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Marketing for loyalty programs is one of the main focuses at Response Labs so we’re always keeping a pulse on what the trends are saying and what consumers are really doing. Shopkick recently released a short ebook covering the revolution of Customer Loyalty. It’s not a long read, but I’ll save you the effort and summarize it for you. This ebook gives a great glimpse into the ever shifting and changing landscape of customer expectations of loyalty programs and what businesses are doing to keep up.
Did you know… QUICK HIT STATS:
- 54% of customers signed up for loyalty programs aren’t even using them
- 28% of consumers leave a program before redeeming a single reward
- It costs 5x more to acquire new customers than to retain existing customers
- Increasing customer retention rates by 5% increases profits by 25% to 95%
As CPG brands continue to lose market share to smaller niche companies, loyalty programs have to get smarter. Here are some ways to do just that.
ONE: On Trend Products
You’ve likely shopped a small business or start up recently. Why? What did they offer you a larger brand couldn’t? Likely a new or innovative product or experience they could quickly and disruptively bring to market to satisfy a need or desire of their customer base.
Small brands like Nutiva are finding their footing by introducing new products or ingredients within their core brand portfolio with minimal risk and investment. Nutiva started as a plant based superfood product line and recently took their core product of coconut oil and created a clean beauty line. Lululemon just announced recently their expansion into skin care with a line that takes you from gym to the office with no shower required. The demand for on-trend products is higher than it has ever been and small companies can experiment with and bring these types of products to their customers faster than large CPG corporations.
As a large CPG, how can you answer this need? Not every trend can or should be taken with the same ambition but picking one or two trends that fit well with your current product portfolio and ingredient offering to provide something unique yet trendy to your customers will show them you understand their ever changing desires and want to be right there with them, sharing the avocado toast, instead of watching from afar.
TWO: The Importance of an Emotional Connection
Give back. Share the love. Help the world around you.
These are values ingrained in Millennials and Gen Z, the spending superpower of today’s society. This audience places a huge value on what the products they purchase say about their own values as a person. So much so, that 90% of them said they would switch to a brand associated with a cause. That product choice goes far beyond price point or distribution proximity. Consumers today engage with and support brands as a badge of expression. They are proud to invest in companies such as Toms Shoes, who will give a pair of shoes for every pair you, and Dove, who launched a multi-year campaign celebrating real women and real beauty, and have no issue passing on once popular brands due to poor corporate practices.
CPGs can capitalize on this desire by simply communicating more openly and frequently about the causes they are involved in. Most major companies have some form of give back agenda but may not think anyone outside of their employees care. Consumers do and they’ll be exponentially more loyal to your brand if they know the good you’re investing in.
THREE: Surprise Me!
Consumers are looking for a 2-way dialogue with brands. That doesn’t mean you answer their text on the regular, what it does mean is that brands take the data they have about all of their customers and turn that data into personalized experiences and communications that show you really know them.
Taking this a step further by surprising them in a small, personalized way will go a long way. Kellogg’s started this trend by placing a prize in every cereal box. Kraft took this to another level by hosting a free pop-up grocery store to support federal workers during the recent government shut down.
Small companies can include a hand-written thank you note in a shipment. Larger CPGs can include a small size sample product offering attached to a larger product or follow Kraft’s example and service their community in unexpected ways. Small acts like this show your customers you aren’t taking their business for granted, will continue to appreciate them and go above and beyond for their loyalty.
FOUR: Transparency
Ahh, there it is, the marketing buzzword of the century. Consumers have access to gobs of information and if they want to find something about your brand or product, they will. It’s not enough to simply be prepared for a PR backlash, brands need to be forthcoming and clear about their practices and products.
Consumers’ quality standards and scrutiny of bad products are on the rise. Being a brand that touts positive practices and doesn’t try to hide behind short-cuts and misleading statements will cultivate advocates. LOLA, a feminine hygiene brand, built their entire brand on trust by calling attention to ingredients inside tampons.
If you don’t have positive business practices to brag about, consider changing your ways. If you do, let consumers know. They will appreciate the peek behind the curtain and will feel more confident purchasing your products.
FIVE: Convenience
Thanks to Amazon Subscribe and Save and Prime Now, consumers’ desire to have access to products almost immediately is satisfied. Grocery stores that offer pick up or delivery services often allow you to see your recently purchased or frequently purchased items – making the “tedious” task of online shopping faster.
As a major brand competing with retailers who can deliver almost instantly, finding new ways to streamline purchases, allow repeat behavior and make the shopping experience easier for your customers will win their loyalty. Target introduced free 2-day shipping for Red Card holders. Peapod delivers groceries straight to your door. VITL delivers personalized vitamin packs based on a conversation with a specialist about what your body really needs.
Taking it outside of a direct purchase example, think of ways your brand can provide ideas surrounding your products, whether it’s a recipe that allows you to shop the ingredients right from the webpage, or a more organized way of delivering a set of products to them to make the post-delivery shuffle more seamless.
Earning Your Customer’s Loyalty
Today’s consumer has high expectations of the products they purchase and brands they are loyal to. Investing in the right insights, the right drivers of purchase behavior and ultimately making company changes that deliver on those desires will gain you increased loyalty and bottom line results.
Reference Links: Shopkick Loyalty ebook, Forbes Article on Retention Rate
