What is an Engagement-Based Loyalty Program?
We know that repeat customers are 54% more likely to purchase again, 9x more likely to convert (Smile.io), 5-25x cheaper than a new customer, and they spend 67% more than a new customer (HubSpot). But you’re probably already convinced of the value of loyalty.
Most brands understand the value of customer retention. That’s not what we’re trying to convince you of. The majority of businesses have established some kind of loyalty program, whether through tiered points programs, VIP member club programs, or simply a card that gets stamped every time you come back.
But the thing that all of those have in common is that their loyalty is transaction-based. Today’s consumer is less and less attracted by transaction-based loyalty building. There’s just too much competition. Nowadays, 45% of millennials won’t even join a loyalty program because they have to make too many purchases to get a reward they deem worthy.
According to CS News: “If there are too many purchases required to earn and redeem points, one in four shoppers will refuse to join a program.”
Consumers are now so highly informed and have so many options at their fingertips, that transaction or purchase-based loyalty programs are no longer attractive to them.
But what if you could gain their loyalty without purchases? If you could reward them before they give you any money?
Engagement-Based Loyalty Program as the New Generation of Loyalty Programs
If you’re only rewarding your customers for transactional interactions, like numbers of purchases, amount spent per purchase or types of purchases, you’re missing out on building deeper, emotional loyalty from your customers. If you can reward your customers before they’ve even made a purchase, you’re starting a fruitful relationship with them without pressuring them to make a decision yet.
Better yet, if they can get to know your brand and product in exchange for their interaction with you, you’re paving the way for a loyal relationship with you in which they will make future purchases. Customers, the humans that they are, will prefer brands with which they have an emotional connection. You can’t create that through a relationship based on money alone.
Other Benefits of Engagement-Based Loyalty Programs
While transaction-based loyalty programs may be effective in increasing purchases, engagement-based loyalty programs help lower marketing and advertising costs. When your customers engage with your content on social media, it boosts organic reach and social engagement.
Sound like a loyalty program and social media marketing solution in one? It kind of is.
Plus, with your customers acting as your own ambassadors, it serves as word-of-mouth marketing, which is possibly the most effective form of marketing.
How Can Customers Demonstrate Measurable Engagement?
Engagement, or interaction, with your brand can come in many forms
Liking, commenting, and sharing content
This is the most straight-forward way customers can show engagement with a brand that has a content strategy. For every piece of content the brand publishes on social media, customers can like, comment and share in exchange for points that they can redeem later.
This is easy to track with platforms like Spitche, through which brands can send invitations to their customers to participate in the loyalty program.
The Facebook algorithm gives more importance to active engagement. To Zuckerberg, ‘meaningful interactions’ are active engagements which are comments and sharing. Passive engagement, (e.g. likes), take less work and trigger less discussion, and as such are given less values.
Through Spitche, brands can assign more reward points for certain actions. So if you want to encourage more active engagement, you can give more points for comments and shares than for likes.
Providing feedback or testimonials
Did you know that 39% of millennials will not book a hotel without first checking out reviews? Of course, this kind of engagement only applies to leads that have already converted. Instead of offering your one-time customers rewards for buying more, leaving feedback could one of many actions possible under an engagement-based points system.
However, be very careful on this point. Make sure the rewards aren’t huge—this is frowned upon by most review sites, and paying customers for reviews is a big no-no. What you can do, though, is offer a small discount for their next purchase or something small.
This kind of rewarded engagement should be paired with something else instead of standing on its own.
Participating in fora and Facebook groups
You can create a private social network where members are invited to join and you create content for them to engage with. Here, you can highlight their stories, set up situations where they can interact with and get to know one another, and overall create a warm environment where they feel a sense of belonging. Eventually, you’re aiming to get to a point where the members are the ones contributing most of the content and activity.
You can define different kinds of engagement: most engagement, most posts, most posts with highest engagement, etc., and reward the group members with the highest points in each category. This creates a strong sense of community and belonging.
The Next Generation of Loyalty Programs
Loyalty programs have existed for a very long time, and they have almost always been transaction-based. But in our rapidly changing, highly competitive environment, where consumers have all the choice the world, this kind of loyalty program won’t continue to fare well.
Engagement-based loyalty helps your customers establish loyalty for free, long before they even have to make a purchase.
Want to learn more about loyalty? Read our Definitive Guide to Customer Loyalty here!