Create Lifelong Customers with Loyalty Marketing

Today’s consumers encounter an unprecedented number of brands on a daily basis. Their purchasing decisions are influenced by value, trends, and quality, which make them more open to experimenting with new products and brands. This means businesses need to prioritise loyalty marketing to build lasting relationships with their customers. 

To have an effective loyalty strategy, you must not only adapt to changing consumer behaviours but also anticipate and meet those consumers where they are in their journey. Modern consumers expect brands to deliver exactly what they need, whenever and wherever they need it, along with seamless, personalised service. Fulfilling these expectations requires a deep understanding of who your customers are. 

Loyalty marketing needs to be a crucial component of any business strategy. Successful loyalty programs can significantly boost purchase frequency, retention, customer lifetime value, and the acquisition of first-party data. In fact, 56% of consumers say they are more inclined to purchase from a brand if it offers a loyalty program.

However, loyalty extends beyond just having a program — it’s personalising experiences and addressing the specific desires and needs of customers. To do this, businesses must redefine what loyalty means and revamp their strategies accordingly. 

 Let’s dive into why loyalty marketing is vital, highlight common customer pain points, and how loyalty is evolving. We’ll also look at three industry-specific use cases to show a clear blueprint of how loyalty marketing should be done. 

Why is loyalty marketing important?

Loyalty marketing is becoming increasingly important for brands and is much more far-reaching than just a program. Loyalty is the result of the sum of all interactions a customer has with a brand, and when done right, it builds an emotional connection that establishes trust between both parties. 

As consumers spend more time online, they gain access to a world of choices, freeing them from the constraints of past habits. Many are drawn to new options, especially those with evolving priorities, lifestyles, or financial circumstances. This shift is evident, with 71% of consumers having switched brands at least once in the past year.

And brands across all industries are taking notice. According to Gartner, one in three businesses that do not have a loyalty program today will establish one by 2027. We see this impacting the Fintech sector heavily, where they are not historically known for prolonged loyalty initiatives but are now finding new value and becoming market leaders.

Common loyalty marketing pain points 

Loyalty strategy isn’t static. While many new brands are entering the loyalty space, we are also seeing a large uptick in companies that have had long-running loyalty programs change their approach. It’s important for organisations to continuously modify their programs and tactics based on shifts in consumer trends, market changes, and evolving customer preferences. 

For Fintech, there has been a shift from high-value acquisition tactics to rewarding members who are more engaged over time and utilise more offerings from the institution. In Australia, customer acquisition costs vary widely, with the average cost reaching around $129 in fashion and accessories and up to $377 in electronics. And with acquisition costs rising 60% over the last five years, businesses face increasing expenses to attract new customers.

New loyalty programs are focused on rewarding and encouraging existing members through engagement even when they are not in a traditional “buying” moment. For example, they create more financially literate members through gamification or educating members about the benefits of related product offerings to encourage cross-product acquisition, creating more stickiness and greater lifetime value.

How loyalty marketing is evolving 

While transactional loyalty programs — which reward customers with incentives like points, discounts, or cash back for frequent purchases, are key to driving results and encouraging continued engagement — they don’t necessarily prompt the customer to prioritise that brand over others. 

This is what we call the “Do / Get” relationship, where you do something only because you get something in return. On the other hand, when a brand builds a genuine relationship and connection with a customer, fully integrating into the customer journey and experience, customers feel a connection to the brand and proactively take actions to engage. This is what we call the “Feel / Do” relationship and what creates a relationship built on trust between brand and member. This is where we should be headed.

Loyalty marketing use case 1: How to get to know your members 

When launching or evolving a loyalty program, it is important to understand who your members are and what is important to them. When planning your rewards, first talk to your members about what they value in the brand and find ways to reward them that are related. Remember what might be meaningful to the organisation might not be meaningful to the consumer, so it is important to keep an open mind and dig into customer expectations. 

Once you launch your program, you can mine the data and engagement to understand your customers better. Use rewards to incentivise giving first- and zero-party data, surveys or quizzes to learn more about where your members are in their journey. Then use the data you discover to craft better experiences and moments for them.

Loyalty marketing use case 2: How to personalise the experience

Personalisation is another key to successful loyalty programs. Simple personalisation can be identifying if a customer is a member of your loyalty program on their first website visit and then tailoring the experience. If they are a member, remind them of the benefits they have earned. If they aren’t, inform and educate them about the benefits of membership. This can be a low-cost way to drive new member acquisition and remind existing members of the value of the program and increase overall engagement. 

However, good personalisation goes beyond this. It’s using the information you have captured to create memorable moments. For a financial institution, knowing that a member has children, understanding their economic status, and being aware of their highest education level (such as a university degree) can be used to advertise a student savings account on a special offers page with messaging tailored for parents, which can drive cross-product acquisition.  

Personalisation can go beyond product offers. It can also create an emotional relationship between brands and members. For example, if a customer is researching home mortgages, a brand could send them information about mortgage rates and important things for first-time home buyers to know.

The brand could even gamify the experience by rewarding the customer for becoming more educated with a promotion spinner, badge, or proficiency metric. By building trust and continually reinforcing the value of the program, brands will achieve better loyalty outcomes.

Loyalty marketing use case 3: Going beyond one-to-one loyalty with community building 

As loyalty programs expand, brands have an opportunity to unite their members around causes and actions that align with the brand and its membership base. Starbucks celebrates Earth Day with online games that help members learn simple ways they can reduce waste and stop plastic build-up in the oceans through everyday choices. Programs like these reward those who share their experiences online and through social channels. This gamifies referrals and brings new awareness to important causes for the brand and its members.  

By creating a community, members stay engaged outside of buying behaviour and brands stay top of mind and part of members’ conversations. This leads to longevity and more purchases over the long run. 

Read more

• Reimagine Your Brand Loyalty Program
• How Customer Loyalty Turns SMEs Into Brands That Last
• Hit Your Growth Goals with a Smarter Customer Loyalty Strategy