IS A LOYALTY PROGRAM FOR YOU? Check our 4. core principles to find out.
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1 IS A LOYALTY PROGRAM FOR YOU? Check our 4 core principles to find out.
2 INTRODUCTION Being the Head of Sales and Business Development at Antavo, means that I m silently watching how ecommerce companies plan and launch loyalty programs using our SaaS loyalty solution. I have witnessed many unique client success stories over the course of the years with none of them being the same. It s a tremendous experience to observe how their programs develop, blossom, and eventually bear fruit, even though they initially have quite different motivations, market positions, and business goals. Probably the most important lesson I have learned over the years is how to identify the tell-tale signs of success: the factors that can make or break a loyalty program. Let me share this knowledge with you. Andy Nemes Head of Sales and Business Development 2
3 OVERVIEW In this part of our series we discuss the four success factors for a loyalty program. We talk about BRAND EMOTIONS PRICING FREQUENCY OF PURCHASES WEBSITE TRAFFIC We learn why they are crucially important and how they relate to loyalty. CONCLUSION 3
4 BRAND EMOTIONS 4
5 BRAND EMOTIONS We are not going through a full branding exercise here, but rather touching on the most relevant aspects from a loyalty point of view. And it takes us to the emotions that your brand can or cannot evoke. Emotions and loyalty have to be related in some way. The missing link between them is engagement. The full chain of thought looks like this: the emotions your brand awakens drive engagement and without engaged customers there s no one to run a loyalty program for. EMOTIONS = ENGAGEMENT = AN OPPORTUNITY TO AWAKEN UP LOYALTY. That s the formula. What are your values in this equation? Does your brand evoke the required kinds of emotions? Are they strong enough? Everybody loves the brand they are working on, so before you say a big Sure! stop for a moment and think about it from the customer s point of view. 5
6 To put it simply, your brand s essence is what your brand is all about. More than that, you have to carry this core meaning over to every single customer interaction in order to dictate a consistent brand experience. Achieving this can help you differentiate and distinguish yourself in today s cluttered markets. We can even jot down examples including some widely known brands: - Nike s brand essence is empowerment. - Orange s brand essence is optimism. - Volvo s brand essence is safety. HOW EMOTIONAL IS YOUR BRAND ESSENCE? In other words, where are you on this imagined scale? PRACTICAL to EMOTIONAL You can interpret your results like this: the more emotions your brand essence has, thanks to the higher engagement it involves, the more successful your loyalty program will be. 6
7 PRICING 7
8 PRICING There is a vast amount of literature on pricing itself. But no matter what strategies you support, loyalty programs are here to help. (End of ad.) Or not. Because there s one specific exception: if your customers are extremely price-sensitive and your core value proposition is being the cheapest on market. Some may argue that you have built your castle out of sand but if it s a conscious strategy, it can work like a charm and be one of the most profitable business models of all. But you might have a problem from a loyalty point of view. In a customer community like this, the core motivator is buying things as cheaply as possible. So if you offer a 5% discount reward in your loyalty program, your customers will do anything for you. What s the problem? That s how you keep a price-sensitive audience in motion you may rightly ask. True. But this customer approach can ruin the essence of having a loyalty program. Instead of having a successful project, you will just end up with piles of meaningless customer information with no deep engagement at all. You don t want this. But, in turn, if extremely price-conscious customers are not your speciality, then loyalty programs are for you. 8
9 FREQUENCY OF PURCHASES 9
10 FREQUENCY OF PURCHASES Keep reading. You will see that it s not just marketing mumbo-jumbo in a minute. Loyalty programs work best when they have to deal with fast-moving consumer goods (FMCG). It may sound a bit enigmatic first, but if you think about it, people engage and relate much more deeply with the products and brands they use on a regular basis, i.e., FMCG or soft goods. Fashion items, food supplements, cosmetics - you name it. Its simple: the more your customers use it, the more they engage with it, the better the loyalty program results will be. On the other hand, if you have to deal with durable goods or hard goods - for example cars, electronic gadgets, or home appliances - their lower re-purchasing frequency results in a lower engagement. And we have already learned that engagement is key to a successful loyalty program, so it may not work. Let s find your position on the soft goods versus hard goods scale and see if it works from a loyalty program perspective. We usually say that if a typical re-purchasing cycle is under half a year, you have a great chance of running a successful loyalty program. 10
11 WEBSITE TRAFFIC 11
12 WEBSITE TRAFFIC We have some bad news and some good news. Let s start with the bad. A loyalty program is about the retention (keeping) of your existing customers and not about acquiring (getting) new ones. It can only work for those who are already somehow connected to your brand. Now, here s the good news. It s true that you need visitors, but not all of them necessarily need to be customers. It s enough if they are members of your website community. So include those who: - generally check your offers - read your blog - watch your video series - read your newsletters How does it look in numbers? ACCORDING TO OUR EXPERIENCE, THE MINIMUM WEBSITE TRAFFIC THAT ALLOWS A SUCCESSFUL LOYALTY PROGRAM TO RUN IS: 100 k visits / month 15 k unique visits / month 12
13 CONCLUSION 13
14 CONCLUSION Can you recall the four crucial success factors we have just discussed? - Brand emotions. - Suitable pricing strategy - Customers with a relatively high frequency of purchases - Established website traffic Right? Now, how many of these criteria fit you? If you have four positive answers, your company has everything it needs to run a successful loyalty program. If you can only identify with two or three of them, you still have some risks ahead, but it will probably work out pretty well. If you only have one positive answer, instead of jumping into a loyalty program right now, our advice is to work on improving the other factors and get back to all this loyalty thing sometime later. 14
15 CONTACT US I hope that this has helped you to make the first, but very important decisions about launching a loyalty program. Please get in touch with us for further advice, support, and help with questions on how loyalty programs can advance your business. I am just a call or an away. Andy Nemes, Head of Sales and Business Development, Antavo andy@antavo.com 25 15
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