Digital Loyalty Programs - A holistic approach to long-term customer retention

Long-term customer loyalty has become increasingly hard to achieve in an ever more competitive environment. As markets become saturated with offers and switching cost decrease, even satisfied customers can be lured away by competitors. The constant pressure to compete to gain lose, and regain customers can drastically impact a company's bottom line. Avoiding this calls for a holistic approach towards customer loyalty that goes far beyond simple earn & burn loyalty point systems and puts modern technologies to use to bind the customer to the brand in multiple ways.

UNIQUE PROGRAMS FOR UNIQUE COMPANIES

nexum's succesful loyalty projects


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Loyalty dimensions

Loyalty Matrix

The dimensions of customer loyalty

Classic Loyalty - Rewards for increased purchases

Earn&Burn point systems, discounts, coupons, and referral programs

  • Customers use these offers to save money on their usual purchases or to get more for the same price.
  • The relationship with the brand remains superficial, as customers are loyal only because of the offers and discounts.
  • For long-term loyalty, these incentives should be combined with other loyalty strategies.

Examples: Payback Points, Miles & More Rewards, Starbucks Frequency Card, DB Bahncard

Relationship - Emotional bond with the brand

Personal bond, shared values, appreciation for the individual person

  • Customers want to be treated as individuals
  • Recommendations must be tailored to their needs and priorities
  • Conscious consumption: It is becoming increasingly important for customers that their values match those of the brands they shop with

Examples: Easy Jet's personalized email-campaign, Audible Badges, Patagonia's Common Threads Initiative

Convenience - Customers don't want to switch

Solution eco-systems, individualized solutions, switching cost

  • An ecosystem of integrated solutions brings customers into a brand world
  • The more time and money a customer invests in a solution, the less they want to switch to another product
  • Products that adapt automatically to the user through AI bring customers in a loyalty spiral

Examples: Apple's product ecosystem, Spotify's individual Daily Mix, Zalando size recommendation AI, Google's integrated services, Salesforce integrated enterprise solutions

Social - The brand as part of the social environment

Communities, Memories & Emotions, Social Platform

  • A community of users creates social bonds with the product at their core
  • If switching to another brand means losing those connections, customer loyalty increases
  • If the value of the product decreases, entire user groups can tip over and switch collectively to another option

Examples: Football clubs, Sephora Beauty Insider community, World of Warcraft, BTS, social media like Instagram

Choosing the right loyalty ingredients

High involvement

If a customer is highly involved in finding the right product, because the price is high or there is a lot of differentiation between brands, the best choice is combining elements from the relationship and social dimensions.

Low involvement

For low-cost products with low purchasing risks, customers do not seek perfection, but pass quickly through the buying process instead. Switching brands is common for these products, so direct and immediate rewards work best.

The right program

Any loyalty program should enhance the existing value proposition or add additional product benefits for the consumer. It is key to know the customer’s wishes and pain points and try to address these with the loyalty program.

Segmenting & combining

Customers can be segmented to find and fuse the right loyalty incentives for each segment into one loyalty program. Building blocks from the "Relationship" dimension are usually a good fit for any company’s loyalty program.

nexum's loyalty building blocks - A holistic approach

Loyalty building blocks

  • Loyalty programs can be built with nexum's loyalty building blocks
  • We have analyzed the elements of the most successful customer loyalty programs and refined them into combinable concepts
  • The building blocks are chosen based on the company's objectives for the loyalty program

Multi-Dimensional

  • We create customized, multidimensional loyalty programs
  • We maximize customer loyalty by combining aspects of different loyalty dimensions.
  • We work in interdisciplinary teams that can leverage the positive interaction effects of the building blocks of different categories

Classic Loyalty Building Blocks

  • Loyalty point system, including a point accounting infrastructure
  • Tiered reward and discount system
  • Development and implementation of a paid membership strategy
  • Referral programs
  • Welcome journeys & campaigns across all channels
  • Cross-site point collection with a custom browser extension
  • Integration of all online and offline channels into the loyalty program through QR codes and NFC
  • Coupons optimized to promote cross and upselling with maximum margins
  • Option to donate loyalty points to charity

Convenience Loyalty Building Blocks

  • Gamified customer surveys natively integrated into browsers, emails, apps, in-store, or other touchpoints
  • AI 1:1 personalized site and product navigation based on each visitor’s intentions
  • Customer data analysed to pinpoint actionable insights
  • Interface personalization options for users
  • Content personalization based on user behaviour
  • On-site search optimization
  • Convenient product order options on new sales digital channels with a streamlined check-out
  • Subscription models
  • Payment app for easy in-store check-out and integration with classic loyalty building blocks

Relationship Loyalty Building Blocks

  • Development of a brand's character for increased relatability for customers
  • Brand values modelled to fit offers and target customers based on market research
  • Individual acknowledgment of each customer through personalized communication on all online and offline touchpoints
  • Individual recommendations that fit each person, instead of general rules of product association
  • Custom email communication with different contents, images, information, timing etc. based on customers' wishes and pain points
  • Personalized landing page with the information that is most relevant to each customer
  • Custom post mailings, personalized to each customer’s story with the brand
  • Push notification strategy to minimize exits and maximize impact
  • Integration of advanced chat-bot AI on all digital channels for 24/7 customer attention
  • Multichannel customer attention integrated on one platform to pick up the conversation based on past interactions
  • etc.

Social Loyalty Building Blocks

  • Community building with the right digital tools and a long-term strategy
  • Social media account optimization and administration
  • Production of content and interaction guidelines to develop a recognizable voice for your brand
  • Loyalty leads generated through social interaction on all channels
  • Content generated on young media platforms like YouTube and twitch to engage communities of future customers
  • Social platform challenges that playfully integrate your brand in people’s social interactions
  • Viral content that makes your brand the must-see among social circles
  • Merchandise for the most loyal followers
  • Collaborations with other (brand) communities that lead to more social interaction around the brand

Advantages of nexum's holistic loyalty approach

nexums services:

  • Data-driven creation of the strategy & concept for the loyalty program based on the company's goals such as revenue grwoth, customer lifetime value or brand loyalty
  • Development of all technical features, UX and content for the loyalty program
  • Implementation and integration of the program into the existing infrastructure
  • Promotion of the new program on all channels and acquisition of new customers
  • Segmentation of customers and data analysis to increase customer interactions and revenue

Your contact for loyalty projects

Roberto Rizzi, Executive Director Sales

Roberto Rizzi

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