It’s always clear to marketers that CX- or Loyalty programs deliver many benefits to a brand, company or influencer, but it’s not always clear to all what the extensive list of benefits actually is, or could be, if your execution and platform are optimal. So that’s why we provide a list with all program benefits here. Let us know if you see more or have other experiences!
Customer Lifetime Value increases
Customer lifetime value is a KPI that consists from various underlying variables. The nice things is that in most programs, they all increase.
Visiting frequency increases
Contrary to what ‘loyalty’ seems to imply for the (longer) duration of the relationship, the first and most direct effect of a loyalty program, and the one that generates most revenue, usually is that the visiting frequency of the customer increases. And when customers come by more often, on average they spend significantly more, return less and file less complaints/make less use of customer service. The higher visiting frequency reinforces itself when you can add an element of routine or habit forming, with which customers ‘automatically’ choose for your product, store or brand
When you can identify customer that have a higher visiting frequency (because they are now identified members), you can also exclude them from your (online) advertising campaigns, saving some budget there as well.
How can you repeat this explosive effect?
Clearly, this is something you’d like to repeat continuously by automating the model. Starting with a one-time referral campaign, you’ll evaluate which members brought in most new (buying) customers. Variables to verify are length of the relationship (how long are they customer) or the (time after the) most recent experience they had with you. You’ll detect the optimal ‘happy moment’ at which it is best to ask members to be your advocates. You’ll set that moment as a trigger for an automated invite to ask a member to pass on your offer to their friends, peers and/or loved ones. You can differentiate per segment what this best moment is.
Then, you set an ‘Automation’ on sending the referral request through the member’s preferred channel, like email or a messenger notification. Follow-on-Automations will be set to nurture outstanding invitations with reminders or will remind inviters to follow up on them.
Impact grows when personalized offers fit the inviters profile, like a reward at a successful invite and another reward after that invitee has realized their first purchase. Or a status increase for customers that have proven to be sensitive to this type of reward promoting them to ‘True Ambassador’, ‘Connected Hero or alike (a title that supports your brand values).
When all members receive an automatic referral request at the optimal moment, this loops automatically when these friends have become a member themselves, etc. As long as the average referral rate is more than 1 (which it should be), your member base and revenue will grow explosively.
You will notice that members who successfully invited other people will change their behavior as well. To be consistent with their own invites, their spend usually rises and their loyalty grows. An interesting side-effect with direct revenue generation impact.
Valuable data for revenue generation
For all models we’ll discuss this week, we’ll point out what the most valuable data is that you can collect to accelerate revenue. The Member-get-member referral model will deliver you a unique data type which is difficult or costly to acquire through other models: relationships between people. This important data type helps to improve recommendations, creation of look-a-like audiences, social proof and profile analysis; all top revenue generating features that you would not be able to use without insight in relationships between people.
Tips & Tricks
From experience, we know there are foot holes and opportunities in setting up these types of programs. We have created a list for you to grab and use while you set up this model yourself. There are several ways to increase the chance on getting the best out of your advocates.
Get the list with valuable tips and tricks here.
VEMT’s Experience & Loyalty Cloud includes all Customer Experience (CX-) Flows as described in this article to enable you to make maximum use of the opportunities that Member-get-Member Referral programs offer revenue growth in you company. Contact us to start rapidly.