From personalisation to customer loyalty

You know what they say: keeping a customer is five times cheaper than acquiring a new one. This is why making your customers stick and keep them coming back should always be high on your list of priorities.

Typically, when we discuss customer loyalty, it doesn’t take long for personalisation to come up. Personalisation and loyalty are closely interconnected. After all, the goal of personalisation is to create a more engaging and personal experience, which will ultimately lead to increased customer satisfaction, loyalty, and conversions. 

For example, research by Epsilon found that 80% of respondents are more likely to do business with a company if it offers personalised experiences. Additionally, consumers who believe that personalised experiences are very appealing are ten times more likely to be a brand’s most valuable customer.

Personalisation efforts can impact loyalty metrics

Typically, measuring customer loyalty leans toward a combination of the following metrics:

• CLV
• Number of returning customers
• Customer retention rate
• Engagement metrics
• Increased basket size and average order value
• Upsales
• Increased NPS and other satisfaction measurements
• Customer feedback surveys qualitative analysis
• …and, most importantly, revenue

Now, when you think about how you would measure your personalisation efforts, wouldn’t it be basically the same set of KPIs as for measuring loyalty? This means that personalisation would directly impact the same metrics!

Although customer loyalty consists of a lot more than just personalisation, we believe personalisation efforts can lead to increased customer loyalty and thus should be an important element of your customer experience strategy.

Examples of personalisation efforts that increase loyalty

Some tactics to use personalisation for growing customer loyalty include creating a persistent identity, tailoring your content, personalised communication, and increasing engagement.

Creating a persistent identity

Persistent identity basically means identifying the customer in any channel they interact with. Companies will need to invest in data engineering to be able to gather information from various sources, link the information with identifiers and be able to use the data in practice. 

Tailoring your content to different customer segments

Personalisation involves tailoring content and offers based on customer behaviours and preferences. Personalising e.g. website content, is typically done by segmenting customers based on location, previous interactions, sign-in data, engagement, interests and anything our systems know about the users currently browsing the website. Brands that have succeeded in identifying their customers in all channels will have more possibilities to personalise and tailor their content to different audiences.

Communication personalisation

Personalisation extends to communication, and this is one of the first steps that brands often take in their personalisation journey. One of the most typical examples of personalised communication is email marketing because the use of efficient CRM and marketing automation tools has become a key element of companies’ digitalisation. With good quality CRM data, it’s possible to know the customers and communicate with them at the right time, with the right message and in the right channel.

Engagement and rewarding

Engaging content, gamification and personalised rewards are common ways to delight customers and interact with them. Often, when brands choose to take rewards into their list of personalisation tactics, a loyalty program starts to form. We have helped many clients - SAS, Fortum and Kotipizza, to name a few – ramp up their gamified loyalty programs. Based on our learnings, rewarding customers through loyalty programs can bring more business while making the customers feel they are getting something back.

Loyalty program as the ultimate tool for personalisation

Loyalty programs range from simple reward points systems to complex, fully customised customer and product experiences. Even though loyalty programs are often considered part of the same discussion as personalisation, very few loyalty programs are actually personalised.

If you are planning to launch a loyalty program or have one running already, you should consider having personalisation high up in the backlog for the program development. A Bond study found that when personalisation is done well, there is a 6.4x lift in member satisfaction with the loyalty program. Other outcomes of personalisation are that members “say good things about the brand” (6.0x lift), “stay longer” (5.2x lift) and “spend more with the brand” (3.5x lift).

As with any personalisation, personalising a loyalty program can start with very small actions, like adding a Hi [first name] headline. The next step could be just always adding two options to choose from, giving the customer the feeling of being in control. Quite often, retail loyalty programs offer personalised product recommendations based on previous purchases. Some bigger retail brands even offer options to purchase fully customised products based on personal preferences.

Inspiring case examples from world's top brands

The leaders in the personalisation and loyalty game show by example how to treat customers individually and encourage loyalty. Take, for example, Starbucks, Nike and Sephora – perhaps your company can follow in their footsteps?

Starbucks Rewards has multiple tiers based on spend, tracks members’ status and reward progress, offers purchase incentives and features challenges such as making a certain number of purchases in one week to achieve bonus stars. 

Nike’s personalised NikePlus loyalty program provides personalised benefits and unique product recommendations. Loyalty program users can also quickly scan items to see if they are available in their preferred sizes and colours. Nike’s personalisation efforts resonate with sneaker fans and make it easy to find the right products or create their own. 

Sephora allows its customers to collect beauty insider points while stocking up on their favourite beauty products. Customers can choose if they want to use the points as personal rewards or donate them.

Fancy Diving deeper?

We have some very relevant articles about customer loyalty, like building meaningful experiences and how thrive on customer loyalty and even an on-demand webinar with Dr Peter Fader from Wharton University.

If you have difficulties deciding where to start personalisation efforts in your organisation, you might also benefit from these articles: start small or go all in, and how to form a personalisation vision. Make sure you also attend our webinar on personalisation to hear how to get started soon!