There's a tried and true maxim that is uttered in the corner of sales meetings all over the world. New customers are the hardest and most expensive to acquire. But why does that remain the case, even in today's incredibly interconnected digital world? The answer is perhaps more common than we realize: Loyalty…loyalty… loyalty. Take care of your existing customers with a valuable rewards and referral program, and by contract you can maximize the maxim into a repeatable strategy. After all, you’re 14 times more likely to sell to a happy customer than a new one. A small improvement can yield exponential gains. Increasing the loyalty ratio of your existing customers by just 15% means a potential lift in sales by up to 70%. Amazingly, the most loyal customers can then become your most powerful advocates. Often people take their experiences to social media and review platforms like Yelp. Here is where your loyalty program can really begin to shine by exposing the great sentiments you've built with people to others who may be looking to shop at your business

One of the most common ways to boost customer retention is through a dedicated loyalty program, but that’s not the only way to limit customer churn.

Understanding churn

For those of you that are new to customer marketing terms, churn is a way of measuring how many of your existing customers are slipping away, spending less, and referring less. This is perhaps one of the most important data points you can extract from a good loyalty program and one of the best opportunities to keep your business growing by reengaging and giving a bit of an extra incentive and recognition to those that were more active before.

Focusing on customer experience in stores and online is also important. Customer loyalty will fall when service levels drop, and 78% of consumers in one study said they would abandon a brand after a single poor service experience.

To turn customer loyalty into a strategy that yields consistent growth in revenue and new customers for your business, start by avoiding these 8 common pitfalls.

1. No Customer Loyalty Program

Bearing in mind that 72% of U.S. adults belong to at least one loyalty program, if you’re not offering any sort of rewards or incentives at all, that’s a missed opportunity on a drastic scale. Essentially, it means you’re having to win your customers’ business again and again at cost when you could be nurturing them from new customer to brand ambassador.

Just as damaging to a business is to create a loyalty program and not promote it. Often, you will see sign-up calls to action to the rewards programs hidden away in the footer of a brand’s website when it should be popping up at checkout or be prominent above the line. Brick-and-mortar stores are guilty, too. Some 75 million U.S. customers leave a store daily without any digital or physical interaction at all. The golden rule is to track customer behavior from the start, segment them, and offer rewards to your higher value buyers.

2. Too Much Complexity

A customer loyalty program doesn’t have to be sophisticated. The basic premise is simple — the more a customer spends (in terms of frequency and shopping cart value), the more you reward them for their business. That’s the tried and tested equation. Too many brands confuse the issue with restrictions on how the customer can spend the points they have accumulated, time limits, or exclusions on using points with other promotions. Instead, make it seamless for customers to enroll, show them clearly how their points translate into value, and limit the small print.

3. Lack of Inclusion

Building a loyal customer base today requires more than rewards. Empowered consumers want to know more about what a brand stands for, how it fits into the overall landscape on diversity and sustainability, and whether its actions match the words. The best deals don’t always win, not least because 71% of customers want to buy from brands that align with their values. So if you’re going to demand loyalty from your customers, look first to your position (or silence) on the issues that matter to them, the diversity of your own workforce, and whether you’re consistent in how your business broadcasts its values on the one hand and cultivates them internally on the other.

4. Low Value Rewards

Marriott customers can redeem their Bonvoy Benefits for free hotel nights or car rentals, Grubhub offers customers up to $400 of free food, and American Airlines offers a range of perks and exclusive upgrades for their frequent flyers with AAdvantage.

What do all these brands have in common? A great offer that customers can aspire to earning. They might represent a cost to the business, but their value is almost priceless when it comes to creating happy customers who talk about, recommend and share their experiences with your brand. When it comes to rewarding loyalty, few things underwhelm or even irritate customers more than a low-value offer. Be ambitious, on the other hand, and customers will respond.

5. Relying on Outdated Tech

We’re no longer in the era when customer loyalty is measured in stamps, fobs, tokens, or punch cards. Not only can customers lose them, but they’re also a missed opportunity when it comes to collecting and analyzing valuable customer data. Today’s loyalty programs need to be an omnichannel, mobile-friendly affair. In the Twism marketplace, for example, push notification and SMS communication are fully enabled. Consider every touch point with the customer, whether it’s an in-store purchase or an online inquiry, as an opportunity to showcase the benefits of the loyalty program. Email is particularly effective in this respect at communicating with your customers because their attention is already primed.

6. Lack of Gamification

If you’re leaving your customers stuck on a single level of loyalty, with no clear means to upgrade or access a higher tier of incentives, they can be easily lured away to a competitor who offers a gamified loyalty experience. That doesn’t mean the program has to be trivial or childish. Gamification just means you’re inviting your customer to engage and participate, make choices and take the initiative. When your friendly barista gives you a fresh loyalty card and stamps the first few holes out of kindness, that’s gamification in action. As a customer, you’re more likely to complete a card that’s already been started than a fresh one. Don’t forget surprise rewards, too. Delight your customers with an unexpected bonus (a birthday treat, for example), and you’ll invigorate their interest.

7. Lack of Customer Focus

Customers are looking for enhanced value in exchange for their loyalty. That doesn’t necessarily mean more products. The hallmark of a customer loyalty strategy that is focused on the business rather than on the customer is the assumption that shoppers want to buy more. Not always. Sometimes the rewards customers really want come in the form of free shipping, sneak previews, limited edition sales, or just a little love from their favorite brand. The essential feature of eCommerce and retail today is personalization, and for that, the focus has to be on the buyer, not the business.

8. Limited Ways in which Customers Can Earn Rewards

Spending shouldn’t be the only way a customer can earn rewards. For a start, it restricts the conversation to price, whereas the business might offer a lot of intangible benefits. It also limits their behavior. A customer who isn’t purchasing can still be generating business value as a referrer or reviewer. One of the most powerful forces for generating customer loyalty is an existing happy customer, so reward yours for their social media posts, reviews and referrals.

9. Transfers not Allowed

The idea of not allowing customers to transfer their reward points to others is logically sound, but it makes little sense from a business perspective. A business is never just nurturing loyalty with a single customer. It’s potentially engaging with their whole network. Let your customers transfer their rewards, therefore, and you have a powerful key to unlock the value of a referral. Does that make business sense? On average, referred customers spend up to 25% more on their first order and offer double the lifetime value of non-referred customers.

10. Lack of Segmentation

Capitalizing on customer loyalty in both brick-and-mortar stores and online is most effective when customers are segmented. A one-size-fits-all loyalty program leaves customers stuck at first base, whereas a sophisticated program encourages the VIPs and high rollers to push on. The benchmark is that just 20% of customers will generate 80% of revenue, so the loyalty of these repeat, high-value customers should be the priority — and there must be a feature in the program that appeals to them directly.

Twism’s Take on Loyalty

Twism offers a fresh, innovative approach to building customer loyalty. It’s simple for customers to get started and low maintenance and cost for the business to operate. Above all, it gives unrivaled insight into customer behavior and preferences, adding value back into the business for the future.
Ready to learn more? Join the Loyalty Movement today or check out our article on easy ways to begin building brand loyalty the right way.