What is loyalty marketing? The importance of brand loyalty in modern marketing

Loyalty marketing programs aren’t new. In fact, they’ve been around in various guises since the 1700s(!). However, it was perhaps with the introduction of Box Tops in 1929 (coupons that were printed onto product packaging that could be redeemed for rewards) that they really started to gain commercial traction and capture the wider public’s imagination. Check out this blog post to learn more about the history of loyalty programs.

It was in the 80s that one of the most famous loyalty programs was created: Frequent Fliers. Seeing how this scheme was driving success for aviation businesses, retailers began to adopt loyalty aggregators. These were programs that reward points regardless of the retailer they were earned from. In the 90s, card-based retail loyalty schemes were also popular to implement in-store loyalty towards a particular business.  

While many of the loyalty programs of the 90s now seem like nostalgic throwbacks, the importance of brand loyalty in modern marketing shouldn’t be underestimated. Loyalty program members contribute to between 12 and 18% more revenue per year than the average guest shopper.

In this blog post, we outline what exactly loyalty marketing is, what it aims to achieve and why it’s the cornerstone of many successful ecommerce businesses. 

Stress Free Guide To Getting Started In Customer Loyalty

What is loyalty marketing? 

Loyalty marketing is a strategy built around growing and retaining existing customers through incentives such as free gifts, discounts and/or exclusive access. Loyalty marketing efforts are designed to build trust, rewarding customers for their continued engagement with, and loyalty to, the business.

What are the aims of loyalty marketing?

👉 Loyalty marketing aims to retain high-value customers. Regularly returning customers spend more and generate larger transactions than guest shoppers. In apparel, a shopper’s fifth purchase is usually 40% larger than their first.

👉 Loyalty programs allow you to gather significant amounts of data on your shoppers. Enabling you to deliver a superior, more personalized shopping experience. 65% of customers said they were motivated to buy when they receive personalized offers. And 61% said the same about personalized product recommendations.

👉 Loyalty programs help acquire new customers because repeat customers refer more people to your business, driving sales. The dollar impact of these referrals can be significant. Over three years, customers referred by online grocery shoppers spent an additional 75% of what the original shopper spent.

The importance of brand loyalty in modern marketing

Shoppers are no longer restricted to purchasing solely from the shops that are within their local town or high street. Shopping behavior has transformed in recent years. Habits have changed from being about convenience – picking the closest option – to one of multitude and choice. Now, there are endless options across every shopping category imaginable – from fashion to electronics and all of the crossover niches in between. 

It’s crucial that you set yourself out as the best option for the customer in your niche by building brand loyalty. This means: 

  • If you invest in providing a top-quality experience for your customers, you can offset the cost of acquisition and grow more thanks to the initial investment. When you have a solid base of customers who will refer their friends to you, you create a virtuous circle of increasing purchases. By promoting your brand through referrals and word of mouth, they’re supplementing your in-house acquisition efforts and turbocharging your sales. 
  • You can thrive by building trust with your customers. Did you know that 80% of shoppers say trust plays an important part of their purchasing decision?  A further 76% of consumers said that, for them to show loyalty to a brand, they need to trust that if they recommended the business to a friend, they would also have a good experience. 
  • Loyalty builds emotional connections, as it hands you the means to demonstrate how you’re aligned with your customer. 68% of customers said they are motivated to show greater loyalty to a brand if it shares the same values as them. 

How to use loyalty marketing: 3 strategies to consider

📱 Social media

Use your social media channels as a way to communicate the benefits of your loyalty program. It’s no fun to feel like you’re at the end of a hard sell on social media. What’s more, your audience will quickly pick up on inauthentic sales messages. Instead, create genuine conversations centered around the perks and benefits of your loyalty program to drive genuine interest from customers. 

Showcasing how your loyalty offering is different or unique will demonstrate how you stand out from the competition. Not only will this help you reach potential customers, but you might find that influencers specific to your industry become aware of – and join – your program.

Stories 2

✉️ Email marketing

In 2019 alone, 293.6 billion emails were sent and received each day. It’s clear that email is set to remain a key part of the way the modern world communicates. As a direct line of communication to your customers, it’s of little surprise that email performs well for ecommerce retailers. For every $1 spent on email marketing, you can expect an average return of $42.

Use data to personalize your email offering, giving customers relevant, timely content. Remember to use email to make loyal customers feel like VIPs, offering exclusive discounts or early access to sales to keep them engaged. You should aim to build lasting relationships with your customers by sharing information about how your values align with their preferences. 

Moxielash Early Access Email 1

💰 Pay per click (PPC)

In 2017, seven million advertisers spent $10.1 billion on PPC ads. This is because PPC visitors are 50% more likely to purchase something than organic visitors. It’s no use sending out a generic message with no targeting and hoping for the best. A key way to be cost-effective with your PPC spending is to make use of your loyalty program data. With the data, you can target your most valuable customers, before sending them targeted PPC campaigns that get them to landing on your page and convert interest into a sale. 

Loyalty marketing in practice: A case study of LIVELY 

Underwear leader LIVELY pulls out the stops to give their best-loved shoppers a consistent brand experience. How? By putting loyalty at the center of their marketing. Access the full case study here.

“The LIVELY Rewards Program” is a beacon of their brand. As well as custom icons, it includes their signature blush pink and accent green to show that the program is part of the brand experience. That same look and feel is then replicated across all ongoing comms around the program so that it is easy for a customer to identify.

As members move up through the tiers, they can engage in ways that usher them further into LIVELY’s brand world. They might be invited to exclusive events, gain early access to new products or even have the opportunity to vote on which styles the brand looks to create next. 

Loyalty emails make sure LIVELY doesn’t just drop customers right after they’ve shopped. They allow the brand to keep in touch post-purchase and to tell them about the surprises waiting in their account. This includes point updates, showing the client that it pays to be loyal, as well as point expiry emails motivating shoppers to return before they miss out on potential rewards.

LIVELY’s members are important to them; not only because they buy products but also for the value they give back to the brand. 

As a result, LIVELY offers one-off experiences to pamper their most-loved customers. They also run double points events so customers can get even more value when they treat themselves.

LIVELY knows that by portraying a consistent message, they can acquire new shoppers by using their brand fans as advocates – growing their community as a result. 

On their program page, members are encouraged to “Hook up [their] BFF” with a $10 voucher by referring them to the brand. On Instagram and in emails, they share last calls for their double points campaigns and encourage members to share the perks with their friends.

Are you ready to use loyalty marketing to your advantage?

Loyalty marketing is crucial to developing long-term relationships with customers who spend more with you. With loyalty scheme members generating between 12 and 18% more revenue per year than the average guest shopper, it’s no wonder so many brands are investigating how to leverage loyalty to their advantage. 

Head over to the LoyaltyLion Hall of Fame to see more examples of loyalty marketing in action.

LoyaltyLion Hall of Fame

About the author

Mollie Woolnough-Rai

Mollie is a Senior Content Marketing Executive at LoyaltyLion. After graduating from UCL in 2016, she has worked both in-house and at marketing agencies providing expertise in content for both B2B and B2C clients. At LoyaltyLion, Mollie manages our content, making sure our readers get the best quality resources about customer loyalty and retention.

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