The first recorded programme of this kind appears to have been created by The Coca-Cola Company in 1887, offering a free sample of Coca Cola to customers who had already made a purchase. Between 1887 and 1913 it was estimated that over 8.5m free Cokes were given out in the US. This signified the birth of an entire nation of soda drinkers.
The evolution of customer loyalty
Over the next century, the concept of customer loyalty evolved at a furious pace. Over time, customer loyalty schemes became synonymous with the retail industry in particular. For a while these programmes were thought of as complex, all-encompassing propositions aimed at helping brands stand out within an increasingly oversaturated marketplace. But with new competitors emerging every day (each with increasing tech savviness) it’s no surprise that more and more time is now being spent on formulating customer loyalty propositions that retain and reward loyal followers handsomely.
The mechanisms that brands use to drive customer loyalty propositions can be highly varied, ranging from old-school stamps on paper cards to redeemable email codes. These days it’s common for brands to even have their own carefully crafted loyalty apps, as well as aggregated loyalty schemes from affiliates too.
Data collection opportunities (with the right levels of compliance and governance, obviously) are everywhere. The best customer reward programmes are the ones that cleverly connect a brand’s values to the customer experience of their platform, creating a loyalty offering that’s practically perfect. Sure, sending out a newsletter with generic incentives may lead to some success – but what customers really want now is that personal touch. When your customer base feels understood through bespoke recommendations, the mechanics of rewarding resonate with them on a whole new level, and you’re far more likely to create brand advocates.
Finding the sweet spot
If you’ve had a read around about customer loyalty propositions, you’ll have already discovered there’s a lot of noise to cut through around the subject. So let’s boil it down a little, shall we?
Essentially, there are two core positions to consider when creating a truly effective loyalty programme. The first is that customer loyalty is a transactional relationship, with a predominant focus on tangible rewards that can be built up to redeem against future goods. This approach encourages repeat purchasing and almost guarantees a return visit to follow up on that initial purchase. This is most commonly exemplified with an “x% off your next purchase” incentive – an accumulation of points based on a customer’s previous visits and spends (think the iconic Nando’s chili scale!) or points that can be redeemed against member-only products and services.
The second purpose is relationship building between company and consumer. Think about it: there’s a reason why local businesses tend to forge such strong local and community connections, when compared to the big brands of the high street. There’s a clear and natural loyalty that shines through, as customers build brand devotion based on personal connection, nostalgia, trust and location.
The truly successful organisations are ones that are able to strike the perfect balance between these two approaches. This comes from first understanding the symbiotic relationship between both parties and how there must be as much give as there is take, otherwise you run the risk of asking too much, or worse, flooding customers with generic emails that very quickly lose the loyalty you’ve worked so hard to foster.
Read next: How to identify the right customer loyalty programme for your business
Join the conversation on customer loyalty
Wondering about customer loyalty and how to implement a successful loyalty program? Why not download our whitepaper “Exploring customer loyalty in the ecommerce era”? Get practical tips and guidance on how to keep customers at the heart of your organisation to foster loyalty.