Surprising Facts About Customer Loyalty Marketing

Customer loyalty marketing isn’t rocket science. It’s a relatively simple concept yet takes years of research and marketing data to pinpoint their motivation. After all, if your customers aren’t motivated, your products don’t sell.

Existing customers that trust your brand and spread the word within their social circle offer their loyalty. In exchange, you develop trust over the years through customer satisfaction and strategic advertising.

But did you know that there are fascinating trends that improve and retain your loyal customer base?

Here are 6 customer marketing facts to snowball sales by acquiring customer loyalty.

1. 82.4% ARE LIKELY TO SHOP AT BRANDS THAT OFFER LOYALTY PLATFORMS (TECHNOLOGYADVICE REPORT)

The verdict is out. To go with a loyalty scheme or not. The study makes a fairly obvious metric that customers are likely to purchase from brands that offer a reward program. The model of the business is straightforward –

• Customer buys a product
• Customer loves a product
• The customer becomes a loyal buyer of the brand
• Brand reward the customer through loyalty system

But what are the other benefits found in a customer loyalty program?

1. Personalization

When a customer is recognized and rewarded by a brand, it makes them feel special. During special occasions, when brands offer their wishes along with a treat, it shows how much the company cares for the customers.

Personalization also extends to having the brands recommend items depending on previous orders of the customers.

Amazon is increasingly efficient at recommending products to its customers. Let’s say, you buy an electronic keyboard. Amazon shows you a list of recommendations ranging from ‘Keyboard stand’, ‘Keyboard cases’, ‘Keyboard cleaning kit’, etc.

2. Customer Service

When a customer loves a brand, they usually fall in love with the customer service. A customer can’t show loyalty when the customer service suffers. For example, why are Apple products revolutionary?

Sure, they are innovative and durable. The other aspect is exceptional customer service. Apple’s hardworking customer representatives are always at your side to assist you with any issues relating to their product.

Having a rewards program that allows customer executives to address you as a loyal customer, makes you feel special.

3. Quality

If it’s one thing that customers love about their favorite brands – it’s the quality of the product. A rewards program that allows the customer to return products that aren’t of high-quality is effective.

Even the best company in the world runs into defective products. If a company acknowledges its mistake and offers a streamlined return process, the customer remains delighted and loyal.

4. User Engagement

When the brand sends timely notifications of upcoming offers and discounts, it notifies the customer. This allows the customer to focus their spending habits based on their monthly budget.

If there’s a big garage sale coming up, regular notifications allow the customer to make their next spending spree, a profitable one.

Combine this with a thriving rewards program that offers special discounts for loyal customers. The brand is sure to increase their loyalty to existing customers. While also encouraging new customers to turn loyal and reap the benefits of a rewards program.

2. OVER 57% OF CONSUMERS PREFER MOBILE DEVICES FOR LOYALTY PROGRAMS (BOND LOYALTY REPORT)

Our first customer loyalty fact comes as no surprise. In a digital age, customers are bound to prefer the portable device. After all, mobile apps are personal, and offers are tailormade for each customer.

Let’s find out why mobile reward programs work effectively.

1. Gamification

With a mobile, a person is likely to engage in contests, promotions, or mystery contests that pop up as notifications. People are excited to know about a flash sale that lasts for 2-3 hours. Maybe get 1000 shopping points and stand a chance to win a trip to Paris.

People stay engaged on smartphones. And loyalty programs aimed at mobile users is a terrific growth strategy.

2. Referrals

Mobile phones have one marvelous convenience – to link all your social groups and family in one. Takes a click to refer a product or introduce a friend to a loyalty program. Companies enjoy the dual benefit of a referral system – gain new customers while also keeping their existing customers happy.

3.  Track Special Days

Anniversaries, birthdays, wedding days, etc. are special days for patrons of a company. A smartphone is a direct way for the company to reach out and give their best wishes along with a special treat. This increases user engagement and overall satisfaction.

Personal interaction via mobile devices increases the emotional bond between the customer and the brand. Emotion is the single most driving force of purchasing decisions.

3. 37.5% OF CUSTOMERS PREFER REWARD PROGRAMS OVER DISCOUNTS (CAPTAIN UP REPORT)

In the past millennium, if you walked past a crowded market and a seller came up to you and gave you two options –

Option A – Buy this beautiful pair of shoes for half its price

Option B – Buy this pair of shoes for its full price and receive a flat discount on all future purchases from my store

You’d be crazy to consider Option B considering the seller isn’t trustworthy. They may simply shift their store or not commit to their claim. That’s why Option A is the ideal choice.

Enter the digital era. Where customers prefer utilizing reward programs over small discounts. Reward programs offer a long-term strategy to receive bigger savings especially if you’re a recurring customer.

That’s why 37.5% of people in the survey believe that a rewards program saves them more money over discounts.

Take a sample reward program for example.

Imagine your favorite footwear store sold shoes for $40. Their annual reward program is as follows

• Purchase for $200 and get a discount voucher of 20%
• Purchase for $400 and receive a 40% discount
• Purchase for $1000 and get a permanent 10% discount for storewide purchases along with previous reward tiers

Compare this reward program with a discount of 20% on items. In the short term, the customer saves money. But once they’ve shopped over $200, the reward program is now on par. And above $400, the reward program starts to double its efficiency. Finally, at $1000, the customer gets a flat discount for life. Which means a 10% discount and the additional discounts that come with the reward program.

That’s why long-term shoppers prefer reward programs over discounts.

4. 52% OF YOUNGSTERS AGREE TO SHARE CUSTOMER DATA WITH BRANDS (EUCLID REPORT)

At a time when privacy concerns and identity theft are high, this study comes as a welcome surprise. Especially when the study group consists of millennials, Gen Xers, and baby boomers. It demonstrates a strong trust factor to allow brands to data-mine individual tastes and cater to targeted content.

Brand loyalty is certainly shaping to allow convenience to merge with technology. With Amazon’s Alexa and Google Home acting as smart purchase assistants for customers. Information about daily browsing habits and product purchase behavior is collected to ensure a streamlined shopping experience.

Winter approaching? Your smart assistant has created a collection of warm products perfect to breeze through the chilly season. All of these are recommended based on your favorite color, brand, styles, latest discounts, and many more attributes.

Digital shoppers no longer spend time browsing through categories of unrelated trends. No time spent on adjusting filters or spending range. Simply log on, choose from a curated list and complete your shopping experience in under a few minutes.

That’s the idea of bridging customer loyalty with brand loyalty. Brands are helping customers find their items while minimizing time spent.

Let’s demonstrate 3 examples of companies with strong brand loyalty that convert customer data into a thriving marketing strategy.

1. IKEA

The Swedish furniture giant visits people in their homes to understand their lifestyles. Every country that the brand makes its mark, it relies on customer feedback to understand the products better.

IKEA understood that American customers prefer drawers in their closets compared to their European counterparts. This allowed them to bring larger customized drawers for their American customers.

Similarly, in many Asian countries, tradition was a strong point in their buying-decisions. IKEA integrated folklore and cultural aspects to their designs and woo their customers.

The term ‘IKEA effect’ exists to demonstrate how people are pleased with the brand even if labor isn’t provided. It shows that IKEA cares about people’s budgets. Great furniture can still be afforded with a small budget through IKEA.

Now that’s priceless customer loyalty!

2. Starbucks

The popular coffee brand collects customer data in an interesting manner. Every time a customer orders at a Starbucks venue, the order is saved as a feature. In time, the application understands the customer’s routine and their favorite addons.

The next time they decide to relish on a cappuccino, a recommendation is brought up.

The ‘Order & Pay’ tool also suggests add-ons, favorite pickup joint, new flavors, etc.

Starbucks then proceeds to club their recommendations with a reward program. The company states over 15 million are currently enrolled in their loyalty program.

3. Spotify

Spotify is to the music world what Netflix is to streaming video content. While Netflix offers recommended shows and movies to its users based on their viewing experience. Spotify goes a step beyond.

Instead of recommending, Spotify collects user data and transforms it into a curated playlist called ‘Release Radar’ & ‘Discover Weekly.

This allows the listener to expand their listening experience and grow their music interests. All possible from the smart data integration installed within the app. Spotify gains user habits such as  – listening duration, favorite genre, playlist information, etc.

Spotify recently launched an exclusive app for Artists. This lets them track their analytics to see how their content is received by their listeners.

Talk about giving creative controls to the artists themselves.

5. 66% OF MILLENNIALS ARE WILLING TO PAY MORE TO PRESERVE THE ENVIRONMENT (NIELSEN REPORT)

This may come as a welcome surprise but the denizens of planet Earth are moving towards a sustainable approach. With global warming and environmental hazards showing their constant threat, consumers support brands that are environmentally friendly and don’t mind paying an extra buck to support the cause.

Customers believe that even a small part from their side makes a big change in the future. All aimed towards a positive environmental change.

Let’s take a look at some of the other facts from the Nielsen report.

1. 69% prefer brands that produce organic products

If your company produces fresh and natural ingredients, you’re driven for social change. People notice the positive ecological actions taken by brands and come forward to offer support. The report also states that customers weren’t driven by personal benefits as coupons and sales didn’t rank in the top requirements.

2. 56% prefer social value commitments by brands

When brands show social justice to their employees and offer employment opportunities to their local region, it drives sales. Here is a list of social value increasing initiatives –

• Involving the local community
• Sponsoring charity events
• Team strengthening activities
• Supporting other Non-profit organizations
• Promoting regional heritage and culture
• Regional recruitment
• Lowering the unemployment rate
• Offering facilities for disabled individuals
• Benefit schemes for employees

Social value from a brand demonstrates humanity. When a brand strips its corporate image and descends into its community, an emotional and permanent bond is created with the customers.

3. 58% wish to buy products from an environmentally friendly company

Companies that promote recycled products, zero plastic, and chemical-free products are thrived to perform well. With the environment becoming a major priority for customers globally, over 70% of North Americans have pledged to buy eco-friendly products.

With customers becoming conscious of how their products are being sourced and produced. It becomes critical for companies to include their social and ecological responsibilities into their consumer loyalty program. This shows that the brand directly protects the environment and isn’t afraid to increase their product cost for the greater good.

6. 67% REVENUE CONTRIBUTED BY EXISTING CUSTOMERS COMPARED TO NEW ONES (BAIN & COMPANY REPORT)

The longer the relationship with the customer, the profitable the company becomes. It’s been said time and again, existing customers offer repeat business and therefore, increase brand value. That’s why it becomes critical for companies to focus on customer retention to improve customer loyalty marketing.

Let’s take a look at 4 reasons that make customer retention a priceless metric.

1. Loyal Customers are Easy to Sell to

We aren’t saying that you can make inferior products and market it to loyal customers. No.

What we are saying is, product launches are smooth when loyal customers trust your brand. With many sales on opening day, a bulk of which happens by repeat customers. It’s no surprise that loyal customers have an effortless experience.

2. Loyal Customers Forgive Marketing Errors

Take a look at Apple’s marketing strategies for years. It builds real relationships with its customers. Relationships that allow the company to make its fair share of blunders and continue their ongoing support.

When Apple launched its ‘Air Pods’, they were deemed a technological disaster. Yet, the undying support of their fans made them gross 67-billion in quarterly profits.

Take a moment to step back and think.

If your company made the same mistake, it may have shut down. If a product launch isn’t supported by your customers, that’s an expensive mistake to recover from.

That’s why customer retention is a critical aspect. It allows the company to experiment without heavy repercussions of losing its customer base.

3. Cost-effective Compared to Acquisition

Consider a customer acquisition infographic by Invespcro for a minute. The statistics show that 44% of companies are focused heavily on acquisition over retention. Only 18% focus on retention.

That’s too low a number. Yet, acquisition costs 5-times the cost of retention.

The same report goes on to state that 50% of existing customers try new products of the brand. 31% of the customers go ahead and spend more money as well.

Further, the profitability achieved by selling to an existing customer is 60-70%. And a new prospect? A mere 5-20%.

Now we come to the most important metric – the customer lifetime value (CLV). The report suggests that only 42% have measured CLV accurately.

The statistics start to make sense. With many companies heavily invested in new customer acquisition. The retention department barely sees any takers. Another statistic further strengthens this point – an increase in 5% of customer retention rates increases profits up to 95%. Staggering isn’t it? Just how small a difference increases the overall profitability of the company.

4. Quality Word of Mouth

Why invest in customer acquisition when your loyal customers already do it for free?

If 1 loyal customer buys a product and recommends it to their social media circle. That’s free marketing leverage towards your brand. It’s twice as valuable since the friends of your loyal customer trust them and indirectly, trust your brand.

Repeat after us –  “Loyal customers are every brand’s salesperson.”

The best way to reward them for their efforts is to introduce referral programs.

CONCLUSION

If you had the choice of finding two new customers or retaining an old one, choose the latter. New customers aren’t guaranteed to make a second purchase. However, an existing customer trusts your brand and products.

A brand that focuses on customer loyalty essentially wins over one that chooses to attract new ones. We hope with the above customer loyalty statistics, you’ll retain many existing customers and maintain a strong bond.

Do you believe customer loyalty is more important than attracting new leads? Or do you disagree? Share your thoughts with us in the comments below.