How To Turn Customer Loyalty Into A Recurring Revenue Channel
Many brands have successfully built up a loyal customer base but often lack the knowledge and processes to fully capitalize on that community and transform it into a recurring revenue channel. This missed opportunity means they are leaving potential earnings on the table and failing to realize the mutual value that can be derived from implementing a few key strategies.
As the CEO and founder of Moast, an interactive testimonial platform that specializes in helping brands leverage and maximize their customer loyalty as a revenue channel, I have witnessed firsthand the transformative impact that three key strategies—referral programs, loyalty programs, and digital word-of-mouth strategies—can have on a brand's revenue-producing capabilities.
In this article, we will dive deep into these strategies, providing valuable insights, practical tips, and examples of how other successful brands have effectively turned their loyal customer base into a recurring source of revenue. By initiating these strategies, brands can unlock their dedicated communities' full potential and create more happy customers while fostering mutual growth and long-term success.
What Is Customer Loyalty? And When Have You Achieved It?
At its roots, customer loyalty is an ongoing relationship between you and your customers based on their willingness to actively engage, support, and purchase from your brand. In essence, your customers' loyalty is a byproduct of their positive experience with your brand. When customers have a positive encounter with your products, services, and the overall brand experience, it nurtures a sense of trust and satisfaction. This connection can translate into behaviors that benefit your business.
For example, loyal customers are more likely to interact with your brand across multiple channels, such as social media, email, or in-person events. In doing so, they advocate for your brand by recommending it to their friends and family. Moreover, loyal customers tend to make repeat purchases, creating a consistent source of revenue for your business.
Customer Loyalty Programs
Loyalty programs have proven incredibly effective in cultivating and leveraging a solid community for recurring revenue. According to a survey by LendingTree, a staggering 80% of American consumers are members of at least one loyalty program. In line with this, research from McKinsey reveals that loyalty programs significantly impact consumer behavior, leading to increased spending on a brand and higher purchase frequency.
In creating an effective loyalty program, offering benefits and perks exclusive to rprogram members is important. Here are some recommendations for perks to offer your repeat customers:
- Discount codes and coupons
- Freebies and promotional products
- Early access to new products being released
- Personalized recommendations based on purchase history
- Point collection system
- Free shipping on purchases
- Birthday and special event rewards
By providing tangible value to existing customers, you incentivize their continued engagement and reward their loyalty.
Be Customer Oriented
I also recommended focusing on the overall customer experience and personalizing whenever possible. Tailoring rewards and communications to individual preferences and behaviors leads to more genuine customer relationships and helps to cultivate deeper connections and the sense of appreciation that customers feel.
Some examples of this might be targeted recommendations based on customer data like purchase history or personalized messages acknowledging significant milestones and special occasions. Using social media platforms to your advantage, promoting the program benefits, sharing success stories, and building a sense of community can go a long way toward increasing sign-ups and active participation. Simplicity is another thing to keep in mind. Customers should be able to understand and join the loyalty program without hassle.
One brand that has excelled in building customer loyalty and driving revenue through its rewards program is Stix, a sexual health and wellness brand. Stix has successfully aligned its loyalty program, "The Group Chat," with its mission to destigmatize sexual wellness and provide judgment-free access to health products. Creating a friendly and conversational blog and program makes customers feel comfortable and engaged. The program offers discounts, free shipping, and limited-edition products, further incentivizing customers to participate and become loyal advocates.
Referral Programs
A referral program is a word-of-mouth marketing strategy that encourages existing customers to share their positive experiences with a brand with friends and family. A survey released by XMInstitute showed that 94% of customers will recommend companies to friends, family, and others when they deem the service very good. Therefore, a strong referral program can lead to plenty of new customers for your brand.
Here are some steps to consider when it comes to building your own referral program:
- Set clear goals: What is your aim to achieve from this program? Is it a certain number of leads, conversions, or revenue? Start by writing down key KPIs and goals to work towards.
- Figure out the rewards: Why should your customers refer your brand and its products to their friends? Besides your awesome customer service, what can customers gain by getting their friend to purchase a kayak, hairbrush, or other product you’re offering?
- Keep it simple and personalized: Create an eye-catching landing page that grabs attention and gets prospective customers interested and existing customers engaged.
- Get the word out: If you’ve gone through all the work putting your program together, then make sure to put it out there and share it across socials, email, and other channels.
Sock Fancy is a leading example of a successful referral program that has kept customers returning for more. Their program allows customers to share a referral code, granting their friends a 15% discount and gifting the referrer a free pair of socks. With this straightforward and effective referral system, Sock Fancy has tapped into the power of word-of-mouth marketing and strengthened its connection with its customer base.
Customer Feedback and Digital Word Of Mouth
Like a referral program and its use of word-of-mouth marketing, digital word-of-mouth is a similarly powerful marketing strategy that leverages the internet and online conversations to get people talking about their brand and offerings.
It emphasizes customer recommendations, reviews, and testimonials through digital channels, including social media platforms, forums, blogs, and other online communities to get the word out. As a result, positive word of mouth can significantly impact consumer purchasing decisions, as people tend to trust recommendations from friends, family, and online communities more than traditional advertising.To effectively utilize digital word-of-mouth marketing, businesses must create positive customer experiences and encourage satisfied customers to share these experiences online.
A great example of this is the brand Oru Kayak, which, with the help of Moast, effectively leveraged its existing pool of loyal customers to build a community of like-minded individuals interested in kayaking and willing to share their experiences with the product online and with other prospective customers. They set up a program that onboarded existing customers as Hosts, adding them to an interactive map where prospective customers could reach out and ask questions or arrange a meetup to view the products while speaking with someone who genuinely knows and cares for the brand.
Stay Ahead Of The Curve
For more on turning brand loyalty into recurring revenue, subscribe to The RevOps Team newsletter and get the latest trends in marketing, sales, and customer experience straight to your inbox.
In the meantime, let us know your thoughts or tips on building loyalty with customers and turning it into a revenue producing machine by commenting below or on socials!