Loyalty Marketing: What Is It and How Can It Drive Business?

Woman using a loyalty card while shopping gpointstudio / Deposit Photos

Getting your brand on the radar of new prospective clients and customers is, of course, essential, but as you grow your business, it's equally important that you don't forget your existing customer base.

Loyalty marketing is about ensuring that this doesn't happen, and helps you retain the business of your past clientele. They are a crucial part of your profit stream, too; for many companies, 80% of their sales come from just 20% of their client base. Capitalising on the loyalty of this population is integral to cultivating a healthy and successful company.

Before you can implement a strategy, though, you first need to understand the basics.

What is Customer Loyalty

At the core level, customer loyalty develops when you are consistently providing buyers with quality goods and service, and they can rely on a certain level of satisfaction when dealing with you.

The best part is that when a customer is loyal to a company, they will not be easily swayed to purchase similar goods and services from a competitor. When a client forms an emotional attachment to your brand, they will be willing to pay a little more, travel a little farther, or buy more products to support your business.

Also, loyal customers will identify with your company, and be more likely to share your brand with others, effectively growing your client base.

So, now that you know the benefits, how does it work?

Implementing Loyalty Marketing

Loyalty marketing is an incentive-based marketing strategy that, as discussed, turns first-time customers into repeat customers.

Therefore, for it to succeed, business owners must first master the art of customer service and flawless delivery. If your customers are going to have a consistently positive experience with your company, you must have mindfully developed procedures already in place to build positive customer relationships and promote customer retention.

The key driver in fostering brand loyalty is your company's ability to deliver a positive emotional experience for the customer. After all, your clientele wants you to make them feel good for choosing to give their business to you, rather than your competitors.

The strategies that you develop should also promote the procedural benefits of continuing to work with your company, aligning with the individual values, wants, and needs of your clientele.

Effective Loyalty Marketing Strategies

The techniques that you use to implement these concepts will be specific to your industry and target market, but all successful loyalty marketers use some derivation of the five methodologies listed below. Therefore, they should be at the core of all your loyalty marketing programmes.

1. Emotional Loyalty

As mentioned, creating a positive emotional response to your brand is integral to a successful loyalty marketing program. Consumerism has shifted from a "think-do-feel" mentality to a "feel-do-think" one. This means that your customers have moved from making information-based purchasing decisions to making emotionally-based purchasing decisions in response to the way that your products or services make them feel.

Building emotional loyalty can be broken down into three steps: starting a conversation, understanding emotional motivators, and fostering a long-term connection.

Start a conversation by associating your brand with a lifestyle, influencer, or event. This could mean a publicity stunt, or something as creatively simple as releasing a set of emojis that incorporate your trademark. The possibilities for making your brand a conversation starter are endless, so be creative and start looking outside the box for ideas that might launch your brand into the spotlight.

Understanding the emotional motivators of your target market involves analysing the data response to various marketing techniques (not just your own, but your competitors) and identifying what moves the purchasing needle for your target audience and why. The goal here is to incorporate those same motivators into your branding so that your users will satisfy these needs by consuming your products or services.

Instead of focusing on making users feel happy only when they are using your products or services, encourage a sustained connection that will stay with them as they go about their day-to-day. Will they feel happy seeing someone else consuming your brand? Will they find themselves eager to try your other products or services? Will they incorporate their experience with your brand into conversations with their friends and colleagues? The key to achieving this sustained connection is putting additional energy into initiating and ending the user experience on a positive note.

2. Social Responsibility

As the global need for environmental awareness and social change is becoming increasingly urgent, companies that are seizing the opportunity to use their profits to make a social impact are, in turn, generating higher profits.

Social responsibility has reached the point where it is almost expected of large companies, but businesses of all size should be seeking to increase their environmental responsibility and enact positive social change. Whether you've switched to making your products with recycled plastic or are donating 5% of every sale to a worthy cause, your clientele will appreciate their funds going towards something more. Social impact is also an excellent way to generate loyalty, especially when your clientele is emotionally attached to a cause you are supporting.

3. Customer Appreciation

Customers like to feel appreciated for giving you their business, and they especially want to be rewarded for it. Even something as simple as one free cup of coffee for every nine cups purchased encourages repeat customers to go the extra mile to revisit your establishment. Rewards programs are a way of giving back to customers to say 'thanks' and to encourage them to bring their business back again.

Some general ideas for rewards programs are a buy one, get the next one 50% off sale, entries in a draw for every $20 spent, a 5-10% referral reward, or a points programme. Look online for ideas, or to find a set programme that integrates well into your industry.

4. Personalisation

Personalisation should be incorporated into all marketing strategies as much as possible, but especially into email marketing.

When sending out promotions via email, it's worthwhile to take the time to personalise each email. This can be done partially through coding in most e-marketing programs (i.e. making sure the campaign is addressed to the person's first or last name).

If you've been collecting cookies, you will also be able to integrate products or services that are similar to each person's recent purchases into each email.

Other ideas for personalising your loyalty marketing strategy are adding your client's favourite colours, incorporating the photo of a familiar salesperson, or offering your customers a choice of which cause they'd like a portion of the proceeds from their next purchase to go.

5. Transparency

Lasting customer relationships are built on trust. When your company is transparent in its operations, your customers will have an easier time trusting your brand and will be more willing to purchase from your business over a competitor.

Five ways to publicly achieve transparency in your business are to:

  • establish your core values
  • not make selling the goal
  • answer consumer questions quickly and thoroughly
  • make your social media a community
  • be open to change and other's opinions

Your core values should be the motivator in everything that you do. When you sell, your customers should see the relationship between your products or services and how increased sales will drive increased implementation of value-based actions.

Refrain from being vague in your responses. If you cannot answer a question entirely right away, answer as best as you can and assure the customer you will send a more in-depth reply shortly after conducting the necessary research.

Use your social media as a community outlet for clientele who share your values. Be open to suggestions and to changing procedural operations if presented with appropriate reasoning.

Remaining transparent and showing openness to change displays strength of character and demonstrates that your customers can rely on you to go above and beyond to retain their business and loyalty and to support what matters to them.


What loyalty marketing advice would you give? Join the conversation and let us know in the comments below.