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It Takes More Than Rewards to Build Loyalty

Building loyalty has long been a marketing goal, but discrete loyalty programs don't always work for retention. Many members never engage beyond a sign-up interaction to collect a reward.

A more holistic customer experience approach has been the retail focus du jour, but when it comes to creating loyalty, products matter most, according to a new study. In a July 2018 survey of US internet users by AYTM for digital commerce solutions provider Yotpo, a majority (55.3%) cited products as the leading factor that makes them loyal to a brand. Great deals were the biggest influence among one-quarter of respondents, trailed by customer service (7.1%) and convenience (5.7%). And being affiliated with a cause (1.8%) didn't sway many of those surveyed.

Conversely, poor product quality was the No. 1 reason why a brand would lose a customer's loyalty (51.3%).

Brands are fooling themselves if they think a consumer will turn into a loyal customer after one purchase. In fact, the greatest number of US internet users (37%) polled said it took more than five purchases before they became brand-loyal. Just 12% considered themselves loyal after two buys.

As far as spurring these repeat purchases, fair pricing (64.5%), free shipping (61.3%) and online reviews (57.3%) were motivators.

Freebies weren't offered as a choice, but a survey by Dotcom Distribution found small free items like a sticker or sample increased the likelihood of a US digital buyer making a repeat purchase from a retailer—especially among younger consumers.

Bonus gifts did turn up in the Yotpo study when asked what buyers would expect from a brand in return for their loyalty. Free items ranked third (43.4%) behind more frequent discounts (71.0%) and free shipping (58.4%).

Of course, in the increasingly personalized world, loyalty program participants don't all want the same thing. For instance, Sephora is known for beauty product rewards based on money spent, plus generous samples. Amazon offers two-day free shipping and access to digital content for a membership fee. And Dunkin' Donuts provides convenience with its mobile payment app in addition to discount perks.

According to Michela Baxter, senior director of loyalty at digital marketing agency HelloWorld, brands should diversify their offerings. "You might use five tactics to reach your loyalty members, but in the future you might need 50, because people will choose different ways to engage with you," she said.