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Social loyalty programs pay off for retailers

5 min read

Brands & Campaigns

The squeeze is on. Consumer spending has been slow to recover with the economy, and, as a result, the size of the retail pie isn’t getting any bigger. To stay competitive, retailers are increasingly finding that they need to focus more on gaining and maintaining customer loyalty as an imperative to business success. Not only is it cheaper to keep current customers than to acquire news ones, but happy customers can be an amazing recruitment tool, if they are incentivized to advocate for their favorite brands. As a result, social loyalty is becoming the newest trend in retail marketing’s tool belt.

Social loyalty, according to Forrester Research, is “brand affinity built on the connection of consumers to the brand as well as to each other.” It provides an opportunity for brands to engage with members beyond the transaction — encouraging awareness, advocacy and emotional loyalty.

Here’s how front-line retailers are using social loyalty to obtain these benefits — and how you can, too:

Word-of-Mouth Marketing
Turning loyal customers into advocates on social media gives brands a powerful way to increase awareness and reach among connected consumers. Moreover, research by Sociable Labs has found that 62% of online shoppers read product-related comments from friends on Facebook, 75% of whom click through to visit retailer websites and 53% of whom go on to make a purchase. Clearly, word-of-mouth marketing works to drive awareness and even sales. In fact, the iterative effect of delighting customers for doing what they already do — interact with their friends and family via social – has helped brands acquire 45% more customers.

Immediate Response Opportunity
Social loyalty programs combine listening with immediate response mechanisms to provide instant gratification, surprises, or other replies designed to thank or delight customers. Not only does a simple recognition and thank you go along way, but customers are more likely to make a subsequent purchase, which enhances their lifetime value and reinforces loyalty.

Brands that successfully tie social to their loyalty programs correlate rewards to pre-defined social actions. Rewards can be anything from a promo code for a discount online to points if the brand has an existing points-based program. For example, one restaurant automatically replies to all Instagram photos of its food with a thank you and free drink offer. And, a large retailer replies to digital check-ins with a percent-off coupon for the customer while they are in the store. To keep the program from feeling stale, these retailers mix up the rewards over time, layer in special promotions and include seasonal events.

Close the Data Loop & Personalization
A very important aspect of social loyalty programs is that they can provide a 360-degree view of customers. Retailers who are killing it at social loyalty link their loyalty program members’ online and offline data, understanding, for example, that Jennifer Holland is the same person as @Jennlovesshoes. With this data, brands are able to close the loop within their databases and different data silos within their organization giving them more data and tools with which to personalize future offers and rewards for Jennifer.

This is critically important. According to an IBM-eConsultancy study, nearly 90% of marketers agree that personalizing the customer experience is critical to success, but 78% of consumers said the average brand doesn’t understand them as an individual. The result is that 49% of consumers switched providers over the past year. Brands that are able to bridge this divide and provide tailored offers and rewards are kicking off a virtuous cycle where customers return because they feel understood, know their needs will be met, and will, in turn, be willing to share even more personal information with the retailer and share their great experience with their social networks. In fact, retailers that have turned their focus to social loyalty have increased brand engagement by up to eight times.

Brands connect advertising of out-of-home to mobile and social to encourage participation.

Competitive Advantage
Immediate thanks, surprise and delight, personalization. Social loyalty components all work together to create competitive advantage by creating a virtuous cycle where brands are able to personalize their offers, as well as personalize how they communicate (e.g. does this customer prefer Facebook, e-mail or Twitter), and then deliver experiences that surprise and delight. Experiences that show the customer that you know them work on two levels: First, the customer knows that you care because you took the time to deliver an offer that is relevant; second, the consumer can draw comparisons between your tailored communication and the competition, whose communication may be far afield.

All these elements leave the customer feeling positive about the brand, further reinforcing a positive view, emotional loyalty and lifetime value.

Much has been written about the value of customer loyalty and the benefits of keeping happy customers happy, versus the cost of being in constant customer acquisition mode. Leading retailers are embracing social media as not just a way to interact with consumers for customer service needs, or to chat with them about trending memes, but as a means to meet new customer expectations for immediacy, personalization and social mobile brand interaction. The competitive advantage it brings is paying business dividends for those on the retail front lines.

Jessica Williams is senior marketing manager at Chirpify, where she is responsible for driving social strategy, engagement, and conversion in concert with SEO, analytics and digital marketing initiatives. She received her degree in journalism from the University of Oregon and can be reached at [email protected] or @Jessica_J.