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The Complete Guide to Customer Loyalty

  • How to propel your business growth with a loyalty program?
  • How to ensure long-term success with loyalty-driven incentives?
  • Learn the best practices of all successful loyalty programs.
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How Personalized Incentives Build up Customer Loyalty?

Mike Sędzielewski
Mike Sędzielewski
November 13, 2019
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How Personalized Incentives Build up Customer Loyalty?

Personalized incentives – the key to personalized loyalty programs

Are your customer loyalty KPIs standing still? You have improved your product, personalized your messaging, adjusted branding, and used cross-channel conversations, yet your offers don’t win beauty contests for best customers’ loyalty incentives. Rings a bell? If so, you might reconsider your loyalty tactics and consider implementing personalized incentives. 

Contents:

  1. Why should you invest in a loyalty program?
  2. Why should you personalize your loyalty program?
  3. What can you personalize in a loyalty program?
  4. Personalized loyalty incentives
  5. Loyalty reward ideas
  6. Rewards catalog
  7. Promotions stacking
  8. Reward customers for more than just purchases
  9. How to create personalized incentives?
  10. Invest in a robust customer loyalty software
  11. How to choose the right customer loyalty software?
  12. Voucherify – the best Customer Loyalty Software
  13. Affordability
  14. Personalization
  15. Omni-channel distribution
  16. Fast integration
  17. Marketer-friendly dashboard
  18. Developer-friendly loyalty software
  19. Tracking and analytics
  20. Personalized loyalty program case study – Soul Cycle

Why should you invest in a loyalty program?

Perhaps you don’t need to be reminded of why the customer loyalty tactics and incentives should rank high in your marketing strategy. If, however, it’s been long since you last considered it, here are some data-backed studies that explain why you should invest in personalized loyalty programs:

  • The top 10% of your customer base spends 3x more than your average customer.
  • 67% of customer churn is preventable if the issue is resolved during the first interaction.
  • Customers with an emotional connection to a brand have a customer lifetime value that's 4x higher than the average customer.
  • 47% of consumers won't engage with a business after a moment of brand disappointment.

At the same time, other findings confirm that well-crafted loyalty incentives can be a useful tool to fix some of these:

  • 37% of customers will pay extra for an enhanced tier of membership.
  • 52% of loyal customers will join a loyalty program.
  • 75% of consumers would engage more with loyalty programs that make rewards mobile-friendly.
  • 70% of consumers would be more likely to recommend a brand with a good loyalty program.

Why should you personalize your loyalty program?

Personalized offers are converting better than bulk offers. Personalized treatment is one of the major drivers of customer loyalty. Here are a couple of statistics that clearly show the importance of personalization for customer loyalty:

  • 93% of businesses with advanced personalization strategies increased their revenue last year (Monetate).
  • 63% of consumers expect personalization as a standard of service and believe they are recognized as an individual when sent special offers (RedPoint Global).
  • When personalization is done well, there is a 6.4x lift in member satisfaction with the loyalty program (Bond Brand Loyalty).
  • 91% of consumers are more likely to shop with brands who recognize, remember, and provide them with relevant offers and recommendations (Accenture survey, 2018).

What can you personalize in a loyalty program?

There are many things you can personalize in your loyalty program. It can be, for example, the messages you send to your customers, channels you use, reminders you craft, customer dashboards you offer, the earning rules for different customer segments, and customer rewards. In this blog post, we will focus on the personalized rewards topic.

If you want to learn more about rewards program personalization, we have additional resources to get you started. We have created a complete guide to loyalty program personalization covering 8 steps to creating personalized loyalty programs. We have also written a definitive guide to personalized promotions that explains personalization as marketing tactics with tips, best practices and examples.

Personalized loyalty incentives

Offering personalized incentives is the way to your customer's hearts. Incentives are the main motivator for customers to join your loyalty program and to come back to your products or services regularly. The more personalized incentives, the more interesting they are for the customer. The incentives themselves do not have to be personalizable, what is important is to personalize the incentive for the specific customer, which means to give the customers what they really want/need. This requires fine-grained loyalty program rules and rewards catalog, that may differ for different customer segments. You can personalize rewards on a customer segment or 1:1 basis depends on the level of personalization you want to achieve.

Loyalty reward ideas

Here are a couple of loyalty program incentives ideas and some tips on how you can personalize some of them:

  • Percentage discount coupons – discount coupons offering a percentage off the customer's order, for example, 10% off the whole order for orders above 30$ or 10% off the perfume product category. You can personalize them by, for example, personalizing the discount code prefix and suffix like {{customer.name}}10%OFF or personalizing the product category you offer the discount for, giving the discount to the customer's preferred category or last shopped category.
  • Amount-based discount coupons – discount coupons for a certain value discount, for example, 20$ off the customer's order. You could personalize the coupon conditions, by offering it only for the customer's favorite product or service category or by offering it around the customer's birthday or a special anniversary.
  • Product-based discount coupons – you can also offer material discounts (for example a product for free with every order above 30$ or BOGO – buy one get one product). Again, you can customize the discount code and the offer, by offering different products as a gift for different customers. 
  • Free shipping discount coupons – free shipping is quite a standard offering but you can personalize the offer by customizing the free shipping code or by offering free shipping with different minimum order limits for different loyalty program tiers. For example, you could offer free shipping for all orders for the VIP tier, free shipping above 30$ for the Advanced tier, and free shipping above 50$ orders for the Basic tier.
  • Referral program rewards – you could make your referral program exclusive by offering the referrer rewards only to the loyalty club members. Then, you could personalize the rewards and offer higher rewards or higher referral limits for different loyalty tiers. For example, basic tier can refer max. 3 friends and earn 10 loyalty points for each successful referral; advanced tier can refer max. 5 friends and earn 15 loyalty points for each successful referral and the VIP tier can refer an unlimited number of friends, each giving them 20 loyalty points.
  • Digital gift cards – it is a highly personalizable reward, you can personalize the amount on the gift card, the gift card look and feel, any limitations on what the gift card credit can be spent on. For example, your VIP tier could get 30$ gift card spendable on anything, Advanced tier 30$ that can be spent on everything excluding the on-sale products and the Basic tier 30$ that can be spent only on your own brands.
  • Cart level discounts – offer a discount without a coupon code, based on the cart structure, e.g. buy one get one free, get 10% if the cart’s value exceeds $100. You can personalize the customer experience by offering discounts in the right moments. With real-time segments, you can trigger an in-app message informing a shopper about an exclusive offer like buy product X get 50% off for X accessories.
  • Loyalty points – you can personalize your currency name, by using creative names that match your brand name and products, for example calling them miles, starts, kisses, corks, stamps, steps, pages.
  • Giveaway entry – you can offer a giveaway entry as a rewards program incentive.
  • Charity donation – you can offer a charity donation as a reward.
  • Geolocation-based campaigns – for example, send a one-off coupon code with a push notification to a customer who matches the predefined location criteria. It can be a simple send-out to a segment called “Londoners” or, a more advanced solution like a notification triggered every time a customer enters one of the geofences you’ve defined. Also, if you run a brick-and-mortar business, you can restrict the coupon redemption to specific stores only.

Rewards catalog

If you offer points that are convertible to rewards, a good idea is to have a loyalty rewards catalog and to let your customers choose which reward they prefer. They know their preferences better than you do!

Promotions stacking

Promotion combining and stacking can help you create a unique customer experience. For example, a reward in a referral program can be a discount coupon. Or, your shoppers can exchange loyalty points for gift cards. Or, a reward in a lottery enables “buy one, get one free” for a winner.

Reward customers for more than just purchases

Point-based loyalty programs are one of the strongest drivers for repeat purchases. The thing that boosts the effectiveness of these programs is rewarding customers not only for purchases but also other actions like writing a review or sharing the brand on social media.

Points are given an expiry date, so that you can make sure customers will exchange points for rewards like discount coupons or gift cards in finite time. SMS or push notifications can be used to send any message related to earning and spending points. A nice addition is that these discounts can be used to upsell shoppers if order volume rules are applied.

How to create personalized incentives?

All of these ideas sound great, but how to implement such a personalized loyalty program? Real-time customer segmentation, personalization of messages, triggers, earning rules, rewards, all require a powerful customer loyalty software. Our main advice is:

Invest in a robust customer loyalty software

If you do not have the right customer loyalty software that allows you to personalize, narrowly target, experiment, track, analyze and optimize your loyalty programs, you might waste your promotional budget by sending wrong loyalty incentives to the wrong audience. To make your loyalty program not only effective but efficient and protect your budget from overspending and fraud, we recommend to invest in good loyalty software.

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How to choose the right customer loyalty software?

It depends on many verticals like the industry or your promo budget, but the good news is that there are some key features everyone should look at when choosing the right customer loyalty software. 

At Voucherify, we’ve been helping our customers build their loyalty programs and we’ve noticed several common points. We’ve found out that, from the marketing team point of view, your customer loyalty software should enable the team to:

  • Personalize loyalty incentives – incentives like discounts or loyalty points work best if they’re adjusted to customers’ preferences and behaviors. Make sure your incentive catalog is versatile enough to engage the whole audience with rewards.
  • Protect the budget and reduce fraud – make sure your discounts target the audience. This includes grouping customers in segments with filters based on purchase history, personal attributes, reward history, but also things that are more dynamic like the cart structure or geolocation.
  • Approach the cross-channel way – engaging the right audience is only the first step. To get a serious ROI from your campaigns, you need to target customers at the right time with the channel they prefer and actually use. Be it email, SMS, push notification, livechat, newsfeed, banners, or whatever your customers keep in touch with.
  • Offer real-time segments – allowing you to filter customers according to their attributes but also purchase history (e.g., only new customers, customers from New York, customers who’ve made at least 10 orders).
  • Enable custom triggers – working on top of segments enable you to deliver incentivized loyalty messages to a customer in the right context (e.g., email, SMS, push notifications, and any channel that can be integrated with webhooks).
  • Have in-built validation rules – they make sure the redeeming customer matches the condition you’ve defined for a reward, including their attributes, current order structure, and the budget you’ve planned for the whole campaign. (e.g., give only new customers from Berlin a 50% off for a leather cover if they put iPhone X 64GB to the cart, only the first 100 customers are eligible).

But in today’s, fast-moving world, the lab won’t be complete without some essential parts from the engineering point of view:

  • Web API – ever-changing customer trends make e-commerce challenges. To tap into new marketing channels your architecture should be flexible and easy to connect to new customer touchpoints. Separating the backend from the frontend with the use of API enables you to include new channels into your loyalty strategy without a fuss.
  • Marketer dashboard – to save tons of engineering time when your loyalty program is live, you might want to give control over the campaigns to the marketing team with a dedicated dashboard.

If you want to build such infrastructure yourself and you add up time for implementation, people training, and maintenance, the summarized cost will be a valid reason to question this whole loyalty incentives ROI. Luckily, there are SaaS, subscription-based customer loyalty software solutions that can cut down the costs to a reasonable level.

If you want to learn more about how to design or choose your customer loyalty software and which features to think about, check our blog post about designing the customer loyalty software architecture.

Voucherify – The Best Customer Loyalty Software

Affordability

Using subscription-based, API-first and Headless Customer Loyalty Software like Voucherify can help you to eliminate the initial investment cost (CAPEX), lower your operational costs (OPEX), and maximize your ROI thanks to the low cost of operations. We offer fair and transparent pricing with a pay-as-you-go model and flexible cancellation rules. No initial investment required, no hidden costs, free trial available for all subscription plans (no credit card required).

Personalization

Voucherify is a customer loyalty software that allows you for full loyalty program personalization customization. You can personalize the program name, currency name, currencies, languages, landing pages, messages, channels of distribution, create loyalty tiers, personalize the earning rules, rewards, reward catalog, customer cockpits (digital wallets), and much more.

Omnichannel distribution

Voucherify allows for omnichannel distribution. As it is API-first, you can connect it to literally any current and future distribution channel. We also offer plenty of out-of-the-box integrations with distribution tools like MailChimp, ActiveCampaign, Intercom or Braze.

Fast integration

Thanks to API-first and Headless infrastructure, integration time can be contained to days or maximum weeks while achieving high flexibility and scalability of the solution, that will adapt to any future platforms and distribution channels in place.

Marketer-friendly dashboard

The loyalty program can be launched and updated from a marketer-friendly dashboard, without the need to involve developers, apart from the initial integration. Marketers can manage everything related to their loyalty program in place, from connecting the databases, connecting integrated software platforms, creating the campaign, distributing it, monitoring the results, A/B testing, changing the campaign rules, checking a specific customer account, creating landing pages and more. The marketer-friendly dashboard gives your marketing team virtually full control over all loyalty incentives.

Developer-friendly loyalty software

Developer-friendly API and SDKs help connect your loyalty campaigns to any e-commerce or CRM system on one side; on the other, to any marketing channels. With these connectors in place, Voucherify knows how to personalize incentives with customer and cart data and ensures a smooth customer experience when it comes to redemption, mobile or web.

Tracking and analytics

Voucherify monitors redemptions from every loyalty program and shows performance reports on single coupon, campaign, or global basis. It also warns you about failed redemptions or malicious activity so that you can react accordingly. This is an essential part of the loyalty infrastructure that empowers marketers to create data-driven campaigns. 

Personalized loyalty program case study – Soul Cycle

To show you the power of Voucherify customer loyalty software, we are sharing with you a case study of one of our customers.

A revolutionary indoor cycle fitness company reached out to Voucherify to help them (re)engage their communities. With Voucherify API, they could quickly split their members into geolocalized segments and offer them highly relevant discount coupons via Braze.

Soul Cycle leveraged Voucherify’s built-in distribution channels to send well-timed deals via push notifications or as an in-app message on mobile. The messages were personalized using several attributes including products (fitness programs), audience segments, calendar events, location, and partnerships.

SoulCycle using Voucherify loyalty incentives delivered by Braze

With Braze <> Voucherify integration, they built a powerful customer loyalty machine that can be quickly adapted to new campaigns, like this one.

Key takeaways

Loyalty programs are a great strategy for building customer loyalty. However, building a successful loyalty program requires personalization and segmenting, to target the right audience with the right incentives through the right channels. Good customer loyalty software will help you with running personalized customer loyalty programs and creating personalized incentives. The best customer loyalty software is API-first and Headless, to allow for fast time-to-market, flexibility, and future-proofing your platform strategy. They should be flexible and allow for customization and personalization. Voucherify, our customer loyalty software, offers this and much more while keeping affordable and transparent pricing.

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