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Are loyalty programs a manifestation of relationship marketing?

loyalty programs, relationship marketing

Today, with the increasing number of touchpoints in building customer relationships, such as social media, relationship marketing is more alive than ever. 

Similar to any relationship (even romantic ones), relationship marketing states that human relationships are built on mutual benefit and trust. In other words, you need to create long-lasting relationships, provide your customers with significant benefits that make them feel important to your brand. 

So, instead of having short-term goals that will cost you more, focus on relationship marketing and build long-term goals that will retain your existing customers, drive loyalty, and increase your revenue. 

With only 49% of online shoppers feeling emotionally connected with the brands they shop online, and as ecommerce is impersonal by nature, it can be challenging for merchants to create one-to-one connections without face-to-face interactions. 

This is where loyalty programs come in as the game-changer. They’re created on the findings of relationship marketing and help you create long-term connections that last. 

So do you incorporate relationship marketing into your store with a loyalty program?

First, let’s take a look at the concept of relationship marketing in more detail to understand what drives longer-lasting relationships.

Relationship marketing states that there are five key precursors to build trust and loyalty:

1️⃣ Relationship termination costs: 

Customers evaluate the total cost (material or moral) of choosing a particular brand or store instead of another one. When a customer first encounters a brand, they form an expectation and evaluate the cost of their commitment.

2️⃣ Shared values:

If customers share mutual values with the brand, they unconsciously associate the brand with themselves and are more inclined to trust it.

3️⃣ Communication:

Customers always look for meaningful, timely, and clear communication.

4️⃣ Opportunistic behavior:

If customers see an opportunistic behavior from the brand, they lose trust in the brand and any loyalty they had will disappear.

5️⃣ Relationship benefits:

The final and the key ingredient of doing relationship marketing right is to offer superior benefits. 79% of customers who receive exclusive benefits from a brand become loyal customers.

“Our job is to connect to people, to interact with them in a way that leaves them better than we found them, more able to get where they’d like to go.”

Seth Godin, Entrepreneur & Best-selling author

So let’s take a look at how to use your loyalty program to improve relationship marketing.

? Building emotional connections with your customers through shared values and exclusive benefits

According to a study by the Harvard Business Review, customers who are emotionally connected to the brand are 52% more valuable than customers who are just highly satisfied.

To make your customers fall in love with your store, show that you understand them, you care about them, and that you share their values. And, as we mentioned above, this then helps you build trust

Begin by clearly communicating your brand values and identity. When you are designing your loyalty program, incorporate your brand values throughout.  

Boody is a great example of this. Established on the idea of “good for you and our planet”, Boody implemented a tiered program structure based on its key brand values: goodness and comfort. By earning “comfort points”, members can progress across three levels respectively, “Goodness Explorer”, “Goodness Catalyst”, and”‘Goodness Advocate”.

“We have an incredibly engaged community that really aligns with our core values. We wanted to create a space where we could reward this community for their dedication to Boody, as well as welcome new customers to our brand.”

Shaun Greenblo, CEO & Founder of Boody

To highlight your shared values, you can also use custom rewards or special campaigns. Zala Hair allows members to make a donation to plant a tree in exchange for the points that they have earned through their loyalty program.

Another way to build emotional connections with customers is to offer them exclusive benefits. You can use gamification to do that – 74% of customers are motivated to become loyal customers by working towards a reward. This will encourage them to spend and engage more. This could be exclusive rewards, such as early access to sales or double points per purchase, when they move up to the next tier.

Then, send them reward available emails or their points balance on a monthly basis to keep engaging with them between purchases.

According to Harvard Business Review, social media impacts emotional connection. 60% of a brand’s social-network-affiliated customers (especially followers on Facebook, Twitter, and Pinterest)—versus 21% of all customers—are emotionally connected. 

To engage with your customers on your social media platforms, award them with points for following you on social. For example, Averr Aglow gained approximately 10k new followers on Instagram by awarding its members for following them on Instagram.

Remember: it’s essential that you keep your relationship with your customers alive after they’ve visited your site or made a purchase. Social media and email marketing post-purchase are both great ways to actively communicate with your customers and keep your relationship going.

? Providing a personalized customer experience

Today 78% of customers say that they would return to a brand if they’re individually recognized and rewarded for their loyalty. Delivering personalized communication is a key attribute for relationship marketers as it stimulates an emotional response

To deliver personalized experiences, leverage your data.  Insights about your customers’ individual buying behaviors support you to learn about your customers’ wants and needs. You can then build relationships with your customers that last.

Through a loyalty program, you can centralize your customer data to help you to identify your loyal, at-risk, and churned customers. You can then deliver more targeted communications to each segment.

  • For your loyal customers:

Remind them what their available rewards are, delight them with surprise gifts or offer them exclusive discounts or double points campaigns

  • For your at-risk customers:

Run a “surprise and delight” campaign that makes them feel valued. Move them into a hidden tier in your loyalty program where they can earn rewards unavailable to other customers. You could also send them points expiry emails to encourage them to return to your site

  • For your churned customers:

Send out a hyper-targeted campaign to remind them why they trusted you to begin with, these could be double points or a free gift on their birthday

? Key takeaways

As the award-winning business author Patricia Fripp says, “to build a long-term, successful enterprise when you don’t close a sale, open a relationship.” 

Customer acquisition is crucial for growing and maintaining your ecommerce business. But, keep in mind that even a 5% increase in customer retention can result in a boost in revenue by 25 to 95%. Building longer-lasting relationships with customers is now more crucial than ever, and so is relationship marketing.

To make relationship marketing a long-term focus: 

  • Highlight your shared values with your customers
  • Communicate with customers honestly and meaning 
  • Offer them exclusive benefits to show how much you value them
  • Use your social media platforms and email marketing to communicate and keep your customers close

But most of all, remember that relationship marketing is a wider business strategy that’s purpose is to increase the value of a relationship.

Ready to start a loyalty program? Book a call with a member of our team today.

This article originally appeared in the LoyaltyLion blog and has been published here with permission.

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