Loyal customers are the steady heartbeat of a healthy business. This holiday season presents a unique opportunity to tap into your loyalty program customers. Given supply chain shortages, brands are offering exclusive access to limited-quantity products, targeted offers and unique experiences to really take loyalty to the next level.
In this webinar, “How to Drive Growth from your Loyalty Program”, we walked through best practices for creating a loyalty program and shared ideas for how you can catalyze your loyalty program during this holiday season.
What We Learned
- Acquire, re-engage and grow loyalty members by balancing strategy and optimizing reach to ensure high growth.
- Personalize messaging and programs through data collection.
- Loyalty programs must be integrated with first-party data and omnichannel personalization, instead of being designed as silos.
- Ekta Chopra, Chief Digital Officer at E.L.F. BEAUTY
- Stefani O’Sullivan, VP, Growth at Savage X Fenty
- Woo Kim, Senior Director of Ecommerce at Aerosoles
- David Henry, Director of Product Marketing at Amperity
Keep reading for the webinar’s key insights or watch the recording below.
The Three Pillars of Loyalty
According to Amperity, the key pillars of loyalty programs are: (1) loyalty enrollment and adoption, (2) robust understanding of the customer and (3) personalized experiences. Each pillar will build on itself to capture the customer and deepen the relationship.
The Three Levers of Loyalty
That’s the big picture. Now for the details of how it all actually gets done. Coupled with the foundation of these programs are another three levers that balance applied strategy and optimize reach to ensure high growth.
To show how the levers actually move in real life retail, Amperity used data from one of their customers, a national coffee retailer.
Lever 1: How can you impact your total unique customers? Acquiring new customers by identifying and converting non-loyalty members is probably the most alluring strategy. Of the three levers, there is the greatest opportunity to bring new people into the program at 80 million unique customers.
- To make the most of a limited time frame of holiday purchases and returns, brands can entice customers through the exclusivity of price thresholds. Plus, when you can truly understand who the customer is and align your offered benefits specifically to their interests, then they are more inclined to engage with you.
Lever 2: How can you re-engage your lapsed members? Activating lapsed loyalty members and activating new ones is the smallest bucket for the coffee retailer at 10 million customers. Because a lapsed member could just be someone transacting with a different email, for example, Amperity suggested strategies that make activating through the loyalty program a no-brainer. In the holiday season, you can offer incentives like free returns or free shipping for loyalty members to draw them back in.
- Also, especially with the current supply chain issues, communicate what you predict will be in high demand or a fast sell-out. This will bring you back to the top of mind for the customer and encourage non-anonymous purchases.
Lever 3: How can you grow your active members? This bit more of an opportunity for growth with a bucket of 20 million active members versus re-engaging. Working to grow your number of active members can prevent increases to that lapsed customer allotment. Since people are involved in loyalty programs for its exclusivity to begin with, reward your active, loyal customers with the inside scoop as to when they can get the best deal. Like we mentioned before, really knowing who your members are and what they want will help incentivize higher value transactions.
Now that you know what we think creates a loyalty program and how to sustain it, here is some performance based data from the Journal of the Academy of Marketing Science to detail the dos and don’ts of your loyalty program.
For starters, Amperity noticed that a common shortcoming of loyalty programs is that they exist independently or as a sole entity. Because customer retention is the aggregate of a variety of customer interactions, your program will reach its highest success when integrated with first-party data and omnichannel personalization.
At the end of day, a customer is joining your program to feel special. You are making them feel that by not being involved, they are missing out. Top performing programs provide members with special events or products, priority services and relevant rewards that tie to the core value of your product or service. It makes sense then that strategies like immediate generic discounts or special attention on only certain occasions, wouldn’t succeed at drawing them in. Good ideas that will sustain your program, but not guarantee growth or retention are membership fees or loyalty tiers.
DICK’S Sporting Goods
Amperity capped off their presentation with DICK’S Sporting Goods’ customer story. They worked with Amperity to apply a more robust ID resolution, smoothed out their data conversion process and improved campaign efficiency and performance with various platforms (Google Cloud, Big Query, Adobe Campaign and Customer Journeys).
The result? Without spending any marketing dollars, DICK’S Sporting Goods grew their marketing audience by 100k gold-tier loyalty members. They were able to uncover who their highest valued customers were and what they actually care about.
How Brands are Approaching Loyalty Programs for the Holidays
The Incremental Loyalty Member
Like we explained before, a proper loyalty program builds on itself with the steps above. Your program is then expanded by each incremental customer and consequential sales gained. For E.L.F. Beauty, 70% of sales online come from their community of 2.7 M loyalty members that is continuously growing. Also, Aerosoles is experiencing a 74% repeat purchase rate from loyalty members, compared to their 17% repeat purchase from non-loyal members.
The numbers are proof enough that loyalty programs are worth the investment of time, energy and marketing spend. Although loyalty members are rewarding you with greater guaranteed sales, engagement and first party data, the downside is the messiness of their data. The panel was surprised at Amperity’s announcement of a 45% deduplication rate for loyalty program databases. Because our most loyal customers interact with us the most often, there is a higher chance of them engaging with various contact information, addresses, names, etc.
As a result, in order to gain clarity on who they are and how you should approach them, loyalty can’t be isolated. Instead it is the lifetime value or aggregate spend of a customer, as well as their profitability. Considering these factors to discern who is who in the broader population will have the greatest long-term impact on your bottom line.
The Incremental Revenue
To truly unlock the power of loyalty data, Amperity recommended A/B testing and a holdout to specifically track incremental revenue and audiences through transactional data too. It is common practice today to track metrics like opens and clicks. Yet, another data point to keep an eye on would be the literal impact on revenue uplift to find the real value in incremental revenue.
Savage x Fenty’s goal is to offer value and they choose to deliver their suite of benefits through a paid loyalty program. This is a standard model in the textile industry, as we have seen from ShoeFab and Fabletics. In this business model, the 1st of the month is the most important for their customers or “VIPs” to “shop or skip”. This built-in retention funnel focuses their efforts on acquisition to get the right people into the program and best identify VIPs that will be attracted.
Movement in Tiers and Data Collection
Some loyalty programs build in a tier or point system to increase the sense of exclusivity within the program and incentivize repeat purchases. Aerosoles focuses on awareness and messaging to remind members of how many points they have and how many until the next discount. This tactic works best for them to move members between levels of the program. Plus, to make the most of the current supply chain issues, they offer double points to those purchasing their items with high inventory.
Also, E.L.F. Beauty introduces the element of personalization and rewarding through gated offers only for loyalty members, especially during the holidays. They collect data on their members through a beauty profile that tracks their likes, dislikes, skin type and personal preferences. This information is then infused into future messaging and segmentation.
CommerceNext is happy to provide marketers with the top tactics and strategies to capture the most new customers and sales. We hope this is your best holiday season yet after applying our recent learnings and recommendations: Cyber 5 Marketing Tips, 2021 Holiday Shopping Trends and How To Market When Inventory Is Unpredictable.