What is Loyalty Marketing? Building an Effective Loyalty Marketing Strategy

January 10, 2024
7
minutes
Loyalty marketing graphic of man using his phone to shop online

Subscribe to Growave blog

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Transform your Shopify experience with Growave!

Try for Free

The truth? Loyalty marketing and any common business goals are the same. Every factor that influences a business also influences loyalty as they are so interconnected. So if you're looking to improve customer service, that affects loyalty. Or maybe you're improving your fulfillment, which can also be a loyalty factor.

Loyalty marketing is a broad topic that is focused mainly on finding and keeping your most interested customers engaged. Like with all things, honesty is the best policy. Much of what loyalty depends on, happens after a customer has a chance to settle with your brand. That’s why people say that loyalty is built on lasting impressions.

While loyalty can exist without a “program”, it cannot be managed without actually implementing loyalty features. Without a manageable loyalty program, we simply leave too much to chance. Loyalty marketing is primarily about the tools we use to motivate and manage loyalty members.

The bottom line is that loyalty marketing is a way of enhancing your core demographics experience. Most shoppers are on the fence, swaying back and forth. The right incentive at the right time can pique their interest. There is so much lost value from ignoring loyal customers and this article observes exactly that.

Loyalty is about authenticity and intrinsic value. Its merits are indifferentiable from you overall business goals. Loyalty marketing is a process of enhancing conditions for customers to encourage engagement with your store.

asd

What are some of the benefits of loyalty marketing?

Image of the benefits of loyalty programs

Loyalty marketing has some clear advantages. However, these benefits are predicated on the successful implementation of your rewards. Let's first cover these advantages.

01. Increased Customer Retention:

Loyalty marketing is closely linked to improvements in customer retention over the long term. In addition to this, some indicators show how a successful loyalty program can affect customer lifetime value. This happens as a result of better customer targeting, enhanced shopping experience, active communication, and incentives.

02. Cost-Effective:

Particularly in ecommerce where acquiring new customers is more expensive than retaining existing ones. Loyalty marketing can be an efficient solution that can reduce your marketing expenses while maximizing revenue from your current customer base.

03. Brand Advocacy:

Global brands are built on opinions and word-of-mouth. Strong sentiments are contagious and that applies to both directions. Loyalty members are an excellent source of reliability and positive opinions.

04. Competitive Advantage:

Loyalty programs can set businesses apart from their competitors. Customers are naturally inclined to choose brands that offer valuable rewards and a personalized experience. Customers also lean towards the brand that they are familiar with and where they have accrued status. 

asd

Essential steps to building a loyalty program?

Image showing the process of building a loyalty marketing strategy

These five steps represent the foundation of an effective loyalty program. Much of the process is knowing what you want to accomplish, studying customers, and making your program easy to use.


01. Define a Clear Objective:

Setting clear and obtainable goals is essential for a loyalty marketing strategy. Whether it’s customer retention, average order value, or expanding market share. A clear goal means a clear path to obtaining them.

02. Analyze Data:

Analyzing customer data can provide some clear indicators of customer behavior. By predicting or anticipating reactions, we can see a clear order of things. Data analysis is a common practice and highly encouraged for a successful loyalty marketing strategy.

03. User-Friendly Technology:

The technology you use matters when building your loyalty program. You should prioritize a smooth experience and think about value for customers. Some of the top loyalty apps can deliver a superior experience with a high degree of versatility.

04. Regularly Communicating:

Establishing a communication channel with your most active customers is an essential step. Build your loyalty program with communication in mind for the best results. One of the best ways to keep in touch is through email or SMS, which can be very affordable but effective.

05. Monitor and Adjust:

Continuous adaptations are inherent in a quickly evolving environment. Keeping up with trends and changing customer preferences can spell your success. It is through the process of change that we find opportunity, and that is something we should appreciate.

asd

Keys to Loyalty Marketing

When designing your loyalty marketing strategy, the details can get complicated. This section simplifies the process. These recommendations with a few examples of unique programs will give you a clear perspective on loyalty marketing.

Lemonade Stand 2.0

Remember the lemonade stand? Everything is just a new and improved lemonade stand.
The lemonade stand represents one of those classic examples of the entrepreneurial spirit. They take their origin in our childhood in the most basic but ambitious ways. They show us that we all need a vase with flowers or some extra ice to keep customers coming back.

In modern terms, they show us that creativity and technique are essential to any successful project. I call them the marketing superpowers not just loyalty marketing. As things get more complicated, what we offer and how we communicate become crucial. 

The lemonade stand gives us a unique sense of clarity on a complex topic. Ultimately, loyalty means intrinsic value. Loyalty marketing on the other hand means the actions we take to incentivize and retain shoppers for the long term—a process of building the experience to supplement the product.

Less is more with loyalty marketing

Contrary to popular opinion, too much can just be too much. Just like in grocery stores, the sheer scale of options can confuse some people (me included). When we narrow our scope we are demonstrating that we know our customers on a high level. So, have a clear idea of what you want to accomplish and the rest is history.

We have a habit of trying to do too much and as a result, miscommunication. The more concise or refined our loyalty rewards, the more engaged shoppers tend to be. It's common to see loyalty marketing strategies endorse freedom of choice, which is good to an extent. The real value is in understanding exactly how to enrich the shopping experience.

Understanding your loyalty shopper

That’s exactly why we should be learning from customers, especially loyalty members who are often the most insightful. With an acute understanding, we can build a road map to a sophisticated loyalty program. The customer’s experience, that’s how we generate some lift to our loyalty marketing strategy.

How do we do that? Well its rather simple. Start by looking at your niche, what are the common loyalty marketing practices? Then use your creativity to deliver some elevated value. This is where creativity and technique start to matter. Check out the article suggestion below that describes 12 different loyalty programs.

Game-Changing Loyalty Programs

The loyalty marketing strategies that transcend the ordinary, elevate above and truly excel. These unique loyalty programs can be central components of a brand's identity. How do we capture this essence? Rewards are how we differentiate ourselves. Creativity can be a daunting topic, but that is what ultimately separates your loyalty programs from the ordinary.

These unique rewards demonstrate how loyalty marketing strategies can transcend the transactional process.

  • Exclusive Events: Some brands in luxury use fashion shows as a stage to introduce their new catalogs. Granting access to your most loyal customers can create strong demand and motivate engagement.
  • Limited Edition Items: Some items are in high demand, and limiting supply to only loyal members can generate high satisfaction amongst members. This can also be early access or loyalty discounts.
  • Community Events: Car brands are known to create “owner” events, where members tour as a group. They create special events for their customers to enhance their product, an amplifier. We see a variation of this with sports brands creating group exercise sessions.
  • Dedicated Service: Airlines are the common culprit. Loyal customers tend to receive special gate access and dedicated service. This is a certified way of making customers feel special. We can also see restaurants providing better seating or more flexible reservations for repeat customers.
  • Social Cause: Mango is a perfect example of brands aligning with social causes to attract customer engagement. They offer donation services and partner with NGOs to bring a socially aware category of customers.
  • Strategic Partners: We occasionally see brands partnering up with partners to boost their customer base, but more importantly to enhance customer experiences. This could be free cinema or concert tickets. That could also mean something like strategic partnerships between car dealerships and banks, something that makes a lot of sense. 
Suggested Article

Offline vs Online Loyalty Marketing

Offline loyalty marketing has been around for a while, whereas online loyalty marketing is only as new as ecommerce. There may be some ambiguity, so this section is all about their differences. It's hard to be objective because offline marketing is much broader and could mean almost anything. Online loyalty marketing on the other hand is mostly about making the most out of a restrictive digital space.

The full loyalty experience is best felt in person, while online methods are mostly incentive-based. In simple terms, there is no matching what an in-person experience can produce. That could mean anything from special events or exclusive treatment. Consider the example below.

Example: An ice cream shop offers free ice cream for children with a loyalty card on special days. They are attempting to create a happy moment that will resonate. They build their loyalty program on a “smile”. This keeps them top of mind and creates a perfect opportunity to offer parents some sort of loyalty program.

Similarly, luxury is best experienced in person, which is often the “wow” factor that brands want customers to experience.

E-commerce has a unique set of challenges like; communication issues, technical complexity, and trust issues. Within such a restricted environment our options might seem limited. Having the ability to improve your prospects may mean a world of difference.

An image of a popular loyalty programand two of its rewards


Example: Massimo Dutti takes its brand identity and builds on those values. Rather than offering an overly simplified purchase-for-points program, they take things to another level. They focus on exclusivity and special access for loyalty members. Customers benefit from intimate in-person sessions and early access to new items. Some loyalty members even gain access to exclusive events, which for the right customer is a wow factor.

Could it be possible that the best loyalty programs are a combination of online and offline programs? We certainly want customers to have the best possible experience. At the end of the day, what matters most is how customers feel about your brand.

asd

Conclusion

If we went down the list of ecommerce specific issues, we’ll find that loyalty programs stand out for their relevance to those problems. For every issue, there is an ideal outcome, and loyalty programs are going tractions for their applicability. So naturally you must be wondering if loyalty marketing is relevant to your business and what the details are.

No items found.
No items found.

Frequently asked questions

No items found.

Book a call with our experts

Book a call with our experts to learn more about how Growave can help you create a successful loyalty program.
BOOK A CALL
Aika Growave Sales

Book a call with our experts

Unlock the Secrets of Ecommerce Success. Book a Call with Our Experts Now!
BOOK A CALL
Aika Growave Sales

Book a call with our experts

Let our team show you the personalized approach to cart abandonment recovery.
BOOK A CALL
Aika Growave Sales

Built on Trust, Driven by Results: See Why Users Choose Growave