Your best acquisition channel doesn’t need to involve stress-inducing amounts of ad spend, hours of creative design and editing, or trying to figure out all the ins-and-outs of how to attend a virtual trade show. In fact, the best ROI on your time, talent, and money is actually to optimize your existing customer base with retention marketing and a rewards program to become an acquisition tool.

Acquisition and retention strategies work together like offense and defense.

Think about it using a sports metaphor: acquisition is your offense and retention is your defense. So while loyalty is a retention tool, it actually allows you to play offense and defense at the same time.

How a loyalty program helps your acquisition efforts

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

repeat customers reconvert, spend more, and share your brand

Not only are these customers are more likely to convert on future purchases, and spend more per visit, but they’re also 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 businesses that offers a loyalty program.

To help you put these tips into action, let’s look at them in more detail.

Tip 1: Have a loyalty program

I know this seems obvious in this context of what we do here at Smile, but hear me out: a loyalty program can be instrumental in helping 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.

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

Experience seekers: Shoppers that look at more than just the products you sell

An experience seeker is a shopper that is interested in your brand, but  not just because of your wares. They are looking to be a part of something more - something they can feel like they belong to.

When they invest their time and money in more than just orders, they form a relationship with your brand and get locked in for the long-haul.  –  These shoppers are especially drawn to programs that have a VIP/tier component to them.

Value-driven decision makers: shoppers are looking to optimize the total value of their purchases

The second type of shopper that is attracted to a loyalty program is the value-driven shopper, which is not to be confused with a price sensitive shopper. While price sensitive shoppers are looking for the lowest price possible, a value driven customer is looking to maximize the total value of their purchase, aka the highest quality of the product compared to price of the 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.

If two stores sell nearly identical products, but one offers loyalty points, guess where shoppers will make a purchase?

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 similarly priced item but one gives points and the other does not, shoppers will order from the place that gives them the extra value nearly every time.

Tip 2: Get referrals

We already talked about how a repeat customer 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.

Rewarding points for referrals opens up peer-to-peer marketing, the most trusted acquisition channel.

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 referral situation.

A few points, dollar-off discount, or percentage discount can turn existing customers into a more powerful acquisition tool than your best retargeting or Facebook ad.

Tip 3: Reward for exposure

The brands that you can’t help but talk about are the ones you see the most often, meaning that the more often a potential customer is engaged by your brand the more likely they are to remember it and prefer it. For the past decade or so, that’s meant funneling as much as possible into digital ads, to get as many eyeballs on your brand as your budget will allow.

Unfortunately, most of your customers now 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.

Simply spending money on ads won’t get you the high-value exposure you would expect.

There are ways around it, though!  One of the best ways to get store visitors that are likely to convert is to get your existing customers to start sharing. Shoppers are always going to be skeptical of your messaging but are much more likely to click a link and check out a brand when its a referral in the form of social proof from one of their actual friends.

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 (unlike your blog or emails) which increases your credibility with potential customers.

The average person has 8.4 social accounts

Since the average person has over half a dozen social accounts, it’s hard to predict their potential reach, but think about how many posts you see from your own network in a day, and how much engagement there is on popular posts.  . That is a lot of eyeballs you could potentially acquire by incentivizing social sharing with your loyalty program.

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. While it’s useful to engage and retain existing customers, it can be a real powerhouse in helping you acquire new ones as well.


Editor’s Note: This post was originally published on December 29, 2016 and was updated for accuracy and comprehensiveness on May 14, 2020.