All We Need Is Loyalty For Happily Thereafter Profits
Customer Loyalty is a beautiful experience for any business: be that a moms-and-pops retail store, an ecommerce site or a mobile app for a hot startup. Yet, this is something that usually comes as the last resort marketing initiative or comes up if the business is being around for some time.
As consumers, we are heavily exposed to a number of loyalty and rewards programs. Some of them, stick with us for years, some become a fad of the season or a year at best. As business owners, we also have plenty of choice for technology partners to make our loyalty programs work seamlessly.
Yet, what if we thought of customer loyalty from the start of building our products?
What if we designed our site, apps and services with the loyalty fundamentals at the core of every customer experience with us? How do we go about that?
After reviewing a number of site experiences from the ecommerce industry and my loyalty choices as a consumer, I found a beautiful blend of examples that use this aspect of cognitive psychology and weave it into the product or marketing experience. I dug deeper and found a model, long used by MIT professors with monkey studies and advertisers with bigger consumer brands. There is also a very good read that details this concept well by Charles Duhhig in the Power of Habit. The idea behind the concept is all about mapping your product experience into your customer habit loop.
The author gives a brilliant example how Pepsodent toothpaste became a top seller brand and changed the entire nations via its intelligent positioning into people’s daily lives. I loved it so much that when I spoke at Digital Week 2013 in August on Customer Loyalty and Purchase Frequency in Sao Paulo at ESPM (a Graduate MBA School), I told the students that the American smile story is all they need to know.
The marketing minds behind this campaign educated its audience about the events when their product should be consumed (triggers). They shared the key benefits based on what the product delivers. And they made sure that the triggers chosen are daily activities and are the events that occur to everyone all the time. Plus, those activities must be sensory. Everyone wants to have a beautiful smile, which can be achieved with the Pepsodent toothpaste. ONLY IF YOU BRUSH after each TIME YOU CAN FEEL THE FILM ON YOUR TEETH. This happens throughout the day to every human being multiple times. This natural event and our ability to cue it ourselves are key. The entire habit loop would go as follows:
In the evolving ecommerce world, I see a number of businesses that become very popular and stick with the audience as if they were designed around the idea. The founders might not have been aware of this factor and saw the potential in the consumer behavior in a different framework. Yet, this interesting pattern is worth paying attention to. Those ecommerce sites are growing so fast for many reasons and this one if part of their success formula whether it is known by founders or unknown. Among my favorites are subscription sites, and niche ecommerce sites that are connected to their customers’ minds through regular reminders within the habitual activity (living and consuming all on mobile).
Besides, the top 3 key components, if you want to increase your product usage rate, you’d better think about how to train your shoppers have a craving for what you have got. Without it, the above simplistic process might work only once. While, the full formula consists of 4 major components:
Let’s see how this applies to my favorite ecommerce sites: Manpacks.com, Birchbox, Jackthreads and some consumer brands I am partial towards to.
What a beautiful blend of science and common sense! Yet, it becomes successful and a piece of art, producing profits only when you master how to find the right trigger; how to develop or select the right reward. You also need to know what else needs to happen or not in the delivery and how to tie all ends for the ultimate customer experience.
For example, Cache had a great loyalty program that turned me from a casual shopper once a year into a heavy shopper that visited a store 8-15 times and dropped more than $500 per visit. For every $100 spend, they would take $25 off, for every $200 spent they would take $50 off and for every $300 – $100 off. The average price of any item in this store is $100. So, if you do shop in bulk, you get a deal of 5-8 items for under $60, which is a steal.
Except, after 2 years, they started limiting what merchandise can be part of the promotion and no dresses can apply. Well, that killed my frequent heavy purchasing, as the dresses trigged my cravings and now I shop maybe once a year. I used to spend $5000 per year, covering my entire wardrobe needs and now I might only go to $300 total value. The reward component was changed and this killed the purchase frequency pattern.
Do not make such mistakes in your shoppers’ experiences if they are your best heavy users. With Cache, I am still a loyal customer, yet I am not a heavy frequent shopper any more.
You can have loyal customers that shop sometimes and you can have frequent shoppers who are loyal, hooked and add continuously to your cash flow, almost predictably, if you know how to create and maintain such an experience.
So, you can engineeer the habits into the product consumption experience, even if it means regular easy shopping for the basics. For men, it could be a perfect bundle of socks, shavers and romantic necessities, delivered regularly. For women, it could be 10-15 classy dresses, available for their shopping indulgence throuhout the year with great steals due to the loyalty discount perks. Or, you can also create them via a very close look at your customer behavior with and without your product. Find some patterns, as humans respond in predictable ways, add creativity, test and segment and offer them a new experience with perks that drive more shopping. And do not forget that constructing a perfect loyalty program is just a part of the experience. The way you deliver it, is what counts the most.
Would you like to increase your active user base? We can help. Would you like to increase the number of your active users or turn your average shoppers into heavy users and frequent buyers? We are just an email away. Would you like to have a loyalty program that boosts your conversions and online sales? Then, do connect to us today for your FREE 30 min consultation.