Evolution of Consumer Loyalty

We have covered the importance of engaging with customers. The origin of tapping into the potential of consumer loyalty started in the retail business. Such retail loyalty programs mainly focused on providing discounts to incentivize the next purchase. This transactional loyalty was effective initially.

Over the years there were two main changes. The success boosted the demand of loyalty platforms in different industries and customers demanded a complete user experience rather than simple discounts. These rewards programs for businesses had to evolve to cater to the needs of their customers.

The best loyalty programs allow businesses to engage customers on multiple levels and provide the same user experience. A loyalty program software should provide a 360-degree loyalty engine which rewards the customer. Transactional loyalty is an integral part of the program but that is just the tip of the iceberg. We will explore other types of loyalties that businesses should look to gain from customers.

Transactional Customer Loyalty

Gaining transactional loyalty is the easiest of the six different types of loyalties from a customer. It works on offers and discounts. A customer loyalty program will provide discounts to get repeat customers. It is a powerful tool, but it comes at a cost. The good news is that discounts offered by loyalty programs are good towards the next purchase. That is a powerful way to bring a customer back.

Used correctly, transactional loyalty can provide great results. Every loyalty program must include this aspect in their offering, but it should never be the only focus.

Customer Loyalty, Understanding Customer Loyalty and Exploring Types of Customer Loyalty
Customer Loyalty, Understanding Customer Loyalty and Exploring Types of Customer Loyalty

Social Customer Loyalty

The next step to engage repeat customers is through social media channels. A customer loyalty program simply awards points to customers for sharing specific posts on their social media platforms. The social sharing can be in form a share, retweet or tagging few of their contacts so the post can go viral. There are endless possibilities. This can be customized with certain time frames to keep the points that have to be awarded in check. Largely this provides another way for a brand to keep customers engaged. This could also be a way for brands to get some additional marketing done for themselves through the customers.

Engagement Loyalty

Building on the social loyalty, we come to engagement loyalty. In this case the customer rewards program offers points if people subscribe to newsletters, watching a youtube video or download case studies etc. You can also reward customers for engaging with your business.

This ensures your marketing material is reaching your repeat customers and is being consumed by them. This improves rate of conversion of these marketing campaigns.

Customer Loyalty, Understanding Customer Loyalty and Exploring Types of Customer Loyalty
Customer Loyalty, Understanding Customer Loyalty and Exploring Types of Customer Loyalty

Emotional Loyalty

As the words suggest this type of loyalty engenders after a customer reward program can form an emotional connection with the repeat customer. It can start simply by awarding points on their birthday or anniversaries. A letter from the CEO to VIP customers is a great way to retain their loyalty.

Emotional loyalty goes beyond discounts. Some of the best emotional loyalty initiatives customer loyalty program software can provide deeper connects the customers that discounts can simply not do. Emotional loyalty helps you customize the offers and campaigns with which you can form a deeper connect with your customers. Emotional Loyalty if utilized properly can be powerful mechanism to ensure consumer loyalty.

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Behavioral Loyalty

Behavioral loyalty is about getting customers to do activities that you want them to do. For example, get 500 bonus points if you make 3 purchases in one month.

Behavioral loyalty can be a key tool in the best loyalty rewards programs. Data science and machine learning algorithms provide insights in the buying behavior of the repeat customers. By analyzing such data your marketing can focus on modifying their behavior.

Another example of behavioral loyalty is to offering double points for people who buy on the weekend before Memorial Day. The chance of earning double points will influence them to buy sooner. Behavioral loyalty is a key tool influence customer behavior.

Customer Loyalty, Understanding Customer Loyalty and Exploring Types of Customer Loyalty
Customer Loyalty, Understanding Customer Loyalty and Exploring Types of Customer Loyalty

Advocacy Loyalty

Like social sharing your customer reward program can award points for referrals. Statistics say people are 7X more likely to purchase from a brand when referred by a friend. The brand ends up acquiring a new customer without spending the high amounts required for customer acquisition.

A repeat customer is more than happy to refer your brand. Rewarding this action with bonus points is the least a brand can do for them. Afterall, customer advocacy is a mini customer acquisition engine on its own.

Summary

With a structured approach, loyalty program software can engage customers across a wide spectrum of activities. With a better understanding of the different types of loyalties we can appreciate how a 360-degree customer loyalty program is vital.

Transactional Loyalty, social loyalty and engagement loyalty work well to convert new customers to repeat customers. On the other hand, emotional loyalty, behavioral loyalty and customer advocacy keeps the customer invested in your brand. Each has its own benefits, yet they all work best when used together.

An objective of every business is to employ the correct mix of these different types of engagements in their customer loyalty program.