Defining Loyalty

Campaign Manager | Client Services
Customer Loyalty

Your database is full of customer information, potentially holding details of users that signed up years ago and have not interacted with you since, and others who return to you again and again.  Both of these data pots, and many others in addition, require different communications. The question is; how do you identify which customers trust your brand? How do you define which customers are loyal? And how do you talk to them so that they feel valued?

Defining a loyal customer:

The definition of a loyal customer will be bespoke to your business. It will depend on your own business, your sector and the values you place against your customer base to denote the best method to define loyalty. Understanding the average frequency of your chosen criteria will help to define loyalty. For the leisure industry, loyalty could be based on those who book their annual holiday with you year after year or those who book with you for smaller breaks several times a year. The same could apply to the retail sectors, depending on your product. Jewellery suppliers could find their peak season at Valentine’s Day, however, this type of product can be purchased several times a year for birthdays, etc. Defining loyalty can be complex, as customers could have purchased twice in their time with you, yet this has been over a 5 year period. Setting the timeframe of what loyalty means to your business will help to fine-tune your criteria.

There are two additional methods to classify loyalty:

Engagement

Focusing on those customers who regularly engage with you, may mean that they continue to return to you in future. Again, this will need boundaries based on their activity recency and your brand/sector/values. A customer may have responded to your emails and browsed your website for 2 months but this occurred several months ago. Deciding whether recency over frequency is more relevant for your business definition of loyalty is vital.

Purchase history

Customers who have purchased with you can also be considered for your loyalty programme. This can be separated into how recent their purchase was, how often they purchase from you, the amount they spend or the product category. Utilising one or more of these elements will allow you to segment and perfect your loyal data pot effectively.

Looking at the data you hold and gaining an understanding of how frequently a customer purchases will be essential to help define your boundaries for your selections. These results could lead to a multi-level loyalty programme such as, how regularly they interact with your brand or how much they spend with you. Purchasing frequency, recency, amount, category and engagement can be overlaid with each other to create a bespoke targeted loyalty programme.

Cross device recognition is essential to ensure that you are observing all behaviour so you can tailor your contact with your customers. Without this, the users may appear less active than initially thought and you may be missing out on a proportion of your target market.

Don’t overdo it

Despite being loyal to your brand, mailing customers too often can have a negative effect.  Using tools available in the market (such as Tempo: Predictive Engagement) could limit the risks of mailing customers too frequently. It has had a great impact with Hotel Chocolat as showcased recently in their case study. Loyal customers require an alternative approach to that used with your prospective customers. These customers are loyal to your brand, acknowledging this can reap rewards and make them feel valued. Respecting the loyalty and mailing them with relevant content will assist in retaining them as faithful customers.

Categorising them into a loyalty programme doesn’t necessarily mean discounts. Nurturing a discount chaser when your customers would purchase without one will not help your business plan. Utilising your resources as much as you can, thinking outside of the box and offering more value to your loyal customers will allow you to create a loyalty package that benefits you and your customers. This could be travel points for every booking for the travel sector or for retail, reward points for every purchase amounting to a free product or a voucher towards another product they’ve been interested in.

Taking the time to establish your ‘regulars’ and their behaviour will help to define your loyal customers. Moving this forward, a loyalty programme can develop from grouping aspects of your data, allowing you to target your customers and make them feel valued. This can encourage customers to trust your brand, recognise it and return again and again.

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