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How to Make Your Loyalty Program Pay Off

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Do loyalty programs actually create more-loyal customers? In a recent study, researchers analyzed two years of purchase data from more than 10,000 customers at a top U.S. retailer to explore how spending did (or didn’t) change after customers became loyalty members. They found that loyalty programs do increase profitability — but only for some customers, and not the ones you might think. Specifically, while the retailer had been targeting loyalty program promotions at customers with high levels of past spending, the researchers found that joining the program actually had no impact on those customers’ spending. On the other hand, joining the loyalty program increased spending by close to 50% for customers who were highly vulnerable to competitors. The researchers used a machine learning model to gain insight into who exactly these customers were, and found that the best predictor of changes in spending was actually customers’ locations relative to both the retailer’s stores and competing stores. Based on this surprising finding, the authors argue that marketers should target their promotions based not on historical spending, but on location, and that they should further consider investing in simple machine learning tools that can help them to identify the non-obvious traits that may correlate with profitability in their unique industry and market.

Ninety percent of leisure and hospitality companies (and more than 60% of all companies) offer some type of loyalty program — and yet, it’s not at all clear that these programs actually work. One report found that the average consumer belongs to more than 14 loyalty programs, often with multiple competing brands, suggesting that these programs hardly create loyal customers.

Furthermore, retailers often target loyalty promotions at their highest-spending customers, which can seriously backfire, since these are customers who would have spent their money regardless, rather than customers for whom discounts would actually convince them to spend more. As one hospitality industry executive bemoaned, “You know, I have this customer reward program. It is kind of expensive, but I feel like I have to have a program because everyone else has one. Honestly, I don’t know what, if anything, it actually does for me.” In many cases, the ROI on these programs just doesn’t seem to pan out.

At the same time, studies have found that loyalty programs do have the potential to offer significant benefits to consumer businesses such as retailers, grocery stores, restaurants, gyms, drugstores, spas, coffeehouses, and more. Customers often develop a stronger psychological attachment to brands whose loyalty programs they subscribe to, and these programs can significantly increase members’ spending and retention rates — if designed correctly.

To explore how retailers can more effectively reap the benefits of loyalty programs, we conducted a large-scale study in partnership with a top U.S. retailer. We analyzed two years of purchase data from more than 10,000 individual customers, totaling 2.4 million purchases, and examined spending patterns such as how often customers visited a store, how much they spent, and what items they purchased, both before and after joining the company’s loyalty program (all data was collected before the pandemic, and we looked exclusively at in-person rather than online sales). Based on this extensive dataset, we found a few interesting trends.

First, we found that for a large group of customers, signing up for the loyalty program had no noticeable impact on their behavior: They started collecting discounts (which they were no doubt happy about), but both the frequency of their visits and the quantity of their spending remained unchanged.

However, two customer segments emerged from the data for whom the loyalty program did make a significant difference: consolidators, or customers who started buying more products from the retailer (likely products that they had previously been buying from competitor stores); and upgraders, or customers who didn’t increase the number of trips or products they bought, but began buying more expensive, premium versions of the same products they had previously bought from the retailer. For these two types of customers, the loyalty program was highly profitable — increasing spending by roughly 50% — and so we were interested in learning more about how the retailer could identify those segments and proactively target them with loyalty program marketing.

Like many companies, this retailer had largely been relying on analyses of historical spending patterns to identify high-value customers. However, we found that rather than focusing on past spending, the more useful metric was actually customer location. Customers’ locations relative to both the retailer and their key competitors determined their “vulnerability” to competition, and the more vulnerable the customer, the greater the positive impact of the loyalty program. There are a few components to this. First, proximity to the retailer marginally increased the impact of the loyalty program, while proximity to competitors significantly increased its impact. This makes sense: Customers will likely be more easily swayed to visit a store that’s close to them, and if they don’t have easy access to competitors, there is limited potential for them to consolidate their purchases in the first place.

A closer analysis, however, revealed important and difficult-to-define nuances around the impact of where exactly the customer, retailer, and competitors were located. For example, the path that a customer takes to reach the store can make a big difference. If a customer passes competitors on the way to the store, they’re likely to be much more vulnerable and thus a much higher-value candidate for a loyalty program. Similarly, if competitor stores are geographically scattered, customers may be less vulnerable than if competitors are conveniently clustered together, especially if the competing stores are in the opposite direction as the store where the customer is a loyalty member.

Given this complexity, manually identifying these sorts of trends can be next to impossible. But in contrast to human analysis, modern machine learning methods are well-suited to finding patterns in complex data. We fed extensive data on both spending and physical locations of customers, stores, and competitors into a simple machine learning model, and the model was then able to accurately predict which customers would be most valuable to enroll. Importantly, the model found that small differences in location could make a big difference in ROI, highlighting how automated tools can segment customers in ways that may not seem intuitive, but which can be incredibly impactful to the bottom line.

So, what does this mean for marketers? There are two key takeaways to note. First, instead of focusing on converting the highest-spending customers, marketers should identify and target the customers who are most vulnerable to competition. These high-vulnerability customers have the highest conversion value, and so targeting them with loyalty program promotions will yield the highest ROI.

Importantly, this may mean rethinking some metrics. For example, the retailer we worked with found that when they targeted loyalty program promotions at customers with the highest historical spending levels, a single email increased these customers’ likelihood of signing up by 6.1% — seemingly an impressive conversion rate! But when we dug a little deeper, we found that this strategy actually performed slightly worse than random targeting when it came to identifying customers for whom the loyalty program would actually increase profitability, and it was a lot less effective than a targeting strategy that incorporated customer vulnerability based on location data. Specifically, after joining the loyalty program, high spenders (i.e., the customers who had been targeted by the original campaigns) exhibited almost no change in spending, while the customers who were targeted based on their vulnerability to competitors increased their spending by 45%.

In addition to increasing ROI, this approach can also be a lot more practical than traditional spending-based analysis. Historical sales data is often unavailable, expensive, or difficult to correlate with other customer information, while location data is almost always readily available. For example, say you’re opening a new branch or expanding into a new product market. You’re likely to be targeting customers for whom you have no historical spending data, but a simple search on Google Maps can give you the information you need to determine where your loyalty program will be most impactful.

The second key takeaway is that what we did wasn’t hard. You don’t have to hire a team of machine learning experts or data analysts to implement a simple model that will help you extract otherwise invisible insights from the data you already have. While our study illustrated the importance of location data for loyalty program ROI, there are no doubt other metrics that correlate with profitability for other programs in other industries, and machine learning can be a powerful tool to help you identify and leverage those patterns.

Ultimately, it’s all about rethinking how you approach targeting. Instead of focusing on customers who are already high spenders, marketers should leverage automated tools to identify and intentionally focus promotions on the customers whose loyalty will be most valuable, and whose conversions will yield the greatest return.

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The Benefits of LinkedIn Ads

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LinkedIn wouldn’t necessarily be the first platform that comes to mind when considering social media advertising. However, if you are a B2B organisation, the platform can allow you to reach professionals across the globe. LinkedIn allows you to generate brand awareness across targeted professional sectors and reach out to decision makers directly.

Advertising is all about targeting the right people. Users of LinkedIn tend to be older, professional and have a higher income than the average user of other social media platforms. So if that is your target market, LinkedIn offers a great opportunity to reach them. Professionals use LinkedIn for business networking purposes so users are generally in work mode so engaging with them should be easier than on other platforms.

Here we outline the six main advantages that LinkedIn Ads have over other social media platforms.

1. Variety of ad formats

LinkedIn offers a number of options for advertising:

  • Sponsored content – this type of ad appears in people’s feeds, it is the least personal form but good for promoting content from your business page and encouraging people onto it.
  • Text ads – these are only viewable by people using a desktop. With these you can choose the audience you want to target and you only pay per click.
  • Message ads – these appear in users’ inboxes and are proven to be good for conversion.
  • Video ads – great for storytelling, you can also retarget users who have watched the video, aiding conversion rates.
  • Dynamic ads – these allow you to fully personalise your ad by showing user’s photo, name and title within the advert.

2. Generate high quality leads

The ability to target professionals and gain good quality leads is the primary benefit of LinkedIn ads. Users are looking at work-related content so will be more open to solutions for their business needs.

With more than 800 million users in over 220 countries and territories, LinkedIn is the biggest social network for professionals and businesses alike. 4 out of 5 LinkedIn members drive business decisions and the platform has been rated the best for lead generation by marketers.

By using LinkedIn advertising, you can access their Lead Accelerator feature. This feature allows businesses to follow their best prospects and offer more targeted ads directly to them. This includes remarketing to website visitors, which helps nurture leads, making them more likely to become customers.

3. Targeting

LinkedIn allows you to target specific demographics, enabling you to create much more personal advertising campaigns. Facebook lets you target interest and behaviour based factors however LinkedIn is the right medium to use if you want to target individuals based on their industry and job. You can filter your audience by:

  • Age
  • Location
  • Company name
  • Company size
  • Degree subject
  • Job title
  • Seniority
  • Industry
  • Member skills

These variables make the platform the ideal choice for B2B organisations wanting to target decision-makers.

Entrepreneurs executing on a business idea
photo credit: LinkedIn Sales Navigator / Unsplash

4. Remarketing

LinkedIn allows you to specifically target people who have shown an interest in your products. Matched audiences show you which users have visited your website and the pages that they went on. This allows you to target them with specific ads in the hope that they will return to your website and convert to a customer.

Matched audiences can be created with:

  • Account Targeting – Uploading a CSV of company names to LinkedIn allows you to target decision-makers.
  • Website Retargeting – Target the users who have visited your website and re-engage them to aid conversions.
  • Contact Targeting – Uploading a CSV of email addresses of your contacts to LinkedIn enables you to nurture your leads and prospects even further.

5. Increased conversion rates

The ability to target specific groups, nurture them and remarket to them will increase your conversion rates.

A year-long study by HubSpot found that on average, LinkedIn ads convert users to leads at a 6.1 per cent conversion rate. This compares to 2.58 per cent for Google search ads.

MD of exhibition stand contractor Black Robin Exhibits, Alan Jenkins, managed to achieve a conversion rate of 8.2% with a LinkedIn campaign earlier this year, he said “We were delighted with the results, it wasn’t a huge investment, we could set the budget and the conversion rate was fantastic”.

6. High control

A big benefit of LinkedIn advertising is the high degree of control that you can have. You can set a specific start time for your advert and specify when it will end. As well as this, you can set daily budgets to ensure your advertising costs are kept at the right level for your business.

Businessman using LinkedIn app

Conclusion

Setting up a LinkedIn campaign is not straight-forward due to the variety of advert types and different ways of targeting. But the platform has a number of advantages over other social media sites if your target market is professional businesspeople.

B2B organisations will be able to target specific demographics with personal ads, nurture and remarket to them. All this will increase conversion rates, making LinkedIn a valuable marketing tool.

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Beginners’ guide to Instagram Reels

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Get ‘Reel’ results

If you haven’t already heard the news, according to Instagram, they’re no longer a photo-sharing app. Shocking, right? The company announced they want to start focusing more on video content, like that offered through Instagram Reels, as opposed to being the original square photo-sharing app they’re known for being.

“At Instagram, we’re always trying to build new features that help you get the most out of your experience. Right now we’re focused on four key areas: Creators, Video, Shopping and Messaging.” — Adam Mosseri, Instagram CEO

This makes total sense because short, engaging videos (shown to us by hyper-accurate algorithms) have proven to keep our attention more effectively than ever before. So effectively that 93% of marketers who use video say it’s an important part of their marketing strategy. Additionally, users are twice as likely to share video content with their friends and family than any other type of content, including social media posts, blog posts/articles and product pages.

So if you’ve been hesitant to start making Instagram Reels or just needed a little encouragement, we’ll cover the basics, give you some ideas on what content to create for your business or brand, and help you understand the data behind it all.

But, before we do, let’s talk about why Instagram Reels needs to be included in your marketing strategy.
What are Reels and why should you start using them?

Person recording elephants on smartphone

Instagram Reels rolled out in late 2020 and the feature has continued to increase in popularity. Reels provide creators with a way to produce and share short, engaging videos using a collection of mainstream music and user-generated audio.

With more advanced editing tools, such as speed controls, filters and transitions, you can effortlessly edit multi-clip Reels up to 30 seconds long, entirely within the Instagram app, which is amazing if you don’t want to use multiple apps and extra equipment to film, edit and post to social media.

Reels are definitely a useful feature of the platform as a whole that is worth exploring. When it comes to metrics, Reels receive 22% more engagement than videos posted directly to a feed. In addition to IGTV, Live and Stories, Instagram Reels are another great tool for you to use to get noticed on the platform and reach potential customers.

Nearly two-thirds of Instagram users are between 18 and 29, with 18- to 34-year-olds the most active age group. That means there’s a ton of opportunity for businesses to be discovered by your target audience on this platform. So, if your Instagram strategy needs a boost to stay top-of-mind and ahead of the competition, Reels could be your solution.

Related: How to plan an Instagram marketing strategy to attract business

Instagram Reels small business content ideas

If your business is active on Instagram but hasn’t posted a Reel just yet, don’t worry, it’s not too late to start. Accounts that don’t follow you can find your content while scrolling on the Explore page, which is why it’s so important for brands to be active where their target audience is.

Don’t let lack of inspiration hold you back, here are some simple and effective video ideas:

Educational content‍

The best way to increase your reach and engagement is to give your viewers value. If you can create something that is helpful, users are more likely to like it, share it with their friends and follow you for more. That ultimately, tells the algorithm your content is worth being promoted to others on the app.

For example, you can create shareable workout, cooking or crafting videos just by showing your step-by-step process.

Showcase your products‍ or services

Highlight what makes your business unique with Reels dedicated to each product or service you offer. This could be a tutorial on how to best use your products or a way to update customers on new offerings.

Create original content‍

Easier said than done, but I know that behind-the-scenes content, user-generated content and FAQs are always a big hit with loyal audiences.

You also have a few different ways to get trending and possibly even viral. You can use trending hashtags, popular audio clips or filters and get discovered among other videos with those elements.

Re-creating a popular trend while highlighting your brand is one of the quickest (but not the easiest) ways for business growth with Instagram Reels.

How to optimize your Instagram Reels

Improvised video recording setup

Improvised video recording setup

Like with any social media platform, there are always hidden steps you can take to increase the likelihood your content gets seen and please the almighty algorithm.

For example, many users who create content for TikTok have started uploading those same videos as Reels. Seems like a logical time saver, right? Well, Instagram has not only clearly advised against re-posting content that’s “visibly recycled from other apps,” it has also updated its algorithm to recognize and prevent it from performing well on their platform.

That being said, here are some tips on how to optimize your Reels for the best results:

  1. Try to record (vertically), edit and add effects to your reels from within the app, rather than uploading a video you’ve created elsewhere.
  2. It’s also important to use text overlays, hashtags, audio, and descriptive captions to let Instagram add you to an algorithm relevant to the content.
  3. @ other accounts, when appropriate. Just like hashtags, you’ll get more reach by including their name in your content.
  4. Use custom thumbnails. Doing so will make it easier for users to find videos they want to watch when scrolling on your account. It’s also a great way to incorporate your branding and help your feed look cohesive.
  5. Sharing your Reels to your Stories and even on your feed will get more people to see it. You can share it when you post it or, if you have posted enough that day, share on a day when you don’t have anything else to post.

Algorithms are constantly changing, and not always for the better. Doing just a little bit of research to stay on top of current trends and best practices will pay off in the long run.

Related: 3 ways to use Instagram Stories for digital storytelling

Understanding Instagram Reels Insights

Bodybuilder recording workout

Bodybuilder recording workout

Finally, you’ll need a way of knowing if your hard work is paying off.

Instagram has included a dedicated tab, which is similar to the Insights tab on your static posts and videos, that details the metrics relating to your Reels. With the Instagram Reels Insights, business owners can see important metrics like accounts reached, plays, likes, comments, saves and shares.

By knowing what type of accounts you’re reaching with your Reels and which content formats are most engaging with your audience, you’ll be able to adjust your content to better serve your target audience and grow your account.

Measuring these stats is the best way to make sure all the efforts you’re putting in to engage your fans is actually working.

Once you have a good idea of where your metrics are on average, try experimenting with the time of day, type of content and hashtags you use when posting your Reels. Start thinking of ways to get in front of new users with videos like tutorials, bloopers or more user-generated content. You could even share customer testimonials or success stories for added social proof.

Final thoughts on Instagram Reels

I know I personally struggled with the idea of including yet another item on my content creation checklist, but I’ve found that even just repurposing a few old clips from videos on my YouTube channel into Reels has proved effective in increasing my engagement and reach on Instagram.

Exploring a new feature of social media can be intimidating and overwhelming at times, but Reels seems to be a fun new way to expand your social media presence through the use of short videos. I recommend testing it out and seeing how well it works for you and your audience. You might find it to be your new favorite tool in your social media strategy.



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5 Strategies to Drive Customer Engagement

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Engaging with your customers is the key to driving sales and growing your company. However, some businesses are not sure how to do this effectively. It means that when they finally manage to engage with their customers, they are not entirely sure what worked. Knowing how to drive customer engagement is all about knowing your customers.

Here are 5 strategies that you can use to drive customer engagement.

Customer engagement
photo credit: Edmond Dantès / Pexels

Communication is the Key

Communication between your company and your customers is fundamental to engagement. If your customers are trying to talk to you about your products or services, then you should listen to them. Avoiding contact will simply drive them to another company.

Here are some tips you should follow.

1. Listen to Your Customers and Never Assume

If you have a customer that approaches you on social media or any other channel, it is vital that you engage them in a conversation. Their initial message might not be the complete story, so you need to work with them to find the right answer.

Once you have found out what the customer wants, go through your products with them and pinpoint what works for them. Your sales team must never assume that they know what their customers want, or they might find the customer goes elsewhere.

2. Seek Help with Engagement

Sometimes no matter what you try, you are unable to engage with your customers or retain them. It may be that there are strategies that you haven’t considered or lack the knowledge to implement.

This is where companies such as TCC Global can help. By helping you and your marketing team to engage with your customers and create brand loyalty, you can start to grow your business.

3. Respond Quickly to Questions

There is nothing more frustrating for customers than asking a question on social media and not getting a reply. Even a delay of a few hours can be enough to cause someone to look elsewhere.

If your business has a presence on social media, then it is vital that it is monitored at least during business hours.

Selling to existing customers

4. Chat to Your Customers

There is a temptation to use your means of communication to just sell products. While this is an important part, there should also be more customer engagement through conversation.

If you find something interesting, tell your customers on social media. Reply to them if they answer you and keep the conversation going.

5. Blog About the Popular Questions

If you are seeing a trend in questions your customers are asking, then it may be a good idea to write a blog post about it.

Blog posts will drive visitors and potential customers to your website and from there they may go to your products. Answering these popular questions will also save time for your customers and build loyalty.

Conclusion

So, there you have it – 5 strategies to drive customer engagement. These are just a few of the ways your company can build a relationship with its customers and build a loyal following.

It is important to remember to stay engaged with your customers even after they make a purchase.

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