Loyalty Blogs

Is Audience Segmentation The Key To Building Successful Loyalty Program?

  • Posted on April 8, 2022 by natalia
  • Reading time about 5 minutes

Every customer is different; each has individual needs and interests. Offering them the services & experiences as individuals will not just help your marketing efforts but also boost customer loyalty to your business. Though it is not possible to address customers purely one-on-one, user segmentation can help to create customer groups with similar likes & interests, which is beneficial to tailor your communications & engage repeat customers in different groups.

Building a loyalty program that provides the same experience for everyone doesn’t provide value for anyone & makes you lose customers in long run. In this blog, we will discuss how to build a well-planned and segmented customer loyalty platform that helps your business meet specific customers’ needs and expectations.

Reasons why Most Loyalty Programs Fail

One of the top reasons why the majority of loyalty programs fail is customers are treated equally by the brands. Another reason is no timely update or development of loyalty programs without proper planning of budget and strategy. Engaging customers differently is not the only solution; your business must focus on rewarding them as per their preferences. Just like one size doesn’t fit all, a single approach for your loyalty program is not enough to make it successful.

The market is full of brands offering similar services and loyalty experiences, customers have lots of brand options available. Your loyalty program must be built in such a way that you create a unique customer experience that differentiates you from competitors. One way is to build a customer-centric loyalty program and focus more on customers who have the potential to be, the most profitable to your brand.

Advanced Audience Segmentation- An Effective Way to Make Your Loyalty Program a Success

To identify your customers, the best metric is the customer lifetime value (CLTV) which helps in finding out the recency and frequency of customer engagements to figure out who spends more and who is new to the brand. This data can be achieved through customer segmentation. Though there is no exact number of segmented groups that your program can have, it is always advisable to build the program in such a way that it supports varied experiences for each segment.

One of the most common approaches is to build VIP tiers that correspond to and target each group of customers based on their CLTV data. The top group will have the most loyal customers that engage frequently with your brand even if you don’t do much. The next one has the customers with the most potential or has bigger/higher infrequent purchases. The last one will be the low-potential customers who may be loyal to another competitor, has a lower need for your services, or the occasional buyers.

With the increase in the adoption of loyalty programs in the retail sector growing by 70% as per the research by Gartner, building retail loyalty programs that create seamless and emotion-centered experiences is becoming the need of the hour. To succeed in the loyalty program, we can make use of advanced real-time audience segmentation that is aligned with the tiered program. Customer data can be put into action to extract insights and launch loyalty program offers.

How Tiered Loyalty Program Helps to Target Segmented Customers More Effectively?

tiered loyalty program is a great option to build an emotional connection for all customer types as it helps to encourage them to spend more and unlock valuable rewards or offers. This type of program focuses on driving next-level incentives & exclusive benefits, which help to prevent customers from switching to your competitors.

Knowing your customer traits can help in better customer segmentation. Some of the common aspects are demographics, location, behavior, and other related data associated with your customers. However, if you focus on knowing the characteristics of the segmented audience, you can drive more personalized customer experiences for better satisfaction ratings.

Steps to be considered for the advanced segmentation of customers-

  • Identify customer segments based on their behavior of purchase
  • Monitor each segment to find which group to prioritize
  • Provide exclusive offers to your top spender’s category
  • Come up with new strategies to target at-risk customers
  • Plan personalized campaigns for each customer groups

Ensure that your customer data are well organized to offer personalized rewards, discounts, or benefits like early access to new products, surprise gifts, etc. rewarding them as per their behavior or buying patterns will make them feel valued and help in boosting retention rate.

Final Thoughts

Hopefully, we know the importance of loyal customers for your business growth. Research says only 20% of your loyal customers have to potential to make up to 80% of your business profits. It doesn’t mean you must focus only on 20% of your total customer database; the key is to understand which customers are valuable and how you must retain them for a longer time. Keeping the focus on the right loyalty program strategy, make use of the segmented customers approach with tiers, and help your business grow by reducing customer churn and increasing retention to a huge extent.

Interested to know more about how to build a robust loyalty program management system with segmented audiences? Connect with our expert app developers of Novus Loyalty and unlock immense benefits by building a customer-centric, unique & personalized loyalty program.

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