How to Build an Existing Customer Growth & Loyalty Program

How to maximise return on cost of customer acquisition.
“Focusing less on one visit and more on engagement.” — Ken Worzel, President, Nordstrom

There’s a raft of real-world examples that prove repeat customers are far more profitable than new ones.

  • Repeat customer are more likely to shop with you again and again—if you can get that customer to come back and make a second and third purchase they have a 54% chance of making another purchase (vs. 27% after just their first purchase). (1)
  • Easier to sell to—a customer who has purchased with your store twice before is 9x more likely to convert than a first time customer. (2)
  • Spend more on each purchase—fashion customers purchase 67% more per order after shopping with a company for 30 months than they spent on their initial purchase.

Encouraging customers to shop with you time and time again requires attention and focus. Most retailers have a mass-approach to their marketing and operational practices, attempting to appeal to new and existing customers alike. Whilst there are logical efficiencies in doing this, specific practices must be implemented to ensure loyalty and spend grows over time. For each customer group, there are moments of truth that will ultimately dictate whether they remain loyal to your brand. To ensure you are relevant in that moment, there are initiatives you can introduce throughout the customer journey.

  • Welcome and onboarding experience
  • Surprise and delight
  • Second purchase program
  • Birthday & key moments programs
  • Seasonal and culturally relevant initiatives
  • Customer advocacy (reviews, social shares and referrals)
  • Re-activation program (at-risk and lapsed buyers)

(You can read about the details of each of these different initiatives in these two blogs - Part 1 and Part 2.) Between these timeline-based programs, there is also a need to identify product purchase-path touchpoints. The recommended approach to this is:

  • Identify cross-sell points—are there specific products that this segment purchases lead onto other product purchases? Know the highest margin accessories and identify specific products/categories that they couple well with.
  • Re-purchase/re-order points—once a product is purchased, how often is a replacement needed?
  • New product launches—this can be effectively handled with both targeted communication as well as a frequent ‘round up’ (hottest products of the month).

These elements make up a customer growth and nurturing program with a variety of touchpoints and media. Don’t employ random digital activities, they don’t work. Plan holistically and ensure you know at what points there may be friction for a customer. Then, come up with a solution to alleviate it. It’s recommended that you workshop their own customer journeys to unveil further loyalty program opportunities and adaptations.

Loyalty Programs

In our experience working with Informed Retailers, impactful loyalty programs have two common traits; A tiered membership structure that is easy to understand. A focus on ‘exclusive’ rewards and benefits beyond basic and transactional discounts/credits. Customers in the loyalty program should feel loved, and like they are an exclusive member of a club or community.

Exclusive benefits can include:

  • Collection previews and pre-order priority
  • Premium shipping and return services, such as free same day delivery
  • Trunk show invites and VIP nights
  • Members only discounts, campaigns and flash sales
  • A higher point to reward ratio

Another key success factor is ensuring reward promotions are time-limited. For example, ‘earn 1000 points before December 1 and receive a $50 Gift voucher to spend in-store’ or ‘purchase these items in October and receive triple bonus points. Some successful programs have a paid membership for certain tiers; ultimately this depends on the perceived value of benefits and savings.

Sources:

1. https://blog.smile.io/repeat-customers-profitable-stats-to-prove

2. https://www.accenture.com/t20180905T060744Z__w__/us-en/_acnmedia/PDF-85/Accenture-Report-The-Changing-Consumer-And-The-New-Definition-of-Retail.pdf

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