Learn more about the 3 R’s of customer loyalty.
In today’s highly competitive market, it is more important than ever for businesses to focus on customer loyalty. Because loyal customers are more likely to spend more and provide valuable feedback. They advocate for your brand, promoting it to their friends and family.
Even researches have shown that it can cost up to five times more to acquire a new customer than to retain an existing one, making customer loyalty a crucial aspect of any successful business strategy.
But let’s be honest.
Not every customer loyalty framework sees the same success as Sephora’s Beauty Insider.
So how can you foster customer loyalty?
One practical approach is to focus on the 3 R’s of customer loyalty — rewards, relevance, and recognition. Implementing these three strategies can create a virtuous cycle of maintaining and enhancing brand loyalty.
The 3 R’s of customer loyalty refers to the three key strategies that businesses use to build and maintain loyal customers: reward, relevance, and recognition. It’s a mnemonic coined by marketing executive Paulo Claussen that helps brands create successful loyalty programs.
Reward refers to the incentives businesses offer to encourage customers to continue doing business with them, such as discounts, coupons, and loyalty programs.
Relevance refers to the extent to which a business’s products, services, and marketing messages are tailored to the needs and interests of its target audience.
Recognition refers to the attention and appreciation businesses show to their customers through personalized communications and special offers.
Together, these three strategies help businesses to foster long-term customer relationships and drive repeat business. Let’s dig deeper into the 3 R’s of customer loyalty.
The first step in building customer loyalty is to reward your customers for their loyalty. Without rewards, a loyalty program is not worth joining for your customers.
There are multiple ways to reward your customers, depending on the products you sell and your customers’ preferences. Some common rewards include discounts, free goodies, exclusive offers, or store credits.
It is essential to tailor your rewards to your customers so that they are relevant to them. For example, if a customer purchases products only from a specific category, you might offer rewards that apply only to that category.
Let’s say you sell beauty products online, and a customer only purchases lip shades from you. You can offer this customer some coupons or store credits that can only be redeemed on buying. This small gesture will tell your customers how much you value them purchasing from you.
Moreover, you can also add an expiry date on store credits to leverage the loss aversion bias principle of psychology. According to this principle, customers prefer avoiding loss over acquiring gains. And the store credit you offered them is their money now. And they would not want to lose it, so before the expiry date, they’ll be very likely to purchase from you.
In addition to promoting your rewards program, it’s also essential to ensure that the rewards themselves are easy to redeem.
This means making the redemption process straightforward and hassle-free and delivering the rewards promptly and satisfactorily. When it’s easy for customers to redeem their rewards, you can increase their satisfaction and encourage them to continue participating in the program.
The second step in building customer loyalty is ensuring your business is relevant to your customers. This means offering products or services that meet their needs and preferences.
According to a report, an average customer is enrolled in almost 15 loyalty programs. But they don’t engage with all of them. At most, they have the capacity to engage with only seven of them. And the seven they pick are the programs that are most relevant to them.
Relevancy simply means using customers’ data in a meaningful way to personalize the reward experience. When you know someone purchases only women’s products from your store, offering them coupons for male products won’t be a good move.
So one thing you must do to stay relevant is gather feedback from your customers. This means conducting customer surveys, focus groups, and other research to understand what your customers want and need from your business.
It also means proactively addressing any issues or concerns your customers may have. And continuously come up with something new to meet their changing needs.
For example, if you sell nutritional supplements and your customers ask for more vegan options, consider introducing new vegetarian flavors to your menu. Or, if your customers are complaining about long wait times on your website, you might invest in faster servers or a more efficient checkout process to improve their experience.
By listening to your customers and responding to their feedback, you can ensure that your business remains relevant and appealing to them.
In addition to gathering customer feedback, you must stay up-to-date with the latest trends and developments in your industry. You can regularly conduct market research, attend industry events, and network with other professionals in your field.
Staying informed about the trends in the industry will help you satisfy and appeal to a larger audience.
Moreover, your customer loyalty program should not be only about coupons and saving money. You need to analyze the entire lifecycle of the customers to come up with rewards that help strengthen their relationship with your brand.
Customers don’t like being told what they get. Therefore, you should not reward them with a random product. Instead, you should give them a few options to choose from. This will make them feel in control, and they will get what’s most relevant to them. In return, they’ll be happy and continue shopping with you.
Customer recognition is a way for businesses to show their appreciation for their customers and to acknowledge the role that those customers play in the success of the business. This can be done in a variety of ways, such as through personalized messages, special offers or discounts, store credits, exclusive access to products or services, or personalized experiences.
Customer appreciation should not be a one-time occurrence. And it should not be limited to a specific set of customers.
Talking only to high-value customers is one of the biggest reasons why most loyalty programs fail. Because a group of customers can only take your business so far. If you want to win big, you must nurture customers throughout their journey. Bring them along and make them high value for you.
You can even consider setting up a tiered program. It will foster a feeling in customers’ minds that they are one of your best customers. And this feeling will lead to an increase in engagement and sales.
Moreover, recognition doesn’t only mean thanking customers and giving them rewards for their purchases. It also means showing customers that you know them and their preferences.
Sephora’s customer loyalty program is one of the best examples of this. Every once in a while, they send special gifts to their customers based on their previous purchases and wishlisted products. It makes their customers feel unique and understood.
With recognition, you make your customers feel in control. They feel proud of the relationship they have with your brand. And customers who are appreciated are very likely to advocate for your brand.
The 3 R’s of customer loyalty – rewards, relevance, and recognition – are vital for building a strong and loyal customer base.
But to implement these 3Rs, you’ll first need to start a customer loyalty program. Wondering where to begin?
Flits is where your quest for a high-performing customer loyalty program ends. It allows you to create engaging programs easily using the Shopify loyalty program and store credits within the customer account page. Used by over 5000 shopping merchants, it’s a loyalty management tool that will make your program successful.