If a loyalty program isn’t right for your business, how do you invest in customer retention and loyalty? The solution lies in creating emotional connections through personalized engagement.
Google “how to grow customer loyalty” and you’ll find plenty of advice about serving customers well, making the buying journey more convenient – and of course, implementing a loyalty program.
Whether in the form of points, stamps or tiers, programs have long been the go-to solution for building a base of loyal customers. Yet for many businesses, the loyalty program’s points-for-rewards model simply doesn’t make sense.
If that’s your business, there’s good news – true customer loyalty doesn’t come from a program. Rather, it’s driven by emotional connections.
Research has found that customers who are emotionally connected to a brand have a higher lifetime value and recommend the brand more frequently than those who are simply satisfied – two key outcomes of loyalty.
So what moves a customer from feeling satisfied to being emotionally connected?
Essentially, it comes down to appreciation – communicating to customers that their relationship with your brand is recognized and valued.
That sense of being valued is what creates a deeper connection and keeps the customer coming back. And it’s precisely this role that loyalty programs play in the customer relationship.
A program shows customers that their loyal behavior (be it making a purchase, referring a friend, engaging with content, etc.) is noticed and appreciated – which in turn encourages continued loyalty.
The task for businesses that decide against a program-based approach is to find an alternative way to communicate this.
So what’s the best way to show customers they’re appreciated? It’s simple: personalized, relevant engagement.
Personalization = Appreciation
Suppose you had a “friend” who consistently forgot important details about you, even though you’d known them a long time. In fact, sometimes they didn’t seem to recognize you at all.
It’s safe to say you wouldn’t feel very appreciated by this person – or have a strong desire to maintain the relationship.
As humans, we expect the people we have a (positive) relationship with to recognize that relationship and show us that it matters.
Yet brands often behave like the forgetful friend – all the while expecting customers to hand over their undivided loyalty.
Sure, your customers probably aren’t expecting to be friends with your business. But they are expecting that you’ll use the data you hold on them to remember their preferences and acknowledge where they’re at in the relationship.
Because doing so tells them that this relationship is valued – beyond the moment of purchase.
For example, let’s say Sarah is shopping online for a new dress and has found promising options at two fashion retailers, both of whom she’s bought from before. The first retailer shows her a generic landing page when she arrives on site and makes her enter her details all over again when she goes to check out.
The other greets her with a tailored landing page highlighting some new products she might enjoy. After a moment, a chatbot pops up, asking whether the shoes she recently purchased (and exchanged for a smaller size) are now fitting properly.
Which retailer will Sarah be most likely to go back to and spend with again? It’s hard not to vote for the second brand, considering that:
- 80% of consumers said they’d be more likely to purchase from a company that gave them a personalized experience (source)
- 48% of online shoppers had abandoned a brand’s website for a competitor’s site thanks to a poorly tailored experience (source)
The second experience isn’t just relevant to Sarah – it’s totally personalized to her relationship with the brand. By remembering exactly where she left off in her journey with them, the retailer communicates to Sarah that she’s more than just an order number – she’s a valued customer.
Given the stats above, any business – whether they have a loyalty program or not – should be prioritizing one-to-one engagement. But for brands without a loyalty program, this level of personalization should be your baseline.
Making it more rewarding
If you’re really investing in loyalty, you may want to take things up a notch by adding personalized offers into the mix.
Offers can take the place of a traditional program’s “rewards”. Whether it’s money off, free shipping or some other perk, customers love it when a brand goes the extra mile to show them they’re appreciated.
The right offer can also give a customer an extra nudge towards completing a desired action, like increasing their order value.
Let’s go back to our example with Sarah. Suppose she ends up purchasing her dress from the second retailer. She posts a photo of it to her Instagram feed along with a positive review, and tags the brand in her post.
Because she’s influential in her network, Sarah later receives a text from the brand, thanking her for her positive comments and offering her free shipping on her next purchase as an extra show of gratitude. As a result, Sarah’s connection to the brand grows even stronger- making her a more valuable customer than before.
Tapping into emotion with data & AI
Unfortunately, for a lot of marketers, creating personalized experiences like this is much easier said than done.
Unless you have a big budget and large team, with skills ranging from content creation to data analysis, it’s nearly impossible to do one-to-one personalization at scale. Or at least, it has been.
Thanks to AI and related technologies, it’s getting much easier to communicate with customers in an individualized way, at scale.
As this tech becomes more mainstream – and more accessible to non-technical team members – businesses will be able to take the right actions automatically, across hundreds of customer journeys all happening at once.
The main factor for success is ensuring that data from every channel is being pulled into the same customer profile.
This single source of data should be used across channels and platforms to decide on the best action to take next – whether that’s initiating a conversation, sharing a relevant offer or responding to a customer query.
Consistent data, consistently applied, is what leads to a truly personalized experience.
To make it happen, marketers should look for an engagement platform that can unify customer data, and includes AI-powered tools to make decisions and automate interactions.
A smarter approach to loyalty
Ultimately, growing loyalty without a program is about building deeper connections with customers and showing them that their relationship with your brand is appreciated.
To succeed, you’ll need to make a concerted effort to use data effectively and capitalize on the latest in customer engagement technology. Drifting along with disjointed data and outdated tech won’t cut it.
Strategy matters, too – creating value for the customer must become a business-wide priority. It’s not always easy, but the impact on your bottom line can be significant.
Because by serving customers in a truly personalized way, you can make them feel pleased, valued and cared for. And that keeps them coming back, spending more and sharing the love with their community – just like a loyalty program.