We’ve talked about customer loyalty quite a bit here at Vend. We think that repeat customers are the best type of customers you can have, which is why we introduced Vend Loyalty – a feature that lets you easily create loyalty programs to reward your best patrons.
Here’s the thing though: Loyalty and reward programs work best when they’re built on top of a solid foundation. A great loyalty program can be even more effective when it’s implemented with a strong understanding of your customers.
In other words, the more you know about your customers, the better you can implement offers that would get them to make repeat purchases, and the more successful your reward programs will be.
But how you ask? Well, we caught up with Jerry Jao, founder of Retention Science, a start-up that helps businesses build loyalty and retain more customers using Big Data analytics and predictive algorithms.
Jerry is determined, resourceful, and has the kind of entrepreneurial spirit that we can all learn from. Really, check out this great article on Forbes about the lessons the he picked up from being a millennial entrepreneur and how he applied them in his start-up.
What types of data or insights should companies look into in order to develop a better understanding of the customer?
The first and most important aspect to understanding the customer is to collect and centralize your data and attach that information to a unique identifier. This allows brands to begin building a profile for each of their customers. At Retention Science, for instance, the following data points (among others) help us analyze and predict consumer behavior:
Sales History – Average order value, frequency of purchase, discounts used, product and category purchases.
Behavioral Data – Frequency of website visits, items added to cart, number of page views, email open rates, CTRs and purchase rates, days and times they open email or make purchases, etc.
Demographic – Location, average household income, gender, age.
Social – Interests, positive/negative comments about the brand.
How can retailers access that information? What types of data-gathering strategies can they use?
Tag Management systems are great ways to centralize and standardize your behavioral data points without affecting the load time of your web pages.
Merchants can also use their email service providers to gain more insights. By analyzing their open, click-through, and conversion rates, they will be able to get an understanding of the engagement level of their customers.
A voluntary survey is another quick and easy way to gain insights into customer preferences.
Retailers can also look into Experian and Census figures in order to obtain demographic data to help supplement information for a customer profile.
Finally, social media profiles can be rich sources of consumer information that provide insights into their interests and preferences.
Now let’s move on to actually putting those insights into action. Based on the data they have collected, what strategies can retailers implement to grab shoppers’ attention and build loyalty?
Today’s consumer expects a personalized shopping experience so it’s critical to address this need with relevant information, products, and offers. For instance, if Customer A prefers a free shipping offer, while Customer B favors a 20% discount, the merchant must personalize their messages and campaigns accordingly.
From a technology standpoint, retailers can accomplish this by building customer profiles within their data warehouse that allows internal programs or 3rd party software platforms like Retention Science, to automate dynamic content that is specific to each customer.
Timing is another critical component to keep in mind. Retailers must understand the right time to engage with customers, not only to improve retention, but to maximize customer spending as well. This can be accomplished through targeted segmentation of customers at critical points in the consumer lifecycle.
For example, a newly acquired customer should be treated differently from a long time consumer. Knowing when to communicate with the right type of messaging will create a 1-to-1 experience between the brand and customer that grabs their attention and improves loyalty to the brand.
Any final words?
Customer retention campaigns and loyalty programs are great ways to build loyalty and nurture relationships. But before all that, retailers must remember that real loyalty stems from wonderful products and awesome customer service—those are two components that merchants should never neglect.