Lessons in Loyalty…Programs
Today’s consumer is blessed—if not totally overwhelmed!—by choices. Between the unchecked physical expansion of retail from 1980-2010, and then the online explosion from 2000-2020, we have more options than ever.
Attracting new customers is critical for any brand at any stage of growth, but retaining customers is where real profit gains are made. Some fast facts from a recent article on Constant Contact:
Repeat customers spend almost 70% more than new customers
Repeat customers are easier to sell to, converting at 65%, compared to new prospects at 13%
New customers cost more to acquire—5x more!
Repeat customers promote your business, referring 50% more customers
Just a 5% increase in retention results in a 75% lift in profitability
It’s a challenge to win the customer, but an even bigger one to hang on to them. During a time at Gap when we were struggling to increase traffic and reinvigorate brand relevance, we knew just one more visit per year from half our customer base would translate to more than $1B in revenue. The math was simple; the hard part was getting them through the doors.
So how are the best brands driving loyalty and repeat online and in-person visits? With next-generation, frictionless loyalty programs. A recent Insider Intelligence article breaks down best practices for today’s top loyalty programs. These 3 basic premises can improve your loyalty programs:
Make Rewards Automatic. Insider Intelligence cites Amazon Prime as a standout because perks like invites to special Prime Days and exclusive discounts simply appear as earned. Don’t make your customer work to accumulate rewards!
Partner with other brands. Starbucks offers double rewards on the days you fly Delta Airlines. Partnerships increase the value offered to your customers and your value to them.
Personalize Rewards. This greatly increases the likelihood your customer will return AND purchase. Bonus: personalization helps to refine your customer profile.
This week during their Q2 Analyst Call, The Container Store CEO Satish Malhotra perfectly demonstrated both the framework and results that a well-designed program can provide. During Q2 more than 126,000 of the company’s Organized Insiders “leveled up” their loyalty tier. He further stated that the average transaction for Insiders was 61% higher than non-Insiders. Last, Malhotra noted that during Q3, Expert level Insiders will be invited to view dedicated content featuring Cas Aarssens’ Holiday Decorating Ideas. Performance like this will be vital to TCS on the way to its stated goal of $2B in revenue.
As a wise retailer once said, "Customers will consider options… but a loyal customer doesn't consider alternatives and won't mind paying a premium for his valued loyalty."
