Focusing on winning new prospects might seem more appealing or potentially lucrative than putting in the hard work to secure the loyalty of your existing customers, but research has consistently shown that new customer acquisition requires 5 to 25 times the investment necessary to sell to an existing client. Veteran customers also spend more than new recruits. Findings like these have driven organizations to shift their primary focus from expansion to retention with many efforts centered around expanding customer benefits through loyalty programs.
By definition, loyalty programs are long-term marketing initiatives offering benefits to repeat customers and are by no means new to the marketing arena. The ultimate goal of a loyalty program is, of course, to motivate your customers to keep buying from you, rather than branching out to other providers. Research indicates that 82% of North American consumers have signed up for at least one loyalty program, the majority of them in the food and beverage industries[i]. These programs have become so prolific, that Forbes estimated that consumers in the U.S. alone have amassed roughly $48 billion in reward points and airline miles.
Improve Loyalty by Tailoring Communication Channel Preference
Customer experience (CX) is a top priority when it comes to customer retention. Businesses must monitor consumer satisfaction to ensure current initiatives are having the desired effect. For instance, InfoTrends data found that only 15% of loyalty program subscribers didn’t want to receive direct marketing messages from their program providers. Companies should target these customers with specialized ads that promote additional sales and exclusive offers. Not only will this keep loyalty program clients happy and engaged, but it also provides an excellent opportunity to increase sales revenue.
Nevertheless, loyalty program members are just after deals. InfoTrends’ research suggests that these consumers expect to be rewarded for their loyalty through discounts or free promotions. These incentives should be tailored to each customer’s shopping profile so that your business can better provide rewards that have the best chance of providing a good CX and the highest probability of generating additional sales.
Here are some of the new potential communication channels that have been empowered by the digital revolution:
- Smartphones: Texting, Apps, and Phone calls
- Tablets/Laptops/Computers: Emails, Apps, and Personalized user interface
- Physical mail: Direct mailing and Promotional offers
- Video game consoles
Every one of these mediums can be connected to the internet, making it a potential communication portal between your business and your loyal customers. Naturally, consumers have different communication preferences – both in terms of hardware and software – that you must consider. For instance, a 74-year-old grandmother isn’t likely to see or respond to an offer optimized for an Xbox console. Channel agnostic customer communications are the most likely to meet consumers where they are on their preferred platform and maintain positive interactions that engender loyalty.
Don’t Let Data Breaches Damage Customer Relations
Unfortunately, cybercrime can scuttle the customer relationships you’ve built on this new digital marketing landscape. Cyber attacks are evolving apace with technology, and malicious third parties are constantly looking for ways to breach companies that house massive amounts of privileged data.
If your organization suffers a successful data breach, you could be exposed to legal action and profit loss. Arguably more important, however, is the damage done to consumer trust. Consumers won’t be willing to trust their confidential information to businesses that cannot guarantee its protection. Every lost customer eats into profitability, making it harder for your company to recover.
Data is a new lifeline for your business. It can empower successful loyalty programs and streamline retention efforts. However, once consumer trust is violated – whether through cyber attack or some form of negligence – the potential fallout could be severe. Make every effort to protect your loyal customers’ data and you should be able to ride the wave of personalization to success.
[i] Keypoint Intelligence – InfoTrends (InfoTrends)