The ultimate guide to crafting a powerful loyalty marketing strategy
30 April 2024
Susan Walsh

The keys to sustainable growth lie in retaining customers and nurturing brand loyalty. Crafting a robust loyalty marketing strategy is paramount to achieving these goals.

One of my favourite steps is to start building out the member lifecycle management model (MLM). This involves using analytics to segment a member database into lifecycle stages, allowing the program operator to manage members in a way that makes them feel recognised, rewarded, valued, and appreciated, increasing the likelihood they will continue transacting with the company. It also gives you an insight into what resources are required, allow targeting of higher-valued members, and bring personalisation into the program.

The basic member lifecycle management model

There are six key stages of a basic member lifecycle management model that you need to incorporate for best success:

1. Acquisition: This stage focuses on attracting new customers to join the loyalty program. The goal is to make the program appealing to potential members and motivate them to sign up.

2. Onboarding: In this stage, new members are introduced to the loyalty program and provided with information on how to earn and redeem rewards, as well as any special offers or promotions available to them.

3. Growth: The growth stage involves encouraging members to engage more with the brand and its loyalty program. This can include offering incentives, rewards, valuable content, experiences, and gathering feedback to improve the program.

4. Advocacy: Advocacy refers to the stage where loyal members become advocates for the brand, promoting it to others and contributing to its growth through positive word-of-mouth.

5. Retention: This stage focuses on retaining existing members by providing them with personalised experiences, rewards, and incentives to continue their engagement with the program.

6. Winback: The winback stage involves re-engaging with members who have lapsed or unsubscribed from the program, with the goal of bringing them back into the loyalty program through targeted offers and incentives.

If you want to read more about MLM with case study examples, read this article.

More complex lifecycle management models can be created over time. These may involve developing more granular member segments, using AI to assist with trend predictions, or having additional communications depending on data gathered.

The MLM allows the ability to cater marketing efforts and communications strategies to each member segment. This will enable a more effective communications strategy, lead to an increase in customer retention and profitability.

It is essential to put time into curating your MLM strategy and continually review results to make optimisations and pivots where required.

Elements to consider when putting together a marketing strategy

It is essential to understand elements that are contained within an effective marketing strategy. Here’s a comprehensive rundown of these essential components and their significance in shaping a successful loyalty program:

  1. Customer segmentation

Customer segmentation is used in the marketing strategy to group customers based on specific characteristics such as demographics, behaviour, or preferences. By analysing these segments, businesses can create more targeted marketing campaigns and offers that are more likely to resonate with each group. This allows for a more personalised but at a group level, and relevant marketing approach, ultimately leading to increased engagement and repeat purchase behaviour.

Segmentation helps businesses tailor their messaging, offers, and promotions to individual customers, creating a more personalised experience that is more likely to resonate with them.

2. Personalisation

Personalisation is used to tailor marketing messages, offers, and promotions to individual customers based on their behaviour and preferences. Personalisation can leverage learnings from segmentation but should go beyond this to an individual level. Personalisation is achieved by collecting data on customer behaviour, utilising segmentation, and using predictive algorithms.

Personalisation enhances customer satisfaction, strengthens the emotional connection with the brand, and ultimately leads to more effective and personalised marketing strategies. Learn more about personalisation.

3. Clear value proposition

By having a clear value proposition that is included in your marketing strategy, you can optimise the product and service offering based on a better understanding of member needs. This helps drive acquisition, spend, retention, and advocacy. It helps in refining brand positioning to resonate better with members, ultimately aiding in driving acquisition, spend, retention, and advocacy. Learn more about value propositions.

4. Omni-channel presence (where it makes sense)

Omni-channel presence is used to provide a seamless and integrated experience for customers across various channels. This strategy allows customers to access rewards, offers, and personalised content on any device, whether it’s mobile, web, or in-store. By integrating customer data from multiple channels, marketers can identify patterns and trends to optimise marketing strategies and deliver highly personalised content. This approach aims to cater to the new consumer paradigm of helping consumers buy what they want, when they want, and where they want, ultimately enhancing value and improving the customer experience.

It also supports the delivery of an omnichannel personalisation strategy with a 1:1 focus, driving higher customer engagement and loyalty. Click here to read an omnichannel example.

5. Reward structure

The reward structure is used in marketing strategy to incentivise and motivate consumer behaviour. Rewards can be framed as gains to create a positive perception and motivate customers to engage with a brand or loyalty program. This can be achieved by offering non-monetary promotions, such as points for completing surveys, engaging with social media, or filling in profile information. Additionally, rewards can be positioned as additional perks provided to loyal customers, creating a sense of exclusivity and special status.

The reward structure can be designed to encourage long-term behavioural change and increased engagement with a company’s products and services. For example, in the case of Microsoft Rewards, the program is intentionally structured to encourage loyalty to the Microsoft ecosystem by offering points for engaging with Microsoft products and services.

6. Experiential rewards

Experiential rewards provide customers with unique and memorable experiences related to a brand. This can include offering exclusive events, backstage passes, VIP treatments, behind-the-scenes tours, or personalised consultations. By providing these experiential rewards in your marketing strategy, businesses can create a sense of exclusivity and emotional connection with their customers, ultimately enhancing customer loyalty.

7. Data analytics

There are several ways data analytics is used in marketing strategy. It helps in understanding customer behaviour and preferences through descriptive and diagnostic analytics. This understanding enables the creation of highly targeted and personalised marketing campaigns, leading to increased engagement and repeat purchase behaviour.

Predictive analytics can be used to anticipate customer needs, enhancing the effectiveness of marketing campaigns. However, it’s important to note that while data analytics is valuable, overreliance on it might neglect emotional and human aspects of loyalty. Learn more about databases.

8. Feedback mechanism

Collection and analyse of feedback from customers to gather insights from customers about their experiences, preferences, and behaviour. This feedback is then utilised to tailor marketing messages, offers, and promotions to individual customers, creating a more personalised experience that is more likely to resonate with them.

The feedback mechanism helps businesses to segment based on their behaviour and preferences.

9. Communication strategy

The communication strategy is used to establish a more personal and one-on-one connection with customers. It involves optimising conversations with customers by following key rules such as being concise in communication, knowing the customer, and using data to personalise marketing messages and offers.

It is utilised to communicate clear messages to customers, educate them, and alleviate any concerns during crisis times. It also plays a critical role in implementing personalised marketing campaigns based on customer preferences and spending habits. Understand more about the difference between a loyalty program and CRM.

10. Brand advocacy

Brand advocacy leverages the positive word-of-mouth and recommendations from satisfied customers to promote a brand. By encouraging loyal customers to become brand advocates, businesses can benefit from organic growth and new customer acquisitions. This is achieved by incentivising customers to share their experiences on social media, leave positive reviews, or refer friends and family to the loyalty program. Brand advocacy is a powerful tool in a marketing strategy to build a community of loyal advocates and differentiate a brand from its competitors.

11. Continuous innovation

Continuous innovation ensures that the loyalty program remains relevant, engaging, and effective in driving customer loyalty and retention. This involves continuously monitoring the loyalty program’s performance, leveraging customer feedback and data analysis to identify further areas for improvement.

Fostering a culture of ongoing experimentation and learning helps in adapting strategies to meet the evolving needs and preferences of customers. By implementing successful variations across the loyalty program’s communications, offers, and experiences, businesses can optimise overall performance and maintain a competitive edge in the market.  Learn about how Bondii has incorporate innovation.

12. Partnerships and alliances

Partnerships and alliances help to expand customer reach and engagement. By forming partnerships with other brands, companies can offer customers the opportunity to earn rewards or benefits across a wide range of participating companies, creating a coalition of partners. This allows for cross-selling and up-selling opportunities, as well as the ability to attract members who are loyal to other participating brands.

There are additional benefits including helping in sharing marketing costs, customer support, and technology infrastructure, making it a cost-effective strategy for all involved parties.  Article on how companies can benefit from partnerships.

13. Employee engagement

Employee engagement leverages frontline staff as valuable ambassadors for the brand’s loyalty program. By educating customers, providing exceptional service, encouraging repeat visits, and collecting feedback, employees can help to build and drive the success of the loyalty program. Training staff on the rewards program is essential to ensure that they are equipped with the necessary knowledge and skills to promote and manage the program effectively. Excellent article on how critical employees are for success.

14. Transparency and trust

Transparency and trust are crucial elements in a marketing strategy, especially in the context of data privacy and customer relationships. Businesses can use transparency to build trust with customers by openly communicating about how their data is collected, used, and protected. This can be achieved through clear and easily understandable privacy policies, consent forms, and communication about data security measures.

In marketing itself, transparency can be used to inform customers about how their personal data is utilised to personalise their experiences, such as targeted advertising or personalised recommendations. By being transparent about data usage, businesses can build trust with customers, leading to increased loyalty and engagement. This can also differentiate themselves from competitors by demonstrating a commitment to ethical data practices and customer privacy.

15. Long-term focus

By adopting a long-term focus, you are building a marketing strategy that wants to build and maintain strong relationships with customers over time. This is achieved through personalised communication, engagement, and the creation of a more relevant and engaging experience for customers. By understanding each customer’s unique needs and preferences, businesses can deliver messages and offers that are more likely to resonate with them, ultimately increasing their lifetime value to the business.

Long-term focus aims to increase repeat purchases and maximise the lifetime value of customers, ensuring sustainable growth for the business.

A well-executed loyalty marketing strategy hinges on integrating various elements seamlessly. The member lifecycle management model is the structure, but you need to ensure all elements are considered to increase success rates. From customer segmentation to fostering brand advocacy, each component plays a vital role in enhancing customer engagement and retention. By embracing a customer-centric approach and continuously innovating, businesses can fortify their relationships with customers, driving long-term growth and success in today’s dynamic market landscape.

Looking to implement personalisation into your loyalty program?

Our loyalty consultants can help. Contact us to learn more about our comprehensive loyalty services and talk with our loyalty consultants to understand how to develop or optimise your loyalty program strategy.

<a href="" target="_self">Susan Walsh</a>

Susan Walsh

Susan is a Loyalty Director at Loyalty & Reward Co, the leading loyalty consulting firm. Loyalty & Reward Co design, implement, and operate the world’s best loyalty programs for the world’s best brands. Susan has previously worked in product, marketing and business roles at Optus and Virgin Mobile, Catch Connect Mobile, Coles Mobile, Proactiv Skincare and ABC Shops. Susan applies her skills across all aspects of the business, including implementation and operations, loyalty program design, member engagement and digital marketing.

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