customer Acquisition

How Customer Loyalty Can Increase Customer Acquisition

Bottom line and lifetime value are two key goals for marketers.

According to Gartner, 80 percent of future profits will come from just 20 percent of customers. Yet marketing leaders still depend on acquisition to reach their marketing goals. Without customer loyalty, businesses often miss these goals entirely.

Acquisition and retention aren’t separate silos. Customer loyalty, when done right, can bring new business and generate acquisition. This comes in the form of word-of-mouth, referrals and user-generated content. But what if marketers could use their loyalty program to assit with customer acquisition? Here’s how to do it:

Start with a system

The first step to customer loyalty is retaining them in the first place. Without a system in place, this becomes difficult. Rewards programs are designed to give value directly to the customer. This can be in the form of rewards, free products, and coupons. Points-based rewards programs are very common. Customers earn redeemable points every time they make a purchase. You can also use tier-based rewards, where the value increases the more a customer does business with you. As they move up the ladder, the better the rewards become. Most importantly, everything is trackable. Measurable systems mean optimization and accountability. Segment your most loyal customers and reach out to them in your acquisition efforts (more on that later on).

Decide what your loyalty system is going to look like. If you’re an ecommerce store, what value can you add for customers joining your inner circle? Can you add exclusive content they can’t get elsewhere? Make them feel like a VIP. For brick-and-mortar businesses, digital loyalty systems are best because you can track purchase frequency and collect customer insights – crucial features for long-term success. A good customer loyalty system will come with its own marketing automation and analytics tools. At the very least, it should integrate with current marketing systems so that all of your data can be housed in the same place.

Collect and Encourage User-Generated Content

Are you encouraging your best customers to share your marketing? User-generated content can be a great source of content for your business. If someone has a pleasant experience at your business, they’ll be more willing to share it with their social networks. Instagram is the perfect platform for this. As your customers post photos in your business or with your products, repost and share from your business account, because as we know, there’s nothing more powerful than social proof. So take a look at what your audience is creating organically. Use Instagram’s geography tags to search for images posted in your local market. Or search by brand name. Run hashtag searches for campaign names and products to find relevant photos pertaining to your business. Take a look at the forms of content your customers are creating. Do you see selfies, pictures of food or your products “in action”? This understanding is key for a more proactive approach. Instead of a reactive approach to content collection, you can run user-generated content campaigns. You’ll encourage content creation and reward your customers for it.

Encourage customers to tag photos using creative hashtags. Don’t use #YourBrandName; your customers don’t want to feel like a platform for your marketing. Instead use a personal and actionable hashtag that shines the spotlight on your customers. Coca-Cola did this well with their #ShareaCoke campaign as is Red Bull’s #PutACanOnIt campaign:

Use your customer loyalty system to identify and reach out to your best customers. Ask them to get the campaign kick-started, offering them a strong incentive to do so.

Create a Killer Referral System

According to New York Times, 65% of new business usually comes from referrals. A Nielsen survey also found that 92% of consumers trust referrals from someone they knew.Referral marketing converts your most loyal customers into advocates. Many marketers make the mistake of hiding their referral systems away in footers and sub-pages that are never found. How can a customer refer their friends if they never know about it?

In order to create a referral system that increases reach and acts as a new channel for acquisition, brands should start with a high-value incentive, like Amuze does. They offer $25 off purchases for both you and your friends:

Increase the value of the reward every time a new customer is referred. Harry’s did this with their pre-launch sequence. Every time a user signed up a certain number of friends, the prize improved:

This added a level of gamification that generated over 100,000 sign ups in under a week. Go big on incentives to generate huge amounts of new business.

Your referral program must be easy to find. Use a strong call-to-action on your website or physical marketing collateral.

It must be clear what you want your customer to do. Do they need to email a code? Share over social media? Having a dedicated landing page on your website will help add clarity. Strong incentives are important. Make sure it’s win-win for both your customer and their friends. They don’t need to be the same, but they should both be high in value.

Customer retention and acquisition are not unrelated strategies. Instead they can work together to help you achieve your business goals.

Delighting your customers is enough to inspire word-of-mouth. Use these concepts to turn them into a constant stream of new opportunities. Start with a great product and customer service. Then work on your retention strategy. Get a digital customer loyalty system in place to act as a hub. Then test the approaches mentioned in this article.

Want to learn how digital engagement influences a business’s bottom line, especially within the restaurant industry? Take a look at our Restaurant Brief white paper.