Your A to Z Guide to Customer Loyalty

Customer loyalty is an essential component of business success.

A recent study by mass media company Vivendi found that 77% of brands could go out of business tomorrow, and consumers simply wouldn’t care. As harsh as this statistic may sound, it’s a stark reminder to businesses everywhere that loyalty is key to survival.

In order for customers to develop an emotional connection to a brand, businesses must employ exceptional loyalty marketing strategies.

With this A to Z guide to customer loyalty, we hope to equip you with the tools your business needs in order to:

• Retain customers and build brand loyalty
• Accelerate FOV (frequency of visit) and increase ATV (average transaction value)
• Boost engagement, thus developing a stronger emotional connection between brand and customer

So, let’s get started!

Awareness

Of course, brand loyalty can’t exist without brand awareness. While customer retention is far cheaper than customer acquisition, this won’t help you much if you don’t have customers to begin with!

A well-designed loyalty program will utilize social media, referral incentives, experiential rewards and Surprise & Delight mechanisms to spread brand awareness and help your business attract new customers.

B2B (Business-to-Business)

Depending on the products or services that your business offers, some of your customers might be other businesses. If this is the case, it’s important to keep in mind that a B2C loyalty program structure won’t necessarily work for a B2B relationship.

Make sure each client’s loyalty experience is tailored to accommodate their unique and specific requirements. This creates a highly personalized B2B relationship that will keep them engaged.

Communication

Communication is key! Whereas the traditional “Buy X Get Y” paper punch cards never offered much opportunity for businesses to communicate with their customers, digital loyalty programs provide businesses with a whole host of ways to stay in touch with customers.

According to Bond Brand Loyalty, loyalty program communications can result in as much as a tenfold increase in personalization when done properly. Which brings us to our next point…

Data

Customer data refers to the information that a business gains from each customer’s ongoing transactions. This includes everything from how much the customer spent to where they made the purchase, what else they bought, the specific time of the transaction and so on.

Digital loyalty platforms can store all of these data points, and use them to create an increasingly detailed customer profile. This is very useful for marketing insights, which we’ll touch on shortly.

Engagement

How can you inspire loyalty from your customers if you don’t engage with them? Good customer engagement is key to the brand experience, and it’s how you elevate the customer’s perception of your business.

There is no limit to the ways in which you can engage your existing customer base, but here are some useful mechanisms to get you started:

• Email marketing
• Social media campaigns
• Personalized texts and push notifications via digital loyalty app
• Surprise & Delight giveaways (such as Scratch & Win instant prizes)

Funnel

In marketing circles, the funnel refers to five crucial steps in the customer journey: awareness, consideration, conversion, loyalty and advocacy. A loyalty marketer’s goal should be to convert one-time or lapsed customers into infrequent customers, infrequent customers into frequent customers, frequent customers into advocates, and so on.

Gamification

This is when businesses take those same features, functions and processes that make a game “fun”, and incorporate them into their loyalty programs, marketing strategies and consumer touchpoints.

Gamification allows brands to capitalize on that emotional high that customers experience when they “win” or “achieve” something. For proof it works, you need look no further than Starbucks Rewards.

Happy Customers

Hopefully, this one should be a given! A happy customer is a loyal customer, and there is no shortage of creative ways to keep your customers happy… especially when you utilise your digital loyalty program to its best potential.

Insights

Remember all that “data” talk earlier? Well, customer data provides businesses with invaluable insights into who their customers are, what they like, how they shop, what other products they purchase, and a wealth of other information.

Not only does all this data help to personalize each customer’s brand experience to cater for their unique tastes and preferences, but it also allows you to make tweaks and adjustments to your business model based on what is and isn’t working.

Spark Joy for Your Customers

It’s one thing to offer your customers quality products and friendly service – that will (hopefully!) leave them feeling satisfied. But to inspire joy, you need to go above and beyond, and a digital loyalty platform can automate this process for you.

At Stamp Me, we recommend building incremental rewards into your digital loyalty program that the customer doesn’t know about, so that when they reach these milestones, it has the effect of a spontaneous gesture. Another technique is to offer birthday gifts, or even just to send the occasional text/push notification to say hello and wish them a nice day!

Keep Customers Coming Back

These days, customers aren’t as easily tempted to “buy nine X and get the tenth free”. While the traditional stamp card method still works, customers need more of a reason to make repeat purchases from a business.

By digitalizing the paper punch card into a loyalty app that your customers can download onto their mobile devices, companies can directly communicate with the customer, and this kind of personal connection keeps customers coming back.

Lifetime Value

A customer’s lifetime value is ultimately the prediction a business makes regarding the net profit earned from the future relationship of any given customer. That’s a fancy way of saying that a first-time customer who just spent $25 with your business could potentially become a long-term customer who spends thousands of dollars with your business.

This is where loyalty marketing comes in – instead of treating each transaction as exactly that (a single transaction), a good loyalty marketer treats it as an investment towards future transactions.

The better your loyalty marketing is, the happier the customer is. The happier the customer is, the greater their lifetime value is. Simple!

Mobile

Digital loyalty apps make it possible for businesses to go mobile with their customer loyalty initiatives, extending the brand experience beyond the walls of the shop itself.

Many digital loyalty app providers (including Stamp Me) provide businesses with access to a sophisticated digital rewards platform, which they can operate over multiple locations and numerous channels (i.e. physical shops and online stores) simultaneously.

This mobile customer loyalty experience also allows brands to engage customers with tailored offers when they come within close proximity of an outlet, along with other effective targeted marketing techniques that aren’t possible without mobile.

Non-monetary

It’s a common trap businesses fall into – rewarding customers with discounts, free products and other monetary rewards. There are countless ways you can motivate customer loyalty with non-monetary rewards or ‘VIP perks’.

Some effective experiential rewards include:

• Early check-ins
• Skip-the-queue benefits
• Free upgrades
• Access to exclusive events like product launches and pre-sale parties

These kinds of rewards show customers real value, and make them feel special. This is a huge asset to building brand loyalty and creating an emotional connection between your brand and your customers.

Omnichannel

In general, this term refers to creating a seamless user experience across multiple channels, be it from online to over the phone, through the mail to in-person, via mobile device and so on.

In regards to customer loyalty, it means providing customers with a convenient and cohesive brand experience across every device and communication channel. A well-designed loyalty program will allow the customer to “pick up from where they left off” when they shop with your brand via numerous avenues and devices.

Personalization

Have you ever walked into your local coffee shop, only to have the barista immediately start making your coffee before you’ve even had a chance to order? Digitalize this concept, and you’ve essentially got personalization.

In a nutshell, personalization occurs when a business tailors its service to cater for each specific individual’s preferences and requirements. This process can be automated, with a decent rewards platform. The more sophisticated the loyalty program, the more accurate the personalization.

Quirks

When it comes to customer loyalty, quirky is good! With so much competition, retaining customers has never been more difficult, and quirks are an effective tool for standing out from the crowd. Think outside the box to develop unique and memorable loyalty marketing, social media campaigns, and other customer retention strategies.

Rewards

No guide to customer loyalty would be complete without discussing rewards! Every customer needs a reason to return to your business – a reward. Just to be clear, this reward doesn’t need to be a free or discounted product.

Customers can be rewarded in a whole host of ways – spontaneous VIP perks, tailored messages addressed specifically to them, free shipping on their next purchase. It all depends on your unique business, and your unique customers.

Simplicity

As much as we love to discuss all the bells and whistles you can include in your rewards program to entice customers and foster loyalty, simplicity is key. The trick is to create a highly sophisticated, multi-layered loyalty program, and then package it up in a neat and tidy offering that customers can easily get their head around and see the benefits of.

“Do X, Get Y.”

Touchpoints

A touchpoint is any means in which a consumer interacts with a business (or vice versa).

A customer might browse a brand’s online store via their desktop at work, pass a billboard promoting the brand’s product on the drive home, and then continue browsing the brand’s online shop via its digital loyalty app at home. After dinner, the customer might see the brand’s TV ad, and then jump into bed and receive tailored offers while browsing social media.

These are all touchpoints in which the customer’s overall perception of the brand can be improved or deteriorated.

Unique

At Stamp Me, we pride ourselves on our industry knowledge and loyalty marketing expertise. That being said, there is no “perfect recipe” to creating an enticing loyalty program that will engage your customers in just the right way.

Our primary piece of advice is to soak in as much information as you can on customer retention and brand loyalty, and then find your own unique spin to put on it. Don’t be afraid to take chances and think outside the box! It’s important to stand out from your competitors.

Value

Stamp Me cofounder Shannon Magowan once came across a bicycle shop that was offering customers a £5 discount with every £500 purchase… Seriously?!

A 1% discount doesn’t encourage customer loyalty. It’s a clear indication that you want customers’ money without giving anything back, and it’s more likely to insult customers, thus reducing your chances of customer loyalty. Our point here is that your rewards need to clearly reflect an appreciation for customers’ repeat business.

Word of Mouth

Word of mouth refers to a more traditional form of promotion, where existing customers tell their peers about your business, and brand awareness spreads that way.

One of the best ways to attain new customers is to provide your existing customers with such a good brand experience that they become advocates. Of course, offering them a little motivation to refer their friends is also an effective technique, and many businesses offer rewards for referrals.

X Marks the Spot

The more accurately you can pinpoint each customer’s spending habits, shopping behaviour and product preferences, the more personal an experience you can offer them. We’ve already discussed how data can provide valuable insights into consumer habits, but you can also obtain this information from surveys, feedback forms and social media engagement.

Youth

As millennials and Gen Z take over an increasingly dominant portion of global spending power, things like “convenience”, “instant gratification” and “corporate social responsibility” become more and more important.

Digital loyalty apps, upfront signup incentives and loyalty programs that reflect good corporate citizenship are all characteristics that should be on any decent loyalty marketer’s radar right now. Learn more about 2023 customer loyalty trends.

Zest

And finally, inject a little gusto into your customer loyalty initiatives. An energetic loyalty program inspires enthusiasm, creates hype, gets people talking and drives engagement.

A loyalty program is the best tool at a business’s disposal for expressing company values, conveying brand messages and delivering an exceptional customer experience… so don’t do a lukewarm job of it!

Now you know customer loyalty, from A to Z.

We hope this A to Z guide to customer loyalty helps you get started on your journey to creating an enticing, engaging and ultimately irresistible customer loyalty experience that fosters an emotional connection to your brand.