Checklist: online loyalty tactics for retail
- Luke Telford
- 18 November 2009
In a café-dense suburb of Sydney, we all routinely walk past five (5!) coffeehouses to get to the one that we
like
. We never go anywhere else. And there's lots of competition. Why is this?
The coffee is better. The cafe has a fairly standard loyalty-card scheme which rewards you with a free coffee after you've bought a certain number. And, the friendly barrista remembers your name, your kid's names, and various small but relevant details in your life, not to mention how you like your brew.
Pretty simple, right? Plenty of cafés can at least get the first two right.
It may seem like it on the receiving end, but it's not. There's quite a lot going on that convinces us to go back.
So what keeps customers loyal?
We posed the same question to Matt Hampshire, CEO of Loyalty Tech, a company specialising in cloud-based loyalty systems for online retail, and his answers were illuminating.
Matt started the company after having a particularly positive customer service experience at a Nordstrom store in Hawaii.
'Nordstrom has a reputation for the best customer service in the world. They're the pioneers of the Black Book. They actually record your details, list the things you bought on each visit, and they personalise that experience for you. Then they might call you up a few weeks later to see how you're enjoying the clothes.'
Hampshire began his career in retail, then moved into working with large software companies, before specialising in e-commerce. After launching several successful product lines for other companies, he established his own. Here are his insights:
Matt Hampshire says get this right first: know your customer
Obviously, it's essential to engage the customer, but many businesses neglect to record their information, and fewer still use it effectively.
You can start building a customer profile with basic information: their name, email and date of birth. These may seem like fairly simple things, but those pieces of data don't magically appear in your customer records. You need to offer something in return, and it has to be free. Target the customer's initial interest in your business and offer something they'll value, for nothing.
'Special offers' need to actually be something special
Be specific about what you're offering. Many companies make sweeping, vague promises about hypothetical future ‘fabulous offers' and invitations to ‘brilliant events'. Once they've signed up, you need to send them acknowledgement that you've started a relationship with them, and you should repeat your offers in an overview of loyalty benefits.
Hampshire claims that discounts aren't the best incentive for providing information. He says they don't encourage loyalty in customers, and that is the crucial thing.
Instead, offer incentives in the form of soft bonuses, benefits or rewards. Make them desirable, and relevant.
‘There was a great example in the US recently, with a furniture company actually offering the opportunity of going on a buying trip to Asia. And that was a free thing. Really unique.'
‘I don't like discount programs. I think bonus programs are better,' says Hampshire.
‘Soft benefits don't cost your business as much, they add value, they differentiate. A customer who is chasing a discount may not really be a loyal customer. If some better discount comes along, they'll leave.'
Relevance is a big drawcard with bonus schemes, and the more exclusive, the better.
‘If you're looking at a fashion retailer, then it comes down to, maybe, having a stylist...'
Peculiar ideas for soft-benefits can work wonders too.
‘There was a great example in the US recently, with a furniture company actually offering the opportunity of going on a buying trip to Asia. And that was a free thing. Really unique.'
Keep on tracking customer behaviour
Now you've gained this initial data, and your customers have responded to an offer, you can go about building a signature for each customer.
Using website behaviour and product preference as indicators, you can figure out their demographic and income level. This is crucial in effectively tailoring future contact with the customer. If you receive a negative response to a particular type of email or offer, make sure you incorporate that preference into your email strategy for that particular customer.
Once you've got their attention and you've profiled their behaviour and demographic, make sure you follow through on any offers.
Maintain consistency from email to email. Make sure your communications with the customers are regular, and be disciplined about ensuring the regularity. But most importantly, make sure the customer knows that they are being given something that is exclusive and personalised according to your point of contact with them.
Create a system of birthday offers. If your business has physical stores, offer something that is only available through their submission of details and acceptance of your emails. Not only is the exclusivity of offers flattering, but they're more likely to tell other potential customers.
Once you've established a mailing list, you need to be rigorous about maintaining contact, and discipline is essential.This might all seem like a lot of work. That's because it is. But, it's work that is necessary if you're to establish an effective loyalty program.
There are shortcuts: companies such as Matt Hampshire's Loyalty Tech offer technology to automate customer relationships programs.
Loyalty Tech's mailing list management software is hosted online (in the cloud), so that you can use it wherever you have reliable internet access. It also incorporates a reminders system to help you stay on top of the ‘discipline' aspect of maintaining email contact. If you decide to implement an offer based on shopping cart abandonment, or birthdays, these can also be automated.
So, although you may have more loyalty work cut out for you than your local barrista does, the principles are the same: engage your customer, provide an attractive and relevant incentive and call to action, take stock of behavioural responses, and tailor future communications accordingly.
