Asking customers to pay for a promotion? How does it build customer loyalty and retention rates? Read our case study to learn more.
What we can learn from Zooplus? A real-life example of an innovative loyalty program that works.
Zooplus, a pet accessories giant decided to make their customers pay for taking part in their loyalty program. This seemingly risky approach led to a substantial boost of customer loyalty and engagement. Why? Because customers attach more value to items and deals they invest in. Why didn’t it fail? Because Zooplus had a set of limitations in place protecting their loyalty budget.
Follow the post for a more detailed answer.
Zooplus - E-commerce giant and a customer loyalty pioneer
Companies that offer everyday products know that frequent need to buy doesn't necessarily lead to customer loyalty. From the perspective of consumers, when a store fails to meet their expectations, there are many other brands to choose from that offer the same or similar products.
Recently I came across a very interesting promotion from zooplus.pl, a Polish branch of the pet accessories e-commerce giant, and I decided to tell you more about it. Zooplus set their marketing strategy towards building customer loyalty and increasing retention rate using a pretty unique approach.
What does Zooplus offer and why it’s an example of an innovative loyalty program?
Zooplus offers their regular customers a “Cost Reduction Program” which allows them to save 3% off every purchase. The invitation to join the loyalty program conveniently appears in the customer’s cart at the checkout. The cost of getting the fixed discount is small and dependent on a chosen expiration date. For example, to use the promotion until the end of the year, customers have to pay an additional 10 PLN fee, equivalent to a nominal €2.5.
Finally, when an order is made, the discount is assigned to the customer making each purchase 3% cheaper and steadily building customer engagement and loyalty.
Let's explore the other attributes and limits connected with this unusual way of building customer loyalty.
Limits that protect Zooplus’ loyalty budget
Every time a customer uses their discount, their savings and order history are updated in the customer profile. Zooplus allows a customer to discount their purchases as long as the total value of the order history doesn't exceed a maximum of 12500 PLN (€2912). Besides the maximum amount of all orders, Zooplus also assigns a minimum required value for each purchase. Both limits help to secure their budget and also help the store to upsell.
The program is available only in the native country and costs of delivery are not included in the discount. The essential element is that the fixed discount is always limited in time. However, available options offer only long-term expiration dates.
Now, we’re going to explain why this idea works and builds a loyal audience for Zooplus.
What makes this loyalty program work?
It may seem that forcing a customer to pay for access to a promotion is at best risky if not plainly foolish.
In fact, this tactic makes the incentive work more effectively than if offered to customers for free. Why?
People pay much less attention to things they get for free. The symbolic price that Zooplus requires to share in the discount actually increases clients’ motivation to use it. It's already paid up, right?
The paid discount provides customer engagement and keeps the discount memorable.
The other thing is an expiration date. The store puts a time limit on their loyalty program and, thanks to this, Zooplus keeps offering the standalone 3% off only to the group of customers who make it the most beneficial for the brand. Otherwise, the invitation to join the program is a one-time offer.
There is one more detail which makes this “Cost Reduction Program” effective. The moment that a customer is offered a discount a feeling of endowed progress is created. A customer doesn't have to look for a discount, place a special code or do anything else, just finish the purchase. At the checkout, a customer can easily remove the invitation to join a “Cost Reduction Program” from the cart but primarily, they get the discount and savings at their fingertips. We wrote previously about "endowed progress" and customer loyalty in this post.
The Zooplus program is an example of a simple but effective e-tool to sharpen up loyalty and retention rates. Firstly, promotion limits like minimum/maximum order value and expiration date secure the Zooplus budget and increase average amount spent. Secondly, the paid fixed discount works as a great incentive that keeps your customer coming back each time they need to re-purchase treats for their beloved pets. The key to making this kind of promotion work is well-tailored limits and a proper balance between the cost of a discount and its value for your regular customers. This way you can set up a loyalty program that offers real value and is a real gift to the most loyal of your customers.