Plenty of modern brands leverage consumer loyalty programs to keep their best customers coming back. But for brands looking to truly stand out in a crowded marketplace — and aiming to significantly boost their customer retention rates and, subsequently, their revenues — strategically integrating their loyalty tactics with their pricing strategies can be key. By doing so, brands can effectively achieve all of the above-mentioned goals, all while driving added customer value and elevating their profit margins.
Achieving elevated customer interactions
Want to cultivate lasting relationships with your customers? Make them feel valued at every touchpoint. This way, they won’t just buy your products, they’ll invest in a connection with your company. Achieving this isn’t just about offering discounts or running promotions. It’s about combining all the tools in your marketing toolkit to create a seamless experience for your customers.
Think about it: You’ve already got your loyalty programs, your pricing strategies and your promotions in place, each working independently to attract and retain customers. But what if you found a way to bring them all together, so they’re working in concert to achieve your business goals more effectively?
Read on to learn more about a trio of ways your brand can create a unified value proposition by blending its loyalty, pricing and promotional strategies — and simultaneously provide added value to customers, achieve added customer loyalty and spur increased business growth.
3 increasingly effective integration opportunities
Much like climbing the ladder of success, here we’ll break down this journey into three distinct levels: Tier 1, Tier 2 and Tier 3. Each tier offers its own unique benefits, with the returns escalating as your brand navigates through the three successive levels.
Tier 1: Increase loyalty program membership with pricing benefits
Start by using price-based benefits to establish and grow your brand’s loyalty programs. Offer exclusive promotions like percentage or cash discounts to loyalty members, making the value proposition clear. This can entice non-loyalty customers to sign up and lead to more frequent and larger purchases. Take inspiration from leading examples like Amazon Prime, which has successfully leveraged pricing benefits to drive substantial growth in loyalty and sales among customers.
Tier 2: Drive desired customer behaviors with added incentives
Once your brand’s loyalty programs are established, leverage added incentives to further shape customer behavior. Offer loyalty-based pricing benefits alongside traditional discounts, for example, by using points-based currencies to encourage more purchases and engagement. Learn from industries like airlines, which have mastered the art of offering rewards and special pricing for high-tier loyalty members to drive increased spending and loyalty.
Tier 3: Merge loyalty and pricing to push more personalization — and create added value
Your brand can achieve the pinnacle of loyalty/pricing integration by delivering fully personalized shopping experiences. Use loyalty program-derived data and insights (such as customer identification information, purchasing patterns and shopping preferences) in conjunction with pricing levers and promotions (such as discounts and storewide sales events) to tailor your promotions, benefits and marketing efforts to individual preferences. That can often result in significant margin improvements. Strike a balance between personalized and mass marketing strategies to keep customers engaged and to optimize for brand and customer satisfaction.
The 3 top hurdles to achieving Tier 3 success
Embarking on the journey of integrating loyalty and pricing strategies can lead to substantial benefits for your brand, but it’s not without its hurdles. As organizations strive to achieve the gold standard in this integration, they are likely to encounter several key challenges along the way. Let’s delve into the three primary challenges faced by consumer-facing businesses on this transformative journey:
1. Merging your marketing and merchandising team views
Integrating your loyalty and pricing functions requires breaking down silos between your brand’s marketing and merchandising teams. In most businesses, these disciplines traditionally operate independently, with the marketing team working from a customer-centric viewpoint and the merchandising team operating from a product-centric perspective. But for successful loyalty/pricing integration, these teams must align, integrate and connect closely, ideally with the help of executive-level guidance.
This integration entails a fundamental shift in mindset from traditional, brand-driven approaches to the teams’ work to a more personalized, customer-focused way of working. Establishing a unified tool set — with a single mechanism in place for planning, reporting and educating the teams on how the loyalty and pricing levers will work in conjunction — is crucial to bridge organizational gaps and develop a cohesive, holistic strategy.
2. Improving your decision-making via advanced analytical and technical capabilities
Many brands lack the analytical models and tools needed to observe the impacts of loyalty/pricing integration, posing a significant challenge to unlocking the strategy’s full potential. Establishing a robust data foundation is the first step, which typically necessitates a deep dive into legacy data systems, along with the addition and maintenance of new metrics and attributes — such as elasticity-based propensity scores — to gauge success within the business and among customers.
This should be followed by rigorous quality assurance to ensure data accuracy. Next, complex models are needed to deliver critical insights such as determining the next best action for customers and understanding their promotional sensitivity. Integration of these models into operational processes often requires sophisticated tools to manage and deliver personalized content and offers.
3. Ensuring clarity and simplicity for customers
Perhaps the biggest challenge of loyalty and pricing integration lies in creating a seamless, easy-to-understand and personalized experience for customers. By leveraging advanced decisioning capabilities — typically incorporated as part of an automated marketing technology system — your brand can prioritize and distribute appropriate touchpoints, ensuring a coherent customer journey. Your business must aim to provide the right tailored experiences to customers at the right moments and avoid overwhelming them with disconnected touchpoints. And if that is done well, the customer may never realize his or her customer journey differs from those of other customers.
Brandon is here to help you boost brand loyalty — and raise your revenues
The fully integrated marketing team at Brandon can cover all of your brand’s marketing needs … all in one place. That includes implementing business-boosting loyalty programs to effectively evaluate your brand’s value proposition and setting product prices that maximize revenues while minimizing consumer cost concerns. To get started with help ranging from a simple website analysis to a comprehensive strategy tailored to boost the performance of all your marketing campaigns, contact us today.