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Successful customer loyalty in low-frequency categories can be attributed to these best practices.
The convergence of big data, social media and omnichannel marketing are causing a tectonic shift for brands and organizations. As a result, more companies that offer products or services which, by cost or utility, tend to draw a lower frequency of customer transaction are embracing loyalty as a strategy to smooth the ebb and flow of today’s economic cycles.
If you count yourself among this crowd, consider the strong engagement garnered by the loyalty industry. According to Forrester, the average consumer household belongs to over nine programs, but most of these programs are focused on appealing to high-frequency customers and are not designed to meet the needs of the low-frequency customer.
However, there is an opening created here, as customers demand relevance to drive their loyalty. This demand provides opportunity for brands with low-frequency to imagine and adopt new levers to cultivate loyalty with an often fickle and unpredictable customer.
Designing an effective strategy is especially critical for categories where purchase patterns are uneven, including many where low purchase frequency is typical. A well-crafted low-frequency loyalty strategy must first understand that what works for higher-frequency categories will not work equally well in low-frequency categories. Successful customer loyalty in low-frequency categories can be attributed to three best practices.
Your communications strategy nurtures and sustains member engagement with the program, especially in low-frequency plays. Finding the right cadence and relevant content is key to nurturing customer relationships.
If you’ve checked your email lately, the vast majority of communications are likely highly promotional. Too often, program operators fall into the trap of communicating too frequently, and pushing for sales without being relevant. If purchase behavior is uneven or infrequent, sending multiple promotional emails per week is just as likely to damage the relationship—and connection to the brand—as it is to lead to sales. In contrast, communicating too infrequently can also hurt a program.
Early on, a loyalty program needs to work hard to get to know the member, and communications should reflect that effort.
Most importantly, you must develop a way to capture and use member responses. Take the small data provided by your member and use it in a big way. It sounds simple, but remember that your members are volunteering their time, effort, and personal information.
As a simple example, Sunglass Hut may have customers who are infrequently in the market for a new set of shades, but understanding which customers are fashion-forward and which customers are into sports and performance will drive the dialogue and ensure those customers are connected to their brand of choice when the time is right to purchase.
Of course, it’s ideal to be able to predict when a member is likely to purchase, and act accordingly when the time is right by sharing appropriately timed offers and benefits. But if even the most active members purchase unevenly or infrequently, it’s particularly important to make sure they stay engaged until they’re ready to purchase again.
A traditional points-based loyalty program doesn’t work when customers purchase unevenly or infrequently because it’s simply inconsistent with member behavior. Its structure is designed to encourage and reward more predictable and regular purchase behavior. In travel programs, better and best members may purchase weekly; in or bankcard programs, members often transact daily. Instead, the most innovative companies recognize the uneven and infrequent purchase nature of their customers, and design their programs to thrive with these patterns.
In fact, designing a program without awards and without points is a great exercise to undertake because it forces you to think more deeply about the desired relationships and what can realistically be attained with your best customers. It’s also a great way to test a program, since one without awards or points can easily evolve based on early learning or rapidly changing market conditions.
Referrals are another valuable strategy to adopt. A staple in many programs, referrals are particularly helpful in low-frequency situations, and even more so to the extent members make purchases in the company of their friends. Again, this is highly characteristic of retailers, especially clothing retailers. The best referral strategies not only deliver new members via unleashed advocacy, but also increase award attainability for the referring members.
Even hotel programs, which have both frequent and infrequent members among their loyalists, understand this. Some are beginning to increasingly reward members for bringing their friends, even though they may not be paying for them. Leading hotel companies like Wyndham Hotels have programs like Wyndham Rewards that will reward for multi-room bookings. Las Vegas hotels have also embraced this trend in a not-so-subtle play to market the social side of Sin City.
As technology and capabilities evolve, loyalty program design and communications tactics do, too. And these changes can empower brands with low frequency customers to build relationships and drive engagement throughout the customer lifecycle. Since every company should have a CRM strategy in place, the growth in loyalty programs is a function of designing around the unique wants and needs of a brand’s customers—as they should be—and less likely to be reliant exclusively on points-based structures. Hopefully these suggestions can improve the odds of success as you attack the low frequency consumer.
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