Using Loyalty as an Acquisition Tool

December 29, 2016
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If you are an avid reader of the Smile.io blog, you know that we love retention marketing. In a nutshell, retention marketing involves designing activities that keep your existing customers coming back and spending more.  This means you don’t have to always have to try to acquire new customers, saving you lots of time and money.

I like to think of it as playing offense and defense in basketball: acquisition is your offense and retention is your defense. So while we always refer to loyalty as a retention tool, it actually allows you to play offense and defense at the same time.

loyalty as acquisition basketball

A loyalty program establishes a switching cost that your customers need to forgo if they want to choose a competitor. It retains those that have bought from you in the past and incentivizes them to return more often, but also does so much more than that! You can actually use points to incentivize acquisition efforts from your existing customers and leverage it as a selling feature of your brand. Let me explain.

 

 

How a Loyalty Program Helps Your Acquisition Efforts

When a customer comes back for a second purchase, a couple of amazing things happen.

loyalty as acquisition amazing things

These customers are more likely to convert on future purchases, spend more per visit, and most importantly are more willing to share you with their friends. This allows you to leverage them to increase your marketing reach, helping you acquire new business. Many people will also actively seek out a  businesses that offers a loyalty program.

Let’s look at some of these in more detail.

Loyalty as Acquisition Tip 1: Have a Loyalty Program

I know this seems obvious in this context, but hear me out.  As I mentioned earlier, a loyalty program can help in the acquisition of new customers. Depending on the type of shopper that typically browses your store, a loyalty program can help attract them to make that initial purchase.

loyalty as acquisition shoppers

While all shoppers can get value from a loyalty program, there are two types in particular that actively seek them out.  The two types of shoppers that are most attracted to a loyalty program are experience seekers and value driven decision makers.

loyalty as acquisition experience

An experience seeker is a shopper that is looking at more than just the products you sell.  Instead, they are also looking to be a part of something more – like a loyalty program! These shoppers are especially drawn to programs that have a VIP/tier component to them.

loyalty as acquisition value-driven

The second type of shopper that is attracted to a loyalty program is the value-driven shopper. This is not to be confused with a price sensitive shopper. While price sensitive shoppers are looking for the lowest price, a value driven customer is looking to maximize the total value of their purchase. A loyalty program allows them to buy what they want while simultaneously gaining points to help with future purchases. Points help them maximize value.

loyalty as acquisition store compare

You can also view a loyalty program as a point of differentiation which can lead to acquiring new customers. If there are two stores with a similar priced item but one gives points and the other does not, which store would you choose?

As you can see, the mere presence of a loyalty program  can be an  acquisition tool for your store. But this is just the tip of the loyalty acquisition iceberg!

Loyalty as Acquisition Tip 2: Get Referrals

We already talked about how a repeat customer (which a loyalty program gets you) is more likely to refer you to their friends and family. This becomes even more likely when they are given an incentive to do so.

loyalty as acquisition referrals

A referral from a friend is the most trusted form of advertising according to Nielsen’s Trust in Advertising Report. By giving your customers points to refer their friends you are creating a trusted channel of communication with new customers by leveraging the ones you already have. We recommend also giving the friend a reward to make it a win-win-win situation.

A few points can turn existing customers into a more powerful acquisition tool than your best retargeting or Facebook ad.

Loyalty as Acquisition Tip 3: Reward for Exposure

They say that familiarity breeds love, and the same can be said for your brand. The more often a potential customer interacts with your brand the more likely they are to remember it and prefer it. Unfortunately, most of your customers have an ad blocker installed and are generally annoyed by online ads.  Investing your resources in this type of marketing simply won’t get the job done.

loyalty as acquisition ads

There are ways around it, though!  Another way to increase your exposure is through social media, especially if you can get your customers to start sharing. Shoppers are always going to be skeptical of your messaging but are way more accepting of peer evaluations and opinions.

Getting more social activity can go a long way in your acquisition strategy and a loyalty program can help. Give your members points when they interact with your social channels such as following you on Instagram or sharing your store on Facebook. This will increase the amount of communication out there from channels that you do not own which increases your credibility.

loyalty as acquisition social connections

The average American has 634 social connections that you have access to if you can convince them to share. That is a lot of eyeballs you could potentially acquire with your loyalty program. See, I told you they were more than just a great retention tool!

 

 

Retention and Acquisition Rolled Into One

I hope you now see that a loyalty program is much more versatile than it may appear on the surface. There are many tips and tricks to help you use your loyalty program to bolster acquisition efforts as well.  It is not just a tool to get your existing customers to come back!