Customer Loyalty As a Cure for All Evil

Customer Loyalty As a Cure for All Evil

“May you live in interesting times” says the English saying, which is supposed to translate as a traditional Chinese curse. Although ostensibly a blessing, it is usually used ironically. Life turns out to be better in the ‘uninteresting times’ of peace than in the ‘interesting times’, which are periods of trouble.

Unfortunately, this wisdom spells the end of the economy as we know it. Production bottlenecks, shop closures and openings, stock shortages, unavailability of components, and rising gas, coal and energy prices do not inspire optimism for the future. Moreover, the pandemic has proved a challenge to global corporations and ordinary customers, whose frustration is beginning to reach its zenith. Planned renovation? The new kitchen your wife has been asking for months? Or the child you promised would buy a new bike? Which shopping plans have youbeen thwarted by a pandemic?

Companies nevertheless strive to give their customers the best possible experience. A loyalty customer program can help with this, with brands knowing up to 70% of their customers and nearly 80% of transactions no longer anonymous to them. Thanks to this, marketers can react to customers’ needs in real-time. It is possible to inform them about emerging changes and new solutions, and use the collected data to build even better experiences. The question is, how to do it well?

Bad news is better than no news

Nobody likes bad news, but the lack of communication can be even worse for many people. People react badly to uncertainty – lack of information or unclear messages. Brands wanted to reassure their customers and stay in constant contact with them. So it’s hard to disagree that one of the most valuable commodities today is efficiently structured and quickly delivered information. Emails, text messages, and push notifications have proven to be effective during lockdowns to communicate to customers about changing situations. A long-term loyalty program strategy enables brands to collect the contact details of their loyal customers so they can reach them immediately and effectively with the necessary information.

Many decisions were made very dynamically during the pandemic, leaving consumers lost in the information chaos. During the most challenging periods of shop closures and openings, with the help of Loyalty Point, our customers managed to send more than 100 million messages to several million club members. These concerning:

  • changes in the functioning of shopping malls,
  • the number of people who can be in a shop simultaneously,
  • the extended period for returning purchased goods.

We encouraged people not to give up shopping and to visit the brands’ websites in the messages. Through communication, we were able to redirect traffic to the site. Although the e-commerce market experienced significant growth in the past months anyway, contextual text messages and emails to club members meant that website activity, as a direct result of communication, increased by up to 50% and the number of people with a purchase by nearly 60%. This is the best proof that long-term loyalty-building pays off.

80% of sales come from 20% of customers

In marketing, the Pareto principle works – 20% of customers are responsible for 80% of sales. Small items, which usually end up in our shopping carts anyway, don’t need sales support – if they don’t work, the customer won’t buy them next time, but this won’t weigh in the context: “lose” or “gain” a loyal customer. The situation is the opposite about items and relatively expensive services, where the purchase decision is preceded by more extended thought. In this case, the support of a consultant is irreplaceable. We have in mind products such as e.g. a bicycle, a pram or kitchen planning services, which are not replaced every month or even every year.

Moreover if a customer leaves unsatisfied, they will probably never come back. During the pandemic, the challenge has been to enable consumers to have the support of a consultant when shopping online. The online experience does not differ from the one they are used to in stationery shops.

Support online sales with customer loyalty

For one of our contractors, we launched and developed a platform offering remote support for the purchase process of a top product. We eliminated a bottleneck in the purchasing process – queues to consultants when shops were open. Still, many people could enter them or the inability to consult when outlets were closed entirely. We convinced customers that they could make a purchase differently, better and, most importantly, without even leaving their homes. Changing the stationary purchase path established over the years is a big challenge in the minds of customers and the company itself. Therefore, a unique system was made available for customers to arrange a videoconference with a consultant.

With the help of a loyalty program, we managed the information and dynamics of the events as best we could. The service was made available to registered users on the website. This gave us accountability and traceability so we could manage the whole purchasing process accordingly. Despite the lockdowns, we managed to keep total 2020 sales of the service for which the online consultation was dedicated at 2019 levels. This represents an increase of 244% in sales generated by online services. In addition, we generated 10% incremental growth for our client in this way.

How close to the purchase is customer?

A loyalty program is not just a customer database with phone numbers and e-mail addresses. Instead, it’s a treasure trove of knowledge about club members’ preferences, how and when they shop, what changes are taking place in their lives, and what interests them. Because we know customers “by the name” and can link their transactions and online behavior, we can accurately determine how close they are to purchasing.

The data we collect about customer behavior on the website changes the process of planning and implementing brand campaigns. By analyzing knowledge about customers using the website, we identify groups interested in buying a given product range. Thanks to data analytics tools, we build a scoring of a given product group we have in the campaign and move on to implementation. Analysis of the effectiveness of one of the projects carried out showed that in the group covered by the communication, we recorded a significant increase in sales of the promoted assortment – for some categories, it was an increase of up to 50%. The offer allowed to increase the number of transactions and their value. The average value of the product sold was over 40% higher than the average value of a product outside the offer.

Thanks to such actions, we maximize the potential of the loyalty program’s customer base. In addition, we reduce the costs of running the promotional campaign by narrowing the group and conducting highly targeted communication.

How to deal with limitations?

The base of club members is, however, limited in some way. We know only a fraction of customers who may be interested in the offer we are promoting because some of them may not know our shop at all or have not shopped with us before. Is it possible to reach people we do not understand with the promoted assortment? Searching for “statistical twins” allows us to extend the campaign’s reach beyond the customer’s ecosystem. By enriching profiles with look-a-likes, we look for people whose online behavior is similar to specific groups of our club members, thanks to which we gain even a 10-fold increase in campaign reach beyond the brand’s website.

Engaging communication, online sales support, and contextualized campaigns tailored to the customer allow us to maximize our loyalty program’s effects and even beyond. Data, or rather the knowledge of customer behavior that we draw from it, will enable us to minimize costs and maximize our actions’ effects, even in these “interesting times”.

LOYALTY POINT is implementing a project with Contribution from European Funds. Learn more