Loyalty - is it right for your brand and how can you make it work?

Oct 4

Loyalty is always a hot topic with retailers, who are looking for ways to increase their Customer Lifetime Value (CLV) and Customer Retention Rate (CRR).

But loyalty can mean different things to different people, and a full blown loyalty program is a big commitment, so let’s take a look at what options are right for you and your e-commerce business.

There are a number of ways to approach Loyalty - points focussed programs, Membership, Community or a blend of these.

But first, what do customers want from brands?

According to a recent Deloitte Fashion and Luxury Report:

44% want to be rewarded with gifts in exchange for their loyalty
45% want more personalized services and goods

They want to be recognised and rewarded for their loyalty with ADDED VALUE.
And do Loyalty Programs actually work?

A client of mine who is a make up brand, shared these results from implementing their loyalty program:

LOYALTY PROGRAM RESULTS

+ Repeat purchase rate: 33%

+ Sales by repeat customers: +30%

+ Returning customers (2 purchases): +27%

+ Returning customers (3+ purchases): +38%

+ Average order value: +86%

Which makes for an inviting case. And there are lots of pros to loyalty programs:

PROS OF LOYALTY PROGRAMS

+ Improves customer retention % and frequency

+ Is a reason for customers to choose you over competitors

+ Turns your customers into brand advocates which can increase customer acquisition

+ The ability to get first-party customer data, giving you a richer understanding of your best customers

However, there are also cons to consider:

CONS OF LOYALTY PROGRAMS

- Traditional points based programs can be expensive and inflexible

- Launching and maintaining a program takes budget and resources to make it a success - customer behaviour changes over time

- If you’re offering discounts and free products, that’s going to affect your profit margins

- Might not be the right approach for your audience - the make up brand who shared the results above, also shared that the program they launched for a sister brand that targeted an older audience, did not perform anywhere near the same.

So, how can you ensure your Loyalty Program does deliver?

KEYS TO SUCCESS

Choose the right tech - YOTPO and Loyalty Lion are both providers to consider. Both plug in nicely to Shopify and Klaviyo

Integrate with other channels - make sure you’re promoting your program across all channels (both on and off line), as well as keeping customers updated as to their status

Have a control group who doesn’t get any of these benefits to enable you to measure value

Run a pilot - this is key! Make sure all the aspects of your program work with a smaller focus group before promoting it to the wider world.

If you don’t feel that a loyalty program is right for your business, or you aren’t ready to take that step just yet, you can achieve higher CLV and CRR with your automated email flows.

HOW YOU CAN ACHIEVE YOUR LOYALTY GOALS WITH FLOWS?

+ Data Capture and Quizzes - build out first party data about your customer and use this to make their communications more personalised

+ Post Purchase - drive repeat purchase by nurturing the customer

+ Purchase Anniversary and Birthdays - show them you know them and make them feel special by marking these events with a gift/offer/communication

+ VIP - trigger by someone entering your VIP segment eg. Has shopped 4+ times in total, has shopped once in the last 6 months, has spent over £500 over all time. Give them exclusive perks such as free/expedited delivery on all orders, early access to new season and dedicated customer service channels.

We’ve worked with a number of brands, including OKA and Ciate London, to define their loyalty and VIP strategies. We’re also a YOTPO partner.

If you’d like to discuss your loyalty plans, or hand over your email flows to an expert team, get in touch.

The team at Vervaunt put together a brilliant article about Loyalty Programs in the Fashion and Beauty industry. Read it here.