Building a lasting relationship with club members is not just about offering ever-higher discounts and better promotional deals. Many companies see the loyalty program only as a contact base – a communication engine – and forget, or fail to see, the valuable potential that comes from running a loyalty program. Our experience shows that contextual communication in a loyalty program can generate up to 10% of a company’s total turnover. How do you achieve this?
Customers transfer the best experiences between industries and build their expectations based on positive experiences with the best brands, regardless of the industry. Suppose a consumer is served very well, quickly and effectively in an online shop and receives contextual and inspiring communication. In that case, they expect the same manner and level of service offered to them by suppliers in other industries, whether it be a competitor brand, a mobile operator or a coffee shop. Getting to know each other by collecting data, analyzing and then being sensitive to the signals generated and building relationships brings real value. It is misleading to think that only material rewards will win consumer loyalty. Focusing on mass communication, the marketer sees only temporary benefits, while a broader view of the loyalty program will allow a much higher and more practical value to be seen.
Evolving Customer Needs
The relationship marketing market is evolving. The focus has shifted from transactions to interactions, so what the customer wants to buy is more important than what you have to sell. Unfortunately, as this year’s ‘State of Marketing report shows, nearly 60% of marketing professionals admit that customer expectations will be more demanding than before the pandemic – if only because of more sensible spending planning. Added to this are changes in the ability to process personal data. There is a growing concern among clubbers about inappropriate use of data, and, as a result, we are seeing a general decline in the number of contact consents. In addition, communication channels are changing due to the emergence of generation Z, who are digitized and accustomed to interactive communication, for whom email or text messages are no longer attractive enough. Finally, generation Z is growing up in a period of rapid technological progress and therefore expects more innovation. So how do we meet these challenges?
Marketing is All about Data
Modern relationship marketing requires a thoughtful and data-driven strategy. The scale of information we can work with is genuinely substantial, looking at what we had access to just a few years ago. SalesForce analysis shows that by 2021, companies are using an average of 10 sources of customer information. Daily data from transactions (online and offline), SMS and email campaigns, push notifications, NPS satisfaction surveys, complaints and returns are used to plan only the communication strategy in the loyalty program. The criteria for selecting customers for subsequent communication campaigns are often spending and the number of purchases from the previous year. There are also external sources: demographic, statistical or geo-location data. The average number of available customer information sources is forecast to increase by half next year. Data management becomes more complex as the sources multiply. Still, we see this as an opportunity rather than an obstacle – other sources of information provide an even better, more complete and truthful picture of the customer, enabling us to build an even more engaging relationship.
The Beginning is the Most Important Part
One of the key elements of a loyalty program strategy is communication. Whether building a relationship with another person in real life or as a brand with a new clubber, getting to know each other is extremely important. At the beginning of the relationship, the clubber is more open and willing to share information about themselves, browse the website more often and look at the mobile app. On selected projects, the average Open Rate is then in the region of 40%.
The high rate of interaction with the brand allows us to know the customer and his preferences. For a marketer, this is a key period in building relationships and identifying typical behavior. Over time, customer engagement gradually decreases. Typically, 12 months after registration, we observe a drop in engagement by as much as a dozen or so percent, so getting to know the customer at the beginning of their customer journey is so valuable. The information gained during this time, the marketer will be able to use at a later to build an inspiring relationship for years to come, which will undoubtedly result in keeping the level of interaction with communication at an optimal level. This translates into better opportunities to reach out with a contextual message. If a high level of interaction can be maintained long-term, the financial return will ultimately be better than that achieved by spamming customers with further discounts.
In loyalty programs, we continue to see that the leading communication channels are email and text messages and contact from call centers. We are also seeing significant growth in mobile apps and their push notifications. A traditional text message is still only 160 characters – not enough to convey engaging content. The text message is treated more like a reminder, so marketers need new solutions. One of the more unique and exciting trends in marketing communication is WhatsApp. We can send a graphic, a video, a registration form, or encourage a clubber to interact with the brand more engagingly. WhatsApp is gaining popularity in Europe and, thus, in Poland. Although it may seem like just another messaging service at first glance, tools built into the app are great for maintaining strong customer relationships and generating leads.
Stand Out or Die… are You Sure?
In addition to the appropriate channel, attention must be paid to the content, form, and frequency of communication. On average, we receive more than 20 advertising messages a day, most of which we do not even open. Many companies send the same mailing to all club members, yet each of us is different, interested in other things, and has recently bought something different in a shop. Marketers even flood clubbers with messages without the slightest context. To break through the mass of other news, they “shout” with bright graphics or controversial statements. And yet, for the clubber, tailored content is still more important than form.
A contextual message sent to a specific clubber attracts his attention. The sending of triggers confirms this. We record significantly better results on indicators such as Open Rate, Conversion Rate, and Click Through Rate than newsletters or traditional mailing. The CTR of a trigger-based message is usually twice as high as that of regular email campaigns. This is because triggers are more personalized to the specific actions of the club member. Such methods also result in greater customer satisfaction in the purchase process, and service requests – quick and precise reaction to a customer’s action makes them feel appreciated and noticed.
Summary – Communication in Loyalty Programs
Communication is one of the essential elements of a loyalty program strategy. The communication determines consumer interest in the offer, reminders about abandoned shopping carts or available discounts. Personalizing the message doesn’t just mean including the person’s name in the news is sent in an e-mail or SMS message. Personalization of the offer and communication, and ultimately the entire service process, can significantly improve the quality of a loyalty program. Indeed, an individual approach, modern technologies and a variety of communication channels can help build an engaging loyalty program.