Loyalty. It’s a word that gets thrown around a lot, and it’s one that’s charged with plenty of old-fashioned idealism – think, a monarch’s subjects, a sports team’s fans, a dog’s devotion to its owner (Greyfriars Bobby, we’re looking at you). But when we think of loyalty in today’s fast-paced consumer society, how has it evolved and what value does it really hold?
In the land of marketing, loyalty is a golden egg. If acquisition marketing is all about quick wins and fast growth, retention (loyalty) marketing is a slow burn. That’s because loyalty isn’t something customers blindly give away with a click and a tap of an introductory offer.
Instead, it’s earned over time. It’s based on building authentic, trusting relationships with brands aligned with their values. Brands that show up consistently, stand by their promises and give them something back.
Focus too much on the funnel and you risk neglecting the hard-earned customers you already have.
We should say that we’re not here to trash-talk acquisition. In fact, it’s true that any good strategy involves a healthy balance of both. It’s just that typically, that balance is off.
With the help of some numbers and figures – here’s why every brand needs a little more loyalty in its long-term plan.
1. It’s cheaper
And considerably so. The cost of acquiring a new customer is anywhere between 5 – 25 times higher than keeping an existing one. Focus more on retention and your budgets will thank you for it.
2. It’s better value
Ah, that word we love to see. When we consider ROI of retention marketing, just a 5% increase in activity could result in as much as 25-29% increase in revenue. That’s simply because repeat purchasers that are familiar with your product or service are more likely to have a higher AOV and greater lifetime value.
3. It boosts profitability
Naturally, this leads to more profit. In fact, with just a 5% improvement in retention, profitability can grow by as much as 25 – 95%.
4. You can learn from it
Long-term customers are a valuable source of data for your brand, whether that be through customer feedback or behaviour analysis. Learn from your loyal customers and you’ll understand how to attract and nurture even more of them.
5. It’s simple and effective
Put a good strategy in place and the rest will follow. The best bit is it doesn’t need to be complicated. Just by spending a little more time and energy on what makes existing customers come back (and back again), you’ll see results that speak for themselves.
What does good look like?
Marks and Spencer
Sparking trust in its customers
Who better to instil a brand’s values than its CEO? The letter format of this newsletter adds a personal touch and shows the thought and care behind its message. It begins with a thank you before moving through core brand pillars of quality, value and trust – all while staying mindful of the current economic climate. Proof that offers aren’t the only way to build loyalty. Top marks for Sparks.
Boots
Using loyalty to their advantage
Launched in 1997, the Boots Advantage Card is one of the UK’s most successful loyalty schemes. Why? It’s a simple case of points per purchase, instant price advantage offers and personalised rewards that keep customers coming back. Plus, the data and insights from the program are just as valuable, giving the retailer a huge advantage when it comes to pinpointing their sales strategies.
Tesco Bank
Every little survey helps
Not only is your customer is your greatest source of feedback, it pays to show them you care. By sending out a timely post-purchase survey you could gain a valuable look into your customers’ experiences while letting them know their opinions are valued. And as you know, the more they interact with your brand, the more likely it is they’ll come back and back again. This example from Tesco Bank insurance shows how uncomplicated it could be.
Dobbies
Big on birthdays
A little personalisation goes a long way, and by sending a simple happy birthday offer like Dobbies, you could see results worth celebrating. Think about it – we all like to feel special on our birthday and we’re much more likely to treat ourselves to the products and experiences we love – like a cuppa and a scone with a friend. These freebies don’t have to cost much, but the value lies in the gesture itself. Hip hip hooray!
Monzo
Sharing is caring
Word of mouth is a powerful thing, so why not incentivise it? We love the way Monzo weaves on-brand storytelling into an otherwise straightforward offer email. By rewarding loyal customers for spreading the word, you’ll attract even more loyal customers in return – referred customers have up to a 37% higher retention rate. It’s a win-win.
Ready to get started on your retention strategy? So are we – get in touch today
Sources:
Think Impact, American Express, Digital Commerce 360, Annex Cloud