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Loyalty is lucrative: A practical guide to getting the second sale

With consumers flocking to online retail over the last 18 months, retailers have stiff competition to stay top-of-mind.  One effective tactic to keep customers coming back and more engaged that retailers of all sizes are turning to is loyalty programs. In fact, in the aftermath of the pandemic, Gartner notes that retailers may be turning to their loyal customers to increase sales instead of trying to attract new markets. From that survey, 79% of retailers admitted to focusing on existing markets to fuel growth. 

Although implementing a loyalty program can seem like a massive undertaking—especially for small, emerging brands with limited resources—it’s entirely possible to create a simple, effective rewards program with the right data and tools.

Instead of trying to roll out a complex rewards program all at once, you can start small with a few tiers based on customer lifetime value and automated reward triggers. This easily managed rewards strategy based on customer data can drive incredible results for your business and brand when done successfully.

Take advantage of the ‘buyer’s high’ 

The first step in creating a loyal customer base is getting in front of them at the right time. Think about the feeling you get when you’ve purchased from a new brand. Your attention and mindshare are at their greatest the day you place the order. If you buy it in-store, you can’t wait to go home and try it on. If you buy it online, you eagerly check the mailbox until it arrives. For retailers, the ‘buyer’s high’ is the best time to quickly increase the likelihood of a second sale. The more time that passes after the first order, the more difficult it becomes to win the second order. 

Australian retailer, Boody, creates sustainable and ethical bamboo clothing and underwear and has a strong cohort of loyal customers through its rewards program called The Goodness Loop. With more than 25,000 members in its loyalty program, the average order value for members of The Goodness Loop is $208 compared to $125 for non-members. Similarly, members of The Goodness Loop are 51 per cent more likely to purchase again, compared to just 21 per cent for non-members, revealing the strength of a loyal customer base.

Using a retail data solution, you can analyse customer data and pinpoint the exact time to target the second sale and what to offer. Also, consider analysing which of your products have the highest likelihood of converting the second sale. Using a customer data solution lets you uncover details like geolocation, age group, financial status, marital status, and pages they land on to inform your retargeting strategy. 

Personalise your program 

One of the best ways to get repeat customers is by ensuring they are satisfied and feel you are prioritising their needs. The Iconic is a great example of a brand that has built loyalty within its customer base. For example, it recently started sending EDMs based on previous category purchases.  

As simple as it sounds, using the customer’s first name in the subject line and body of the email makes it more personable yet less than 10 per cent of brands currently do this, so it’s a way to stand out against the competition. Another capability is to provide a unique code for each customer to enjoy benefits and discounts of a loyalty program, which the market is seeing a growing demand for.

Another tactic for personalisation is to send surveys to customers so they can tell you precisely what they are thinking. By collecting customer feedback, you can discover how your products or customer service are lacking and learn about features your customers want to see.

You can also use surveys to collect important customer data for loyalty programs, such as how they discovered your company and how particular acquisition methods correlate with consumer purchasing patterns.

Track early indicators of churn 

By drilling down and tracking customer retention metrics, you will be able to spot an increasing churn rate early and work to bring it down through loyalty programs. Some metrics you need to track to understand how your marketing campaigns affect your retention rates are churn rate, repeat purchase probability rate, and average order value. 

Churn rate is a metric that tells you how many customers you are losing over a specific period, where repeat purchase probability tells you how likely a customer is to make a repeat purchase and how many customers turn into repeat customers. This is critical to measure as it helps you see segment-specific behaviour and optimise your strategies on a campaign-specific level to align your campaigns with your long-term business goals. Another metric to track is average order value and profitability, which tells you the value and profit of each order when considering the average repeat order rate.

COVID-19 has forced customers and competitors online. Being confronted with a major influx of new customers during the COVID-19 pandemic, a nuanced understanding of your customers, paired with data-driven personalisation strategies, is critical for high retention and lifetime value growth.

Especially given the new landscape the pandemic presents, loyalty needs to be at the centre of everything you do to keep customers coming back. 


Read more: Let’s Talk: Customer loyalty programs – What incentives work?

Read more: Let’s Talk: How can you entice customers to spend more


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Nick Hinsley

Nick Hinsley

Nick Hinsley is Vice President of Retail at Lexer, the leading customer data platform for retailers. Prior to joining Lexer, Nick worked in retail for well-known menswear companies, Gazman and Gant, and then in traditional media for over 15 years.

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