Why Email is still at the Core of a Successful Loyalty Program

Loyalty is a much-overused term in retail marketing.

Does the fact that a consumer’s wallet is packed with ‘loyalty’ cards mean they’re loyal to all of those brands? If anything, the opposite is true.

Consumers will pick and choose particular benefits that are relevant to them. Any number of different loyalty programs, all from competing brands could give them the ideal combination for their lives.

So how can you help your brand gain as much share as possible of that elusive loyalty? Barraging consumers with cookie-cutter emails doesn’t work. However, a well-targeted email marketing strategy can achieve that all-important differentiation through a careful balance of personalization and automation. Here’s how to do it.

Sell the perks early on

When a customer first enrolls in a loyalty program, your biggest challenge is to sell the benefits before you have sufficient data to personalize the rewards to their individual tastes.

Provide incentives with broad appeal, and keep them within relatively easy reach at first, to encourage recipients to engage and start recouping the benefits right away.

Beyond the standard ‘first-name’ personalization, emails should also include dynamic, conditional content such as membership number, total points and any other user-specific data available.

Subsequent reminders should come at regular intervals, but avoid repetition and user fatigue by using recipients’ activity since the last email to tailor content accordingly. Provide constant encouragement to reach the next level as their rewards accrue.

One excellent example of a successful email loyalty campaign is ‘Welcome to your monthly shot of Costa…’. Sent to 1.6 million Costa Coffee Club subscribers, it pulled in recipients’ Club Card numbers and total points, which were matched to the closest reward they could enjoy.

There was also an enticing animated GIF of a fresh cup of coffee being poured, and the campaign achieved a highly impressive 44% open rate, which translated into a 12% click-through rate.

Keep your customers’ attention

As customers continue to accumulate rewards as part of the loyalty scheme, the next challenge is to provide sufficient incentive for them to continue climbing to the next level.

Keep them engaged with discount codes and exclusive perks, and use their loyalty points tally to continually prompt with the next available incentive to nudge further engagement and purchases.

As the database develops, segment loyalty program members into different ‘personas’ based on their buying habits, and use this information to offer the most appealing rewards possible. It’s all about creating a ‘switching barrier’ to prevent customers from being attracted to a competitor. For example, when Sainsbury’s notice that I haven’t purchased specific products in a while, I receive coupons with extra points incentivizing that purchase to make sure I’m not getting key items from somewhere else.

Personalize to drive engagement

You can tailor both the content and the tone of the messaging to appeal to different personas, to maximize click-through and conversion rates. This approach was hugely successful for pet retailer PetsPyjamas, which achieved a tenfold increase in sales through a tiered campaign.

Following an incentive for the first purchase from a range of popular products, a second email encouraged those with existing PetPoints to redeem them, and those without to create a profile to start earning points by sharing data.

A third email shared a specific offer, then the campaign split into three: those who had not used the discount code were reminded of it; those who made a purchase were incentivized to make another; multiple purchasers defaulted to standard marketing.

Compared to the previous campaign, open rates increased from 40% to 60%, and revenue per email increased by an impressive 1000%.

Reinvigorate loyalty when necessary

Over time, purchasing history from longer-term loyalty program members can also help you determine the highest, and lowest, spenders in the scheme.

Set up your own RFM (Recency, Frequency and Monetary) model, and use the data to target communications further. Focus automated emails on product ranges from which recipients have purchased before, taking into account how much they spend on average and how regularly.

After a year or so into the loyalty program, it may be necessary to nudge and remind members of the benefits, particularly if they appear to be losing interest and engaging with it less frequently.

Set up automatic triggers for reminders, either by tracking engagement with the loyalty scheme, or the open and click-through rates of the emails. Behavior-based triggers could be as simple as a ‘we miss you’ message after a period of inactivity or use complex data for a more targeted approach.

Key takeaways

  • Use dynamic, conditional content to personalize emails
  • Prompt with the next available incentive to drive engagement
  • Segment the database into personas, and tailor messaging
  • Target personalized offers to customers based on purchase history
  • Set up behavioral triggers to re-engage lapsed customers

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