Reward Program Strategy

Designing Rewards Programs for Customer Segmentation: Brand Loyalists

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Everyone has that one brand they’re extremely passionate about.  For my mom, it’s Tim Hortons coffee; for my dad, Volkswagen cars.  As for me, I’ve been a passionate Disney fan for as long as I can remember, and that passion has driven me to go out of my way to interact with the brand whenever I can.

While this kind of steadfast commitment was once the norm, evolving markets and increased competition have made it more difficult for brands to monopolize their respective industry.  Today’s children are beginning to exhibit a sense of brand awareness as early as two years old and are exploring brands on their own. This behavior, combined with a growing sense of brand ADD in uber competitive markets, make it more unlikely that they’ll stick with brands they discover when they’re young.

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These conditions make a brand’s diehard fans all the more valuable.  People like myself and my parents are willing to stand by the brands we love no matter how much their products cost or what kinds of negative publicity they receive.  This dedication is at the heart of customer loyalty, and defines the most excitable and engaged segment of customers: brand loyalists.

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Defining Brand Loyalists

By now brand loyalists should be fairly easy to define, but let’s take a moment to break it down.  At their core, brand loyalists are individuals who remain unwaveringly loyal to a particular brand, regardless of the growing number of competitive alternatives.  This resilience is often carried up through childhood, meaning loyalists can be directly impacted by the brands they were introduced to as children.

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Because of this, brand loyalists are not always understood by others.  While the majority of shoppers can be swayed by factors like price, convenience, and associated status, loyalists are more concerned with the relationships they’ve developed with a brand.  This makes them wildly different from reluctants, connoisseurs, and savvy opportunists.

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With so many different brands and products available (and more appearing every day), it’s important to remember that customers don’t owe you anything. Their commitment to your brand is and always will be a choice, not an obligation. This is what makes customer loyalty that much more valuable, and even more important to nurture.  The best way?  Extraordinary rewards.

 

Designing Rewards for Brand Loyalists

As your most impactful customers, brand loyalists deserve to be treated with the utmost respect and gratitude.  Through thick and thin, they’ve stuck with your brand and continue to support your business – all without getting paid.  

This dedication deserves to be recognized, and properly.  After all, their loyalty is saving you money!  Studies have shown that acquiring a new customer can cost anywhere from 5 to 25 times more than retaining an existing one, and a rewards program is one of the best ways to keep your acquisition budget in check.

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That doesn’t mean you can just offer any old rewards, though.  While other customer groups are looking for more conventional transactional rewards, brand loyalists have already made the decision to shop with your brand.  This means that your rewards program should focus on building and continuing the relationship you have with them.  You achieve this by enriching your customer experience and treating them to things they couldn’t possibly get anywhere else.  In other words, remind them why they chose you in the first place.

 

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Although the vast majority of shoppers are drawn to brands that offer discounts and free shipping, we know that brand loyalists don’t necessarily value this type of reward.  If they did, their enthusiasm for your brand would most likely align with the likes of connoisseurs and opportunists, instead of rising from their deep-seated commitment to your brand.  

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Since your brand loyalists have been with you through thick and thin, you want to treat them to something truly special.  The best way to do that is by creating new ways for them to participate in and explore your brand.  This type of reward is known as an experiential reward, and can be anything from special events to exclusive products to once-in-a-lifetime experiences.  

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Many industry leaders have already adopted this mindset.  e.l.f. cosmetics, for example, gives their best customers the opportunity to vote on new product colours or choose their own sale day.  Sephora invites their VIB Rouge members to exclusive events that feature free samples and beauty consultations.

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These experiences are supremely rewarding for loyal customers because they focus on the pleasure of engaging with your brand.  By emphasizing engagement, you’re able to build solid relationships that will inevitably grow into a strong brand community as customers share delightful experiences they simply can’t get anywhere else.  This long-lasting effect also outshines the fleeting joy of a transactional reward, motivating customers to remain engaged in order to cash in on the next exciting experience your brand has to offer.

 

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Experiential rewards are even more effective when paired with a VIP tiers program.  Tiered programs give you the chance to publicly recognize your best customers by restricting these outstanding experiential reward to those customers who have the highest average order value, customer lifetime value, or repeat purchase rate.  No matter who they are people like to feel special, and when it comes to your business who’s more special than your best customers?  

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As a general rule of thumb, VIP programs are most effective when the highest tier is exclusive.  Here at Smile.io, we’d recommend that this tier only be open to your top 5% of customers.  This small margin ensures that no matter how you choose to segment your customers, your brand loyalists are guaranteed to fall into the most elite category.  

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You can make them feel even more special by building a program with at least 3 tiers.  This ensures a greater separation between the general members of your program and your loyalists, further recognizing their importance in the larger scheme of your business.  This public acknowledgement makes brand loyalists feel valued and important.  For these fiercely dedicated customers, brand loyalty is something they’ve worn as a badge of honor for quite some time.  Just look at how proud Starbucks customers are to finally receive that elusive Gold Card!

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Being recognized as one of your best customers provides an overwhelmingly positive experience that can only continue to strengthen your brand loyalists’ positive feelings for your brand.  By the same token, the perks of being in that higher tier – be it social status or exclusive rewards – will motivate other customers to engage in your brand, pushing more of your customers into that coveted brand loyalists tier.

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There are few things quite as exciting as a surprise.  Whether it’s a surprise party, gift, or announcement, these types of unexpected events have the potential to make people extremely happy.  I can fondly recall a number of times that friends surprised me with exciting news or gifts, and each time I was beyond excited and understandably so – surprises are fun!

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You can apply this same principle of delight to your rewards program by surprising your brand loyalists and other top tier customers with bonus rewards.  Unlike welcome points or birthday rewards, bonus points aren’t planned, and the fact that customers can’t anticipate them makes them the perfect way to demonstrate your genuine appreciation for their continued loyalty.  

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Just like with experiential rewards, bonus rewards can take a number of forms.  From double earning to special gifts, there’s no end to the types of bonus rewards you can offer your customers.  Sephora is once again an expert at this, offering VIB members the opportunity to earn double, triple, or even quadruple rewards on specific weekends (depending on their program status).  This spend more/earn more model works extremely well by delivering more value while simultaneously driving more engagement for your program.

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No matter what type of reward you want to offer, these types of bonus events are best run over the course of one week or weekend.  This window of time gives customers more than enough opportunities to engage without cheapening the “specialness” of the gift you’re offering.  With a shorter timeframe, your bonus rewards can still feel rare and exciting, encouraging existing customers to engage and new customers to get engaged.  In this way, your special rewards can be a bonus for both your customers and for you.

 

Making Your Customer Experience Special

Above all else, the goal of your rewards program should be to appreciate and celebrate your brand loyalists.  As your brand ambassadors, these customers simply want to experience the best of what your brand has to offer, making experiential rewards and bonus events the perfect opportunity to treat them to something only you can provide.

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These types of unique, brand-specific experiences give them something to look forward to and remind them that you’re able to offer something that can’t be rivaled.  In these ways, you’re reminding them why they chose your brand in the first place and reinforcing that decision.  Through these relationships, you can expect to see your brand continue to grow as your rewards program converts more pragmatics, reluctants, connoisseurs, and savvy opportunists into delighted, impactful brand loyalists.

 

Want to learn more about customer segmentation?

Click on any of the links below to learn more about that customer group.

customer segmentation series link pragmaticscustomer segmentation series link reluctants

customer segmentation series link connoisseurscustomer segmentation series link savvy opportunists

 

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