Although this isn't a new phrase for marketers, it makes more sense than ever today, in this era of customer-focused marketing.
This is the age of informed and proactive customers. The information age has provided customers with a variety of opportunities and choices -- making them less likely to remain loyal to one brand, but rather, to experiment with different ones. The rise of social media has also empowered them to share their experiences –- both positive and negative -- on several online platforms.
And while this is good news for customers, this is great news for companies. It gives marketers the opportunity to track online customer activity and develop strategies to keep the customers loyal to their brand.
Customer loyalty programs are one of the oldest strategies used by brands to encourage loyalty among customers. In the current scenario, even they've had a makeover. Gone are the days when loyalty programs were just about points, rewards, and discounts. Today, customer loyalty programs aim to offer personalized benefits to their customers.
Presently, analytics are heavily underexploited by companies despite the benefits. According to a research conducted by Broadway Business, the satisfaction rate of a company's use of analytics to create a competitive advantage was just 32%. The report further discovered that although the primary area for use of analytics was to improve customer loyalty (58%), the least adopted customer analytics practices were using data for insights (38%) and using social media to determine customer sentiment (35%).
This shows the huge anomaly in terms of the need for analytics for customers loyalty programs and the actual use of the same.
Now that you know about the benefits, here are five ways you can integrate analytics to boost your customer loyalty program:
How to Use Customer Loyalty Analytics to Analyze Business Growth
1. Calculate Your Customer Retention Rate
Customer retention simply refers to the process of turning new buyers into loyal customers and making them brand advocates of the company. The metric for calculating it is the customer retention rate.
Customer retention rate can be defined as the number of customers at the end of a certain period of time in comparison to the number at the start of the period. The universal formula for calculating customer retention rate is:
Customer Retention Rate = ((CE-CN)/CS)) X 100
CE = number of customers at end of the period
CN = number of new customers acquired during the period
CS = number of customers at the start of the period
Customer retention rate (CRR) is an important metric that can be calculated weekly, monthly or annually. There are many reasons why a customer may leave your company, so it's crucial to devise strategies to retain loyal customers and prevent them from leaving. HubSpot Research found that only 48% of consumers believe that companies value their success, and building customer loyalty is one of many ways you can demonstrate that.
There are various metrics to measure CRR like your website's clickthrough rate, email open rates, customer survey feedback results, etc. You can check your success rate by measuring your customer lifetime value, customer redemption rate, and rate of customer return.
A higher customer retention rate will ensure a higher loyalty program enrollment rate. This means the more customers remain loyal to your brand, the more you can reward them with your customer loyalty programs and create lifelong bonds. By developing meaningful relationships with your loyal customers, you can expect their lifelong loyalty.
2. Understanding Your Customers' Needs
In the age where your customers are swamped with choices, there is no place for guesswork. You can't afford to trial and error strategies and wait to see what works. The other approach is to use data to understand your customer and their needs and work your product and customer activities around that.
The rise of social media has revolutionized communications and now reaching your customer is simple. Tools like Facebook Messenger and Twitter direct messages have shifted the entire customer care segment online. Customers now share their pains and delights on social networks like Facebook and Twitter. These platforms are also great places to listen to your customer and hear what they are saying. Most customers are online and share their various experiences, questions, doubts and feedback on these platforms. It is thus beneficial for companies to choose the right social media platforms for their businesses. Through these platforms, businesses can be in sync with what their customers are talking about, their likes, dislikes and their requirements.
Another intelligent way is to integrate the data you collect into buyer persona. Buyer personas are reflections of who your customers are. Thus they should be as accurate as possible. If you add all the collected insights into creating as detailed a buyer persona as possible, then it'll help you craft your loyalty programs accordingly. Doing a keyword analysis will help you to discover the terms and phrases that are used by your target audience to find your business. Subsequently, you can utilize the keywords in all your content.
You may also conduct customer journey mapping to better understand your customer. It's an invaluable resource for marketers. Customer journey mapping is the process of telling the story of the customer's journey with a brand from the first point of contact to ensure continued engagement and a lasting relationship. It helps every member of the company understand their customer better and develop programs accordingly.
Understanding your customers' needs will go a long way towards defining your customer loyalty program strategy. Since the ultimate beneficiaries of your program will be your customers, so understanding their needs will help you to customize your program according to their needs.
3. Prepare a Customer Segmentation Analysis Report
An easy solution to finding the right customer for your brand is segmenting your customers. Before finding out how to do that, you must first know what customer segmentation is.
Customer segmentation simply refers to the segregation of potential customers in a particular industry into categories on the basis of various factors such as requirements, characteristics, and behavior.
Customer segmentation is a great way to boost your customer loyalty program. Once you have properly segmented your customers, it'll be easier for you to customize specific rewards targeted to each segment.
4. Measure Your Customer Loyalty
The aim of all customer loyalty programs is to make your customers more loyal to your brand. Loyalty ultimately leads to better customer retention.
There are several metrics that you can use to measure customer loyalty. One of them is redemption rate. It's simply the percentage of rewards redeemed by your customer. A higher redemption rate means more customers are redeeming their loyalty program rewards, which means that your brand has more loyal followers.
Another important metric is the active engagement rate. To measure the redemption rate, you'll have to measure the engagement rate. It's simply the percentage of customers engaging with your loyalty program. Engagement is counted whenever a customer earns or spends points in the program. This will help you analyse if your current loyalty program is effective or not.
Participation rate is also another important metric to measure customer loyalty. This will help you to calculate the percentage of members who are actively participating in your customer loyalty program. This will help you to analyse how loyal your customers are, how good your loyalty program is doing and how you can improve on the same.
All of this data will help you to understand how loyal your customers are, With this information, you make the necessary tweaks in your programs to gain more loyalty. The idea is to turn your loyal customers into your brand advocates.
Thus your loyalty program should focus on ways to engage your customers more into interacting with your brand, earn and spend more points and to reward your existing customers into becoming your brand advocates.
5. Monitor Customer Reactions with Promotions and Product Recommendations
Listening and asking questions can be your greatest asset in boosting your customer loyalty program. You can come up with new ideas or modify old ones about the promotions and rewards by collecting feedback. Ultimately, it's for the customer so they will be able to guide you better to know what they want.
Social media is a great place to listen to customers. Since most of your customers are active on social media already, it can be a great resource for you to learn more about them. Find you what your customers like, which brands they follow, what products they like, who they talk to. You can also just ask a question and seek their opinion. This will not only give you ideas about how to reward them but also about what products or services will be ideal for them.
You can also use paid search or social advertising to collect customer feedback. You can target your ads for specific segments of customers and analyze their reactions and feedbacks. This will help you to understand how they feel about your promotions or products and what you need to change.
Customer surveys are another great way to collect feedback. You just have to prepare a list of questions you want to ask and send it to all your customers. Make sure to keep your questions precise and relevant.
With all the customer feedback data you've collected, you can perfect your customer loyalty program in accordance with their needs. The valuable customer feedback is your guiding light which will help you to plan your customer loyalty program and make it valuable and engaging for them.