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General Loyalty Guide: All Industries
December 14, 2022
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With 2000+ customers in 70 countries and over $1B worth of points processed, we've gained insight into world-class retention strategies and what it means to create strong and sustainable brand loyalty.
While you build your program, our team is equipped with loyalty experts to ensure you have an exceptional program set up to scale. You can always book a time here to speak with one of our experts about your strategy or get any questions answered. Enjoy the guide, and happy Gameballing!
Understanding your metrics before setting up a retention strategy is crucial to the success of your program and business growth. There are two sets of metrics that you should prepare: pre-program metrics to help set up a well-performing program and performance metrics to understand how your program is performing. Check Gameball's webinar on business metrics.
Let's get both sets of metrics set up:
When crafting your loyalty program, it is important to know certain metrics so you know exactly what rewards you should be offering and can ensure a profitable program.
Your profit margin is a great indicator of profitability in your business which can also be used to determine how much cashback you should offer to your clients. Keeping your net profit margin in mind can help set a benchmark for how much cashback you want to offer your customers.
For example, if your net profit margin is between 1-10%, the cashback value shouldn't be high (usually 1-3%); if the net profit margin is between 11%-20%, the Cashback value could be between 3%-5%.
Important Note: this varies across product margins and industries, so keep in mind this is a general suggestion.
When creating challenges, deciding level amounts, and deciding on new rewards to implement in your program, your AOV is an extremely helpful indicator in setting up your program. For example, if you wanted to know how to advance customers through each level, you could set the threshold based on 2x AOV, 3x AOV, and 5x AOV.
Since this average basket size metric focuses solely on the number of products a customer buys in a single transaction, this will be very useful for deciding on specific challenges and pushing an increase in ABS.
For example, if you wanted to increase your ABS from 2.4 to 5, you may create a challenge that awards points to a customer who buys 5 or more t-shirts from a specific collection.
Use this purchase rate to understand typical purchasing behavior and to decide the increment of purchases you will reward in. Purchasing frequency can also help you set a goal of what you want that number to look like, giving you a solid number to work with when crafting rewards.
You're all set! Now that you have these metrics ready to go, you can start crafting your program. As you go through each segment of setting up your program, utilize these metrics to help you make sure that you are providing the right amount of rewards that are engaging for your customer's typical behaviors. As you get set up, use our Rewards Strategy Template to assist you in crafting the perfect program.
This is a very important yet sometimes daunting metric to calculate. However, your LTV:CAC ratio is crucial to understanding your business' performance, as it is the amount of profit your company can expect from a customer for the time the person remains a customer. This can also allow you to determine which customer segments are more and less profitable and craft specific retention strategies for each segment.
Follow these steps to get your metric:
Total Marketing Spend (All Costs Spent on Acquiring more customers) / Number of Customers Acquired (on an annual basis)
Typically, broad retail CAC is 10%
The typical benchmark for LTV: CAC is 3:1. This means that each customer is generating 3 times the value that it costs to obtain them. If your LTV: CAC is below this, you will reach a point of losing profit per customer. If your LTV: CAC is much higher than this, you may not be leveraging your marketing spend enough and may be leaving growth on the table.
Where do I find this? We've got you covered! On the Gameball homepage, you can see revenue generated, in total, and by each program. This gives you a clear picture of Gameball-generated revenue and insight into which programs are performing well and the areas where some adjustments need to be made. In this blog post, you can better understand the revenue metrics on the Gameball homepage.
Note the starting number and track the 6-12 months after launching Gameball to see the improvement. If you find that the repeat customer rate has not improved, you may need to adjust your program to make it easier for customers to redeem points or more engaging challenges based on their shopping behavior. If you'd like some extra help with this from our team of loyalty experts, you can always book a consultation call here!
This metric determines the rate at which your customers redeem their earned points. The average redemption rate of loyalty programs is approximately 13-15%. If this is much below this, you need to adjust your challenges and earning rules to ensure that it's not too hard to earn a reward and that challenges are engaging enough.
Constructing a new Loyalty program could be confusing, especially if you want to include different loyalty elements and programs all under one umbrella. The best way to think when you're creating a loyalty plan is to define your business objectives and then choose and design your sub-loyalty programs based on how well they would serve these objectives.
In this section, we'll cover some common goals and how you can use Gameball to accomplish them.
Customer acquisition is gaining a new customer by completing their first purchase from a product or service you offer.
Here are some strategies that will help you achieve a lower CAC and increase the conversion rates of new customers:
Utilizing the referral program will have your current customers sharing the love and inviting their friends. Give your customers a reason to refer in 3 steps:
For the referrer: the referrer should have a good incentive to get the referral done, but make sure they don't get rewarded just by sharing your link. To avoid fraud cases, reward them when their friend completes their first purchase.
For the referred friend: for the referral to be successful, the referred friend must complete their first purchase. Incentivize this action by offering a coupon reward that could be applied to their first purchase.
Make sure to clearly explain how the referral is done, when the referral is successful, and what the reward is. This makes it easy for your customers to share instantly.
For your current customer: offer them points so they can choose how they want to spend it. This will also encourage more ways to engage with your program! When deciding how many points to reward, consider how important referrals are to you and weigh this amount against your challenges. For example, if referrals are going to be the most important driver for your business, make this reward the most enticing in your entire program.
You can give a fixed amount coupon that can be applied to their next order. For example, a $15 voucher.
For new customers: offer them something they can easily understand the value of, like dollars off or a free product. This way, they know the value of what they're getting and are more likely to complete the referral. Whatever you decide to offer your new customer, ensure that it is lower than your current CAC.
The reward for the new friend should be lower than CAC, and the reward for referrer should be weighed against their other challenge offerings.
Getting your guest customers to create accounts is the first step toward a higher conversion rate. When they sign up, they access the gates of rewards and possibilities. That's why giving them an instant boost of points, and an encouraging message says how they can engage in other ways would, ultimately, convert guests into new customers.
1- A visible challenge on the widget
2- A message that tells them what they're missing out on.
The most common rewards for this type of action are:
1- percentage-based discount on the first order.
2- Fixed amount voucher
Since the Signup reward is given only once, the reward could be relatively more generous than rewards for other accomplishments.
According to data from Forrest Research, it costs five times as much to acquire new customers than it does to keep current ones (how to lower your customer acquisition costs here!).
Everyone values different things, so you want to set up your redemption arcade style where customers can have fun choosing how they want to spend their points. They may use different coupons each time, keeping them engaged and intrigued with the program.
You can let customers redeem and exchange them with any type of gift, such as:
To be able to reward proceed with points, you need to set a monetary value to one point. This will allow you to decide the point reward value for every purchase (cashback), challenge achieved, successful referral..etc.
We typically recommend that you set one point to be equivalent to 1% per 1 currency unit. Customers like to see large quantities, so you can award them many points and have them redeemed at an affordable rate.
For example, if your currency is US dollars, then 1 point should be equal to 1 cent, or in other words, 1 point is 0.01% US dollars. This applies to most other currencies.
Cashback rewards are probably one of the most used types of rewards by retailers in all industries as it's easy to understand and calculate by customers.
Cashback rewards help retailers increase store traffic, sales, and customer lifetime value (CLV). Customers like to feel that they are recognized for spending their hard-earned money, which is why cashback is the perfect way to show a new form of value to the customer and keep them coming back for more. Forbes did a study on this and found, "We just surveyed 19,000 of our users about their shopping behavior, and 82% said they prioritize special promotions, discounts or cash back when choosing where they'll shop. That's a powerful loyalty stat."
Here is a list of actions you can reward your customers for when doing:
Learn more about our email marketing integrations.
Or a direct reward: (no need to go through the redemption and exchange process)
Creating a tiered program could be tricky. You do not want the tiers to be too easy to travel through or too hard to reach. You also want to ensure that there are some good motives for players to want to level up.
Having an extremely unique and engaging top tier can drive a strong sense of achievement among your customers.
Here are some points you need answers for before you create a levels program:
When creating levels, we typically recommend anywhere between 3-5 levels, which typically have the perfect balance of ease to level up and exhilarate customers to strive for more.
If you find that customers tend to come back and are eager to achieve more, you can always create more levels.
When thinking about the difficulty, make the first two levels easy to achieve, so customers feel the sense of achievement right away, and then each new level could be harder to achieve, so they want to work towards the top.
If you want no more than 5 levels, make sure that the final level can only be reached by your most loyal customers. For example, a "VIP" level that active, engaged customers would reach.
Players could level up when they meet criteria that allow them to join the following level. For example, players can unlock and move to the second level when they have received more than 2000 points from the time they joined.
Points are not the only element that can determine the leveling-up criteria. Here are some other elements or methods that a player can collect to level up:
There are two types of rewards to offer when a player levels up:
Each level should offer a constant benefit, such as a percentage-based discount that they can always use anytime they are making a purchase. Make sure that the benefits get better with each consecutive level.
For engagement and to guarantee that the player is able to track their loyalty progress and achievement as well as the rewards they receive, notifications are essential to complete your customized loyalty experience.
A notification is a short piece of message that informs the player of a new event or progress that has just taken place.
Other Important notifications:
Unlike Push notifications, messaging is used to inform customers and incentivize specific actions like engaging with a challenge or push a cart completion.
you can create a pop-up message that tells them about the following:
Messages are often sent in multiple formats, such as pop-ups, small and big toasts, and banners. Make sure to plan a concrete messaging strategy to guarantee effective results.
Creating campaigns in times such as special occasions is a technique often used to boost sales by businesses in all industries.
Break your traditional cycles of rewards by offering special gifts during the campaign. Here are some examples:
Customer experience depends not only on deployed loyalty programs; it's the whole experience that counts.
Here is how you can enhance the whole loyalty experience:
Customer segmentation is the process of grouping your customers according to shared characteristics. If implemented right, segmentation could be the key to understanding your target audience and providing products that serve the market needs.
Go through the list of customers and pinpoint the type of lists that would benefit you to recognize and separately identify. Think of the type of player groups you would feel curious to learn more about their mass and the duration to which this group would stretch or shrink. Think also about the actions or messages you would convey to a certain segment of players if you had your fingers on.
Examples of these segments could be:
Your segments should be distinctively different and focus on the right factors. This way, you can create personalized, engaging experiences for every customer profile you have.
Segments are often used to gain insightful data on customers, but there are endless applications to use these segments on. Here are some examples:
The loyalty program you create should go well with your business theme and brand so it will look like an integral part of your whole platform.
Here are some tips you can do to create a coherent loyalty program that goes well with your platform:
There is always more to do to enhance your customer loyalty experience; the preceding recommendations are primary keys to creating a concrete and coherent loyalty program for anyone in any industry or business.
With 1500+ customers in 65 countries and over $59m worth of points processed, Gameball has gained insight into world-class retention strategies and what it means to create strong and sustainable brand loyalty.
You can always speak with one of our experts about your strategy or get any questions answered.
