by Amba Wilkes
The global pandemic has undoubtedly created challenges for brands of all shapes and sizes to stand out in an increasingly competitive market. In a world where customer shopping behaviour continues to evolve at a rapid pace and the future of the high street faces huge innovation, the importance of customer loyalty has never been so prevalent.
We chatted with Fiona Stevens, Head of Marketing at LoyaltyLion, who shared first-hand insight into how customer loyalty has shifted in the last year, how to overcome common loyalty challenges and advice on how to create an integrated loyalty programme that makes a real difference to your business.
How has customer loyalty changed in the last 12 months?
We’re definitely seeing a shift when it comes to loyalty. Although more consumers are shopping online due to the pandemic and there have been challenges around stock availability which have made people switch brands more often, we’re actually seeing loyalty become more prevalent in the past 12 months.
Today, shoppers are actively choosing to shop with brands that they know and trust rather than searching for new ones. We did some consumer research at the end of 2020 which found that 68 percent of consumers were more likely to shop with brands that they knew and trusted than they had been a year previously. While 52 percent said they would prioritise shopping with brands where they had points or rewards they’d collected.
It was also interesting during Black Friday and Cyber Monday - which is a time we usually associate with shopping around to get the best deal and reduced brand loyalty - we saw a 29 percent uplift in loyalty programme sign ups. People were actually wanting to create that relationship with the brand. We also saw a 13 percent jump in member orders and 48 percent more rewards claimed than over a normal weekend. Shoppers were coming back to the brands that they know and love.
Last year we were already talking about the conscious consumer and the fact that more customers are prioritising whether or not brands share their beliefs and values – whether that’s sustainability or looking for vegan products because you’re vegan – people are wanting to shop in a way that remains true to them. But this does also mean the way consumers shop is changing which presents a really big opportunity for brands to secure customer loyalty by being authentic and focusing on those values and those connections rather than just transactions.
What challenges has this created for eCommerce brands to capitalise on the changes in customer loyalty?
First of all, stores have had to work really hard to stand out and continue acquiring new customers as the market has become more and more crowded. You need to actively build those customer relationships in order to maintain and retain them long term.
Secondly, they have to make sure they’re connecting with customers in between transactions far more than before. Otherwise, A) those customers become a one hit wonder and B) customers aren’t always looking to make a purchase there and then, they actually want to connect with a brand in a more meaningful way, even if they don’t have the extra pennies to spend in that moment.
But we’ve also seen brands rise to these challenges. For example, clothing brands have had to close all their physical stores, but many have chosen to run virtual styling sessions instead. Although these businesses aren’t able to maintain those physical relationships, they’ve found a way to replicate the connection online.
Then you have other brands who’ve created an entire community hub full of content such as podcasts for a day in the pandemic, playlists to keep listeners focused and interviews with founders. Content can be created that really reflects your brand values and keeps you in touch with your customers between transactions, encouraging them to come back and connect, even if they’re not making a purchase right away.
And finally, you’ve got brands who have taken the time to communicate their values to build these long-term relationships. For example, a dog food brand we work with allow their customers to redeem loyalty points in the form of a donation to a dog shelter or to plant a tree instead. So, it’s really clear to their customers from the get-go what they value and if this aligns with their beliefs, it helps to drive a connection.
It’s definitely a challenge to find way to keep customers from looking elsewhere or being distracted by convenience and discounts or the first brand that pops up in a Google search, but we are seeing brands do it really well.
How is LoyaltyLion helping brands build and retain loyalty?
There’s still a tendency to see a loyalty programme as an additional thing on your to do list, another thing to manage. Because of this, it can end up in silo, gets forgotten about and doesn’t drive the results you want.
We really want to help brands build and retain that loyalty by making your loyalty programme an integral part of your marketing strategy. Rather than it being a separate channel, it should work alongside all of the activities you’re already doing. For example, if your focus is on email marketing, make sure you’re putting your loyalty data into those emails and messaging to improve performance. If your focus is on generating more UGC or social proof, make sure you’re incentivising reviews and rewarding people when they do mention you on social media. If you’re looking to improve customer experience, you could integrate your loyalty data into a helpdesk to sweeten those slightly sour situations.
We really want brands to stop seeing loyalty and retention as a standalone tactic and start seeing how it’s something that could be built into everyday marketing activity. We’re building more integrations to make this easier for merchants as well. We’re also helping brands build long term relationships by making sure their programmes are completely customisable. For example, the Integrated Loyalty page lets you build your loyalty programme as a natural part of your customer journey while customer rewards can be designed around a specific charity that you support. It’s about making sure that your loyalty programme is a part of your whole customer experience and your whole brand.
We also want to help brands move past the simple points and rewards programmes. I think there’s an inherited problem where we have all been part of a Tesco Clubcard or Nectar or Boots Advantage points scheme. Now we just see loyalty programmes as equalling points that are usually quite difficult to get any kind of value from. So instead of just offering discounts and special offers, we want to see brands start to think about aspirational rewards, things like early access to sales, double points event or the opportunity to be part of a product tester panel. This will also help to create brand advocates and allows customers to be part of a community, as you’re rewarding them in a way that enhances the brand experience as well.
Is there any advice you’d share with brands when they’re looking to get started with loyalty?
I think the key thing is to start on a small, focused scale. You can segment your customer base according to your most valuable customers and when you start your programme, there’s absolutely no harm in focusing your attention on the most valuable segment.
Take time to figure out who your VIPs are, the ones that are spending the most and the most regularly. This can sometimes be tricky because often you'll find that the shoppers who seemingly have the highest lifetime value actually don't because they return 90 percent of the things that they buy from you or they only shop with you during a sale. So, you do have to go a little bit deeper than surface level. But if you can figure out who your most valuable customers are and focus your programme on rewarding them, they will have the higher average order value. If you can get them to come back and spend, that will deliver a faster ROI. They're the ones who will act as advocates too. You can then encourage them to make referrals and reviews - all the good stuff that will help your loyalty programme drive acquisition.
The other piece of advice is just to start simple. You can add things on at any point, all you really need to know at the start is how you want it to align to your brand. To begin, you can start by rewarding purchases and account creations. Then you can add rewarding of reviews, incentivising social and build out as you go. But it’s never too early to get started with something simple. As soon as you have a customer, you have a customer that could be making a repeat purchase.
Partnering with only the best, we work closely with LoyaltyLion to implement bespoke loyalty programmes for premium, fast growing brands including NEOM. If you want to know more about what a loyalty programme could do for your business, don’t hesitate to get in touch with our team of retail experts.