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How Marketers Need To Build Loyalty Programs Now

"Price and convenience are important" as part of a loyalty/rewards program, but "they are increasingly table stakes. More and more, consumers are looking to premium brands to provide value beyond the transaction," says Erica Richey, at ThirdLove.

The typical template of a brand’s loyalty program usually takes its cues from the traditional punch card handed to regular customers offering a free or discounted item when they reach a specified number of visits.

While a form of check-in app functions have largely taken the place of putting holes in paper, the model’s focus is outdated, as a recent surveys by content marketing platform Yotpo and Dotcom Distribution (via eMarketer) suggest.

The consensus of the two consumer surveys is that customer experience and product quality are the two main drivers of loyalty — freebies and deals are lower down on the list. In a sense, the answer is obvious: the rise of on-demand immediacy via e-commerce channels and the ability to compare prices instantly have leveled the playing field among marketers in those areas.

Price and speed, especially at a time when Amazon is seen as defining those terms even as the e-commerce giant is both competing and assisting brands on the local level have forced stores to find other ways to differentiate and appeal to shoppers.

Speaking of Amazon, Yotpo’s 2018 State of Consumer Loyalty, demonstrates Amazon’s influence on consumer expectations and, in turn, the way loyalty is currently understood. The online survey of 2,000 consumers found that 61.3 percent of shoppers cite free shipping (an Amazon hallmark) as an incentive to buy from a new brand and highlights ways that direct-to-consumer brands can go above and beyond to earn, and re-earn, customer loyalty.

“No one is better at the transactional relationship than Amazon, who successfully engineered loyalty by making things like free shipping and discounted pricing table stakes,” said Tomer Tagrin, Yotpo’s CEO and co-founder. “To win, brands need to be able to transcend transactions and offer a superior experience in every way, from product excellence, great customer service to personalized experiences that foster a deeper connection. Brands can only gain true competitive advantage by developing a direct relationship with their consumers, and this survey stresses where the opportunities might lie.”

Among the Yotpo report’s topline findings:

  • Loving the product is the No. 1 reason they’re loyal to a brand (55.3 percent)
  • Poor product/quality is the No. 1 a brand loses their loyalty (51.3 percent)
  • For brands they are loyal to, consumers are willing to:
    • Tell friends and family about the company (60.0 percent)
    • Join a loyalty / VIP program (52.3 percent)
    • Spend more on a product even if there are cheaper options elsewhere (39.4 percent)
    • Leave feedback / online review (37.0 percent)
    • Participate in a contest / promotion (31.8 percent)
  • It takes a lot of purchases to cultivate loyalty. Before considering themselves loyal, shoppers need to buy from the same company:
    • Five or more times (37 percent)
    • Three times (33 percent)
    • Four times (17.7 percent)
    • Two times (12.4 percent)

Amazon’s influence can be seen in what consumers expect brands to provide in return for their loyalty: more frequent discounting (71.0 percent) and free shipping (58.4 percent). Brands should consider offering additional benefits and enhancements:

  • Bonus gifts (43.4 percent)
  • Custom promotions and product recommendations (36.9 percent)
  • VIP and early access (26.2 percent)
  • Exclusive events (22.5 percent)
  • Customers expect a response from a brand in 24 hours or less (67.3 percent)
  • Poor customer service (23.5 percent) comes in second to poor product as a key reason for losing customer loyalty
  • As a potential touchpoint for customer service, Facebook reigns as the top social media channel for engaging with favorite brands (44.5 percent)

“The survey findings reinforce our philosophy that although price and convenience are important for our customer, they are increasingly table stakes. More and more, consumers are looking to premium brands to provide value beyond the transaction,” said Erica Richey, Head of Retention Marketing, ThirdLove. “At ThirdLove, our core motivation is to provide each customer with a highly personalized experience. We earn her loyalty by developing an individual understanding of each customer and curating products and crafting programs that resonate with her individually and personally.”

About The Author
David Kaplan David Kaplan @davidakaplan

A New York City-based journalist for over 20 years, David Kaplan is managing editor of GeoMarketing.com. A former editor and reporter at AdExchanger, paidContent, Adweek and MediaPost.