So you've decided to launch your rewards program. Great! You're on your way to boosting customer lifetime value, average cart size, and overall loyalty. But what now? How do you make sure you're building the right program for your store and receiving all the benefits of a well designed loyalty program?
The possibilities can be truly overwhelming. You could choose to focus on driving purchases of a particular product, or to encourage customers to read certain content. Maybe you want referring customers to earn a certain free product for their efforts.
We often talk about helping stores incentivize the customer behaviors that are most important to them; but how do you know what those behaviors actually are? Here are 3 ways to determine the customer behaviors that increase retention and boost engagement so you can get the most out of your rewards program.
Go Directly to Your Customers (All of Them)
Who would know what behaviors engage customers better than your current customers? If you want to understand what gets customers excited about your brand, skip the speculation and go right to your primary sources. Before contacting customers, make sure your polling methods are completely unbiased.
Be cautious about email blasts to a master list
This is the best way to collect the most data, but you may not end up collecting data from the right subgroup of your customers. When you send out an email blast to all of your customers, you inherently bias your survey because you are collecting results from the customers who are most likely to fill out a survey that you send out. These customers are already engaged in your program and already love what your store has to offer.
Its great to learn from engaged customers and we’ll go into more detail on them later, but you may be losing out on the opportunity to hear from the rest. One of the biggest benefits of customer engagement is boosting activity levels of your low performing customers so make sure you’re not missing something that’s important to them.
Conduct a simple random sample
Instead of email blasting all of your customers, generate a random subset of customers and reach out to them with as personal a message as possible to maximize response rates. A simple random sample will create a set of customers representative of your entire customer base. This gives you a group manageable enough to work with while also giving you data that can be reasonably applied more broadly.
Avoid asking leading questions
You goal in surveying your customers in the first place is to gather information. It's important to make the distinction between learning how your customers feel and testing whether or not they feel a certain way. Ask open ended questions to allow customers to provide their own insight and elaborate freely. When you test your own previous hypotheses you limit the scope of the answers your receive thus diminishing your findings.
A question worded the wrong way can yield results that are either misleading or incomplete. Ask your customers what information they’d like to know before making a purchase (this could help you build appropriate content). You could also ask them what prompts the decision to make another purchase at your store. Customer testimonials often turn out to be eye opening, just make sure you bias your data as little as possible.
Study your High Performing Customers
Ignore your preconceptions of who your best customers are. The first thing to avoid here is blindly reaching out to friends and influencers you know who use your products. There's a good chance they are in fact some of your highest performing customers, but let your data determine who you ultimately study. This will help you eliminate previous biases and allow you to retool your strategy if need be.
Generate a list of your customers with the highest lifetime spend and start breaking down their habits. First look at purchase statistics. How large is their average cart size? How frequently do they make purchases? Identify any commonalities that stand out across the customers and take note of it. Its highly unlikely that these purchase habits are a coincidence, especially if you’re looking at a large sample size.
Secondly, look at these customers as people. What makes them so drawn to your brand. Are they subscribed to your newsletter? Have they reviewed your products? Do they follow you on Instagram? Break your findings down to numbers to see how valuable each of these actions really are to you. For example, what percentage of your best customers follow your Instagram account. If you know a large percentage of your best customers do, maybe you should be driving more traffic to your Instagram page.
Research the Rest of the Market
Take a look around at high performing ecommerce stores, keying in on stores with similar target demographics. If similar successful stores are making efforts to engage customers in a certain way, the same strategies will likely benefit you as well. Look at their content, their promotions, and their general purchase flow. You’ll be surprised how easy it is to determine what behaviors they're encouraging in their customers.
This is no mistake. The modern customer makes decisions on a website extremely quickly. High performing ecommerce stores understand this and you’ll be able to quickly break down their engagement strategies.
Take a look at Vanity Planet, a store focused on beauty and personal care. A visit to vanityplanet.com immediately reveals a promotion they’re running to help customers earn discounts.
What can you learn about Vanity Planet customer engagement strategy from this banner?
The crucial lesson this banner teaches us about Vanity Planet's engagement strategy is the promotion itself. Vanity Planet offers customers incrementally large discounts based on their customers’ cart sizes. Customers spending over $100 dollars in a single purchase earning a 25% discount on their total purchase compared to a 15% discount on a $45 purchase. 25% is sizable discount, so why does Vanity Planet offer so much money back to high spenders?
Because they’re incentivizing the “right behaviors” for their store. For their store, larger cart sizes likely tend to define high spending customers, and encouraging customers to get into the habit of spending more each time they visit slowly molds them into better customers.
If their “save some green” promotion didn't catch shoppers' eyes, they have another promotion to reward free shipping to customers who spend at least $49 in a single purchase. This bar (pictured above) is clearly displayed at the top of their website on all pages and is also built to encourage customers to increase their cart size. A quick glance at this website might be enough to convince another beauty brand to start to encourage larger cart sizes.
A similar study on any of your favorite ecommerce websites will reveal their customer engagement strategies. You'll be able to catch onto any important behaviors you may have missed in your customer surveys and studies of your high performing customers and be well on your way to properly boosting customer engagement.
Finding the customer behaviors that increase retention for your store is essentially a study of your store. You'll find what makes you different and what makes people want to buy from you. Armed with that data you'll be able to design the right loyalty program for your store and get your customers to spend more money more often.