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Loyalty Marketing Gets Personal: 4 Tips for Retaining Customers

Loyalty Marketing Gets Personal: 4 Tips for Retaining Customers
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Smart businesses know that it costs less to retain existing customers than it does to acquire new ones. That's why so many brands are focused on loyalty marketing — campaigns designed specifically to bring in repeat business and referrals.

But it's not enough to just send out a generic, "Hey, come back!" email to previous customers. In today's market, you need to personalize your loyalty campaigns to fit your customers' needs.

"Loyalty marketing needs to be personalized because, at its core, you are asking for a deeper relationship with your customer," said Jason Greenspan, CEO at tech hygiene company WHOOSH!. "Would you ever think of giving a loved one a birthday cake saying, 'Happy Birthday, Customer?' Of course you wouldn't."

There's plenty of proof that personalized marketing works, too: Recent research by Virtual Incentives found that 56 percent of consumers surveyed feel personalized incentives improve their consideration of a brand, and three-quarters said these incentives make them feel respected as a consumer. Another survey by Accenture Interactive revealed that 65 percent of customers are more likely to shop at a retailer that remembers their previous purchases.

However, there's a fine line between personalization and privacy invasion, and brands need to be aware of how they're coming off to consumers. Sixteen percent of those surveyed by Virtual Incentives described personalized offers as "creepy," and a quarter said they felt these efforts are a violation of their privacy. [See Related Story: Great Loyalty Programs Keep Customers Coming Back]

If you want to make your loyalty marketing efforts smart, customized and effective — without scaring your customers away — follow these tips from our expert sources.

Danielle Brown, vice president of marketing at loyalty commerce platform Points, said it's important to think about the objectives for your loyalty program before you launch or make changes to it.

"It's easy to say, 'I want a customer to be more loyal,' but what do you want to do? Drive a larger [purchase] size? Get customers to recommend your product to others?" she said. "A big mistake is that programs don't really define that [goal]."

Knowing your goals for the program is also essential to knowing what data you need to collect and analyze in order to better understand your customers.

Customers expect you to know, based on data and surveys, what they want, Brown told Business News Daily. "If you get that wrong, it knocks your credibility," she said.

When companies ask for loyalty, they need to return the favor by making the customer incentives reachable and desirable, Greenspan said. Otherwise, they'll lose interest in the opportunity.

It's important to find out what customers expect and what's important to them, Brown added.

A good place to start is a customer's past purchases. The Virtual Incentives survey found that 63 percent of respondents prefer rewards based on their specific purchase history, as opposed to their purchase location.

"Incentives don't have to be physical goods — status is as valuable as 'stuff,'" Greenspan said. For example, certain hotel brands offer upgraded rooms at check-in to preferred customers, he noted.

A successful loyalty campaign is all about collecting the right customer data and using it well. But not every company has the resources to run a loyalty program like the "big guys" — you need to understand your capabilities to collect and handle data, and make it work for your business, Brown said.

At the most basic level, loyalty-related data can include survey results, account details and customer preferences, Brown said. As you get into more advanced analytics, you can do a little more digging to glean insights and concrete recommendations based on past behavior.

"You'll see more returns at a higher rate, but it's expensive," she said. "Be honest about what you can provide and support."

Loyalty marketing efforts aren't a "one and done" deal; they're a lot of work, and you need to stay committed to engaging your customers over the long term if you want to see a return, Greenspan said.

"Customers notice when people they ask for loyalty in the early part of the relationship and then slowly stop showing any special attention over time," he said.

Finally, Greenspan reminded businesses to treat their loyalty programs as a means to build ongoing one-to-one relationships.

"One-to-many is how you find the customer," he said. "One-to-one is how you keep them."

Nicole Fallon

Nicole received her Bachelor's degree in Media, Culture and Communication from New York University. She began freelancing for Business News Daily in 2010 and joined the team as a staff writer three years later. Nicole served as the site's managing editor until January 2018, and briefly ran Business.com's copy and production team. Follow her on Twitter.