You’ve acquired your customers through retargeting. Now, you want to retain them. It makes sense why: increasing customer retention rates by 5% increases profits by 25% to 95%. But the big question is, how can you retain your customers? How should you get them to shop and interact with your stores? This is where a loyalty program bridges the gap between one-time purchases and long-term customer retention.
Understanding a loyalty program
A loyalty program is a rewards program designed not just for merchants, but for customers. It’s the key to why customers stay and keep returning. So, before creating a loyalty program, merchants should ask, “Why should customers stick around?” The answer lies in offering benefits that are truly meaningful to them. Whether it’s discounts, free items, free shipping codes, or cashback, customers will decide based on how valuable and worth their time these rewards are.
The bottom line: Customers want valuable rewards with simple actions to sign-up for a loyalty program.
Why should you try a loyalty program?
No matter where your business stands, you can always benefit from a loyalty program. Here are several reasons why:
Turn interest into commitment
Typically a customer journey in an e-commerce store looks like this:
- A customer discovers your store.
- They’re thinking about whether to buy something.
- They decide to make a purchase.
- Your brand keeps in touch to stay connected.
- A customer came back to your store aka repeat purchase
Retargeting helps you with the first two steps, but a successful loyalty program will help you to achieve the final step. In other words, turning a one-time customer into a lifelong customer. How? By giving them tempting reasons to come back to your store, like Nordstorm’s Loyalty Program - the Nordy club :
When we pay a closer look, we can learn that all their rewards are created to make customers feel special:
- Members-only discount
- Priority access to exclusive events
- Free items and personalized rewards
- Double points day
Apps like Ako Marketing can help you create and manage effective loyalty programs. They allow you to tailor rewards and engagement strategies to fit your customer’s needs.
Increase Customer Retention, CLV and Conversion Rates
Customer Retention
As discussed above, a successful loyalty program will keep customers coming back to your store. In fact, if you can keep your top customers, you’re on the path to growth. Various data sources support this, and many recognized that the top 10% of customers often spend significantly more compared to the rest. This opens up to a high customer retention rate.
Customer Lifetime Value (CLV)
The evolution to a higher customer retention rate also brings positive changes, including a higher customer lifetime value (CLV). High retention rates mean customers stay with the brand longer and make repeat purchases, leading to increased CLV. Merchants can leverage Ako VIP tiers to further enhance this CLV.
Conversion Rate
Once a high CLV rate is achieved, the prospect of unlocking a higher conversion rate is high. What’s interesting is that these customers went from knowing nothing about your brand to turning into a brand advocate, where they will do word-of-mouth. This opens up to the potential of new customers. To support this, merchants can implement a referral program that rewards loyal customers for bringing in friends and family. LHS, a Taiwanese lifestyle brand, implemented a personalized referral program and achieved a 70% loyalty program sign ups. If you’d like to learn more, you can check this blog.
How to use a loyalty program with retargeting
Using a loyalty program will supercharge your retargeting ads. We’ve previously learned the benefits - fostering loyalty, boosting customer retention, CLV and conversion rates.
Here are a few tips on how to make the most of your loyalty program combined with retargeting. These tips will help you to stand out from the crowd!
1. Create Targeted Facebook and Google Audiences from VIP Tiers
A loyalty program involves more than rewards. VIP Tiers can also help you segment your customers based on their engagement and purchases. Here’s how you can categorize them:
- Bronze - New or occasional customers
- Silver - Frequent buyers who have reached a certain threshold
- Gold - High-value customers with significant spending or engagement
- Platinum - Top-tier customers with the highest engagement and spending
Establishing these segmentations will guide you in creating highly targeted and personalized advertising campaigns in Facebook and Google.
An Adobe report shows that personalized retargeting can increase conversion rates by 20%. Even with these benefits, many companies don’t use personalization effectively. Here’s how you can maximize your retargeting ads with a loyalty program for Facebook and Google audiences:
Facebook: Create Custom Audiences for each VIP tier by uploading their contact information to Facebook Ads Manager. This allows you to craft personalized ads specifically for each group. For instance, Platinum customers might receive exclusive offers, while Silver customers could get enticing promotions to increase their spending.
Platinum ad example: “As a Platinum member, enjoy early access to our new collection and an exclusive 25% discount just for you! Shop now and get first pick on our latest arrivals”
Silver ad example: “You’re almost there! As a Silver member, you get an extra 10% off your next order. Shop now and enjoy more savings!”
Google: Similarly, upload these segmented lists to Google Ads to create Customer Lists. Use these lists to tailor your ads and retarget each tier effectively, ensuring your ads are relevant to their purchasing behavior and loyalty status.
2. Bring Back Cart Abandoners With Loyalty Rewards
An essential element of bringing back cart abandoners is rewarding them with meaningful rewards through retargeting. Ecommerce brands can take several approaches to capture back the heart of their lost customers
- Retarget With a Member Sign-up Reward - Offer a welcome reward for customers who first join your loyalty program.For example, “Join our loyalty program today and get 10% off your first order!” This encourages them to complete the sign-up and start enjoying your rewards.
- Retarget with a VIP Premium Reward - Remind your customers the exclusive rewards they can get by becoming a VIP member. For example, “Become a VIP member and get 20% off plus free shipping on your next order!”
3. Analyze VIP Members Preferences for Retargeting Ads
To stand out and deliver accurate targeted campaigns, it is important to steer clear of generic ads. The solution is a CRM software integrated with AI. By nature, humans want to be told, but not read. So what if you had an Ai software that could tell your red and green flags in your marketing campaign? Use the insights from AI to:
- Optimize our ad content - AI can highlight which images, videos, or messages perform best with your audience
- Refine your ad creatives - Merchants can take it easy and focus on content that are proven to be effective
- Enhance personalization - Use data to create more personalized offers for each VIP tier.
Conclusion
Using a loyalty program with retargeting ads can significantly boost customer engagement and sales. By creating targeted ads for different VIP tiers and analyzing their preferences with AI, you can deliver more relevant and effective campaigns. This approach helps turn one-time buyers into loyal customers, increasing retention, customer lifetime value, and conversion rates. Investing in personalization and smart retargeting strategies will pay off in stronger customer relationships and higher profits.