What brand loyalty is made of
The pickings are rich for consumers when deciding who to buy from. It’s all too easy to chop and change brands, so how do we encourage them to stick with ours? And how can this benefit both customer and brand?
Here are some great ideas and examples of how you can leverage loyalty with your customers right now.
What comes to mind for me when I think of the brands I’m loyal to? Customer experience. Let me guess – that’s got you thinking of Amazon or maybe ASOS? Both brands are excellent at providing an ease of service that takes the hassle out of shopping. This makes them the ‘go to’ retailers for repeat purchases, time and time again.
Personalisation is a key driver in this. Through intelligent use of data, brands can effectively target customers at key touchpoints and even anticipate their needs. According to McKinsey, personalisation can deliver up to five to eight times the ROI on marketing spend and lift sales by 10% or more.
When I say personalisation, I don’t just mean addressing a person by their first name (how dull). Consumers expect much, much more. What underpins great personalisation is relevancy. It’s all very well addressing me by my first name, but if the content isn’t relevant or based on my interactions with your brand (especially through my onsite behaviour) then personalisation hasn’t done its job. It’s likely that I won’t engage with your communication or what you’re selling.
PureGym does personalisation well through its monthly newsletter, which pulls in your monthly number of visits and duration in the fitness club. If you’re an active gym goer, you’ll probably open it. The offers promoted in the email are also tailored to their audience, with regular discounts on sports brands and content related to sports and wellbeing.
Virgin Trains is another brand using personalisation effectively. I recently received an offer based on a frequently booked train journey. I’ve noticed I don’t really receive communication unless it’s relevant and it’s to let me know of station closures based on my frequent travel history. This naturally encourages me to engage as I don’t feel like I’m being targeted with irrelevant information.
It seems the crux of successful personalisation is for customers to feel that brands use the information they hold on them to enhance their experience and make engagement with the brand easier. This means delivering information at the right time. Take the above offer as a great example. If a train company knows a customer doesn’t travel to Birmingham every week, it’s not necessary to send regular messages. Doing so just dilutes the impact of the offer and the customer doesn’t feel their preferences are being acknowledged.
Rewarding customers for shopping with you is a great way of increasing revenue and encouraging loyalty. A recent study by the DMA found that 70% of marketers acknowledge customers’ value and enjoy the rewards offered by such schemes – but only 49% of organisations offer them.
Points in return for purchases is one of the main loyalty incentives out there, with Boots offering the simplest exchange of four points for every £1 spent. Tesco Clubcard offers vouchers to spend in store. Earning rewards is a clear motivation for customers to spend with specific brands, and 66% of customers say this influences their spending behaviour. Providing loyalty members with clear ways to accrue and use these rewards can help drive retention and brand engagement.
However, some major retailers seem to have given their typical discounts and offers a rethink in the past few months, with ASOS ending its A-List points scheme last October and M&S announcing its Sparks card will be moving away from ‘its discount-heavy approach’. So what other types of programmes drive loyalty?
The North Face offers loyalty members access to one-of-a-kind expeditions around the world. This works well by providing perks based on customers’ unique interests aligned with the brand itself, helping to build a strong consumer-to-brand connection.
Similarly, Lululemon gives in-store exercise classes that perfectly complement its athletic wear products. While this isn’t a loyalty programme per se, since anyone can sign up, it has proven successful in getting customers into its stores. A recent Ghost Race event in the US had 35,000 guests registered for the race with 20% new to Lululemon, according to CEO Calvin McDonald.
Toms has gone further, using its programmes to make a real difference by donating a pair of shoes to a person in need for every pair sold. This type of scheme is tailored more to the values inherent in the customer rather than product value. A recent study found 49% of consumers are willing to pay more for a product that supports a cause. This appears to be a a growing trend for fashion especially. Consumers are really looking to make more sustainable purchases that are good for social responsibility and the environment. According to Neilsen, 66% of global consumers are willing to pay more for sustainable goods.
It seems there is no cookie cutter approach when it comes to loyalty schemes, although it’s clear that understanding what your customers value is key.
Ensuring a repeat purchase
From beauty products to household goods and pet food, there are staples that most of us buy each month. At first glance, these products aren’t seen as fostering brand loyalty compared with more considered purchases. However, identifying them and creating a regular subscription is a great way of making sure that the next time a customer comes to buy it will most definitely be from you. This further differentiates you from the competition. Holland & Barrett has this set up with its subscription order function, as has Amazon with its ‘subscribe and save’ feature.
It’s a given here that a brand would need to have products or services that aren’t one-off purchases. Setting this up would lead to guaranteed recurring revenue and customer retention, and it appears there is increasing appetite among consumers for subscription models, with 25% of UK adults saying they’ll be subscribing to more services over the next five years.
Setting up this model also creates a natural opportunity to promote other frequently ordered products. Customers get what they need with minimal effort each month, while increasing their average order and enabling you to more accurately predict an individual’s purchase frequency. It’s the perfect upsell.
Brand loyalty, customer experience
In my view, here’s what underpins customer loyalty: simplifying the customer experience and the path to purchase, through relevant targeting of products and services and reward schemes that align with a brand’s identity. This provides real value to the customer – making their life easier, simpler and better. And ultimately, when customers feel taken care of, they are predisposed to buy from you again and again.