THE CLARUS Blog

Do You Want a Successful Loyalty Program? Focus on Your Best Customers

When building out your loyalty program one of the first questions you will ask yourself is: “What benefits will create loyal customers?”

It’s an important, but difficult question to answer.

Your customers are diverse and have different needs and values. So, coming up with an answer that meets all their needs can be complex.

When launching a loyalty program, it’s important to think simple and build based on what you already know.

And who do you know best? Your best customers.

Here’s why focusing on your best customers is crucial when building a loyalty program.

 

Your Best Customers Are Your Most Profitable Customers

Your top customers have always proven to be your most profitable.

The top 3% of customers spend 3x more on average than other customers. By adding a loyalty program that further increases their spending you will see an increase in retention.

Just think, if your retention rates increase by 5% you will already see a 25%-95% increase to your profits.

Now let’s look at it from a marketing perspective.

We have all heard the phrase, “it costs more to attract a new customer than to keep an existing one,” and that’s true!

It can cost five times as much to attract a new customer than to retain an existing one. Not only that, but the probability of selling to an existing customer is 60%-70%, while the probability of selling to a new prospect is 5%-20%.

Be smart with your marketing investments: If your best customers are already profitable for your brand, show higher retention rates, and are easy to market to – why not focus on them first?

 

You Have Data on Your Best Customers

Your best customers return to your site consistently, which makes it easier to determine buying behaviors, habits, and preferences.

What are your customers purchasing? When do they tend to buy the most? What devices do they purchase from?

Defining these quantitative data points helps you make better decisions when determining how your loyalty program should be built, along with laying out transactional benefits that users will find valuable.

This data is important to ensure the program you’re building is what your customers WANT.

Never guess on what you think the customers want in a program, let the data speak for itself.

It removes the guesswork around what benefits will create loyal customers. The answer is right in front of you.

Building a loyalty program around current customer data eases the stress of making sure your program will be a success. You know it will be because your customers told you what will make it successful.

 

Just Because They’re Your Best Customers Doesn’t Mean They’re Loyal

One perception about your best customers is that they are your most loyal customers. So, you may ask, why should I invest in my top customers if they are already loyal?

This is not always true.

While your best customers do find your brand attractive and engaging, loyalty is created by showing your customers that you find them valuable as well.

It is a two-way street based on reciprocation.

Ask yourself, if a competitor comes around and offers the same or even better benefits why would your customers stay with you? What makes you more valuable to them?

Given the increase of direct-to-consumer brands and unlimited buying options with online shopping, loyalty is harder to retain.

Your best customers can leave you in an instant if you do not treat them like they are of value to you.

A loyalty program creates enhanced relationships with your best customers by giving them benefits that they can’t get anywhere else.

And think outside the box. Sometimes the benefits are not just transactional; they’re emotional.

What benefits can you offer them that meet their emotional needs? Personalized customer service, donations to their favorite charities, and birthday gifts are just a few examples of emotional benefits that can set you apart from a competitor.

 

Loyal Customers Want Your Brand to Succeed

Not only is quantitative data valuable but understanding the reasoning behind users’ buying habits and preferences is important to build a program that suits the needs of your customers.

There is more happening in your customers’ lives than going on your site to buy.

Why do they come to your site? Why do they purchase certain items?

Understanding this and what consumers value outside of your brand is a big part of building a successful loyalty program.

Now, who will give you this feedback? Your best customers.

There is a reason they are your best customers. They want to see your business succeed so they can continue to get the value out of your products.

Customers who only shop at your brand occasionally are not as invested, so there is less chance they will take time out of their day to fill out surveys or do interviews. If your customers know that you are working on ways to improve their experiences, they will be more than happy to provide feedback and give you direct answers to how to do that.

 

Your Best Customers Will Show You the Way to Long-term Loyalty

By focusing on your best customers, you are guaranteeing yourself a successful loyalty program. They are your best customers for a reason.

By giving them benefits that make them feel valued you will see improvements to your brand, and profits instantly.

While it may look like an overwhelming task to build a profitable loyalty program, it’s simple. Your best customers will give you the data you need, retain at higher rates, and drive profitability.

This changes them from your best customers to your loyal customers.

How does your brand focus on your best customers?

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