Customers breathe life into your brand's story. They talk about, recommend, and review your products, thereby keeping you relevant in the market. In the digital era, customers drive the marketing campaigns. With the wide availability of data, customer engagement and loyalty are tangible assets. You can calculate the engagement score, reviews, and feedback your brand receives. The centrality of customer engagement urges brands to get creative with loyalty and reward programs. Consequently, brands are taking a relook at the metrics calculating the brand's lifetime value (LTV).
What is the lifetime value (LTV)?
When customers are a vital asset, acquiring new customers takes time and money. Customer acquisition is important while expanding your brand's presence. It is also important to retain your buyers. Your customers are spoilt for options, most offered by your competitors. Throughout their lifetime, your customers will be making buying decisions. But will they always engage with your brand? The lifetime value of your brand is the average revenue a customer brings in through a purchase, spread over a lifetime. The index is calculated after deducting the cost of acquiring, retaining, and engaging with that customer. Keeping the technicalities aside, increasing the LTV of your brand is essential for maximizing profits and growth.
The era of D2C brands and personalization of the customer experience
Personalization is the hallmark for successful D2C brands. Rewards and customer loyalty for D2C brands come from the business model. D2C brands sell goods directly to the customers, eliminating the distribution channels and retail outlets. So the responsibility of understanding and connecting with the customers lies entirely with the brand. It is counterintuitive, but D2C brands are like mom-and-pop stores, and they thrive on building community and personal relationships. D2C brands need to keep the humane touch alive in the world of bots.
In the digital era, D2C brands have a unique advantage. Bypassing mediators, D2C brands can control and leverage customer data. Despite the growth of eCommerce, many start-ups follow a D2C or hybrid model. Also, many D2C brands have a niche customer profile. Using customer data can be a competitive advantage for D2C brands.
‘Loyalty program’ is the buzzword. But do loyalty programs help D2C brands grow?
People may forget your taglines and advertisements. They may discount your legacy. But they will always remember how your brand treated them. Treating every customer as a VIP is important for your survival in the market. If you want to grow and maximize profits, you need to give something back to your customers. After all, you want your customers to remember your brand each time they purchase.
Lifetime is a long time. So you need to get creative to increase the lifetime value of your brand. Studies show that loyalty programs can contribute to as much as 20% of a company's profits. 84% of consumers say they're more likely to stick with a brand that offers a loyalty program.
What does a successful loyalty management program look like?
There is no doubt that loyalty programs work. But they can do wonders to increase the lifetime value of D2C brands only when done well. Coupons and reward points are the most commonly used loyalty programs. But in the digital era, you know what interests your customers. Brands can use this information to keep their customers engaged throughout their lifetime.
There are many ways to retain your customers and incentivize them. Below are the few points that can increase the lifetime value of your brand:
- Word of mouth: For D2C brands, customer feedback is the most important promotional campaign. A loyal customer will not just stick with your brand but actively sponsor it.
- Social selling: Today, customers look for value addition. They want to be recognized as individuals. Infusing the human element is the best way to ensure brand recall. Listen to what your customers want from you before building a loyalty program. Offer solutions to their pain points by looking at customer reviews and feedback.
- Talk to your customers: Small things like a thank-you email can go a long way in building relationships.
- Discounts and sales: Who doesn't like a good deal?
- Product quality and customer service experience: Best marketing campaigns and loyalty programs cannot compensate for poor product quality. In D2C marketing, the brand is responsible for pre-sales, sales, and after-sales. So a smooth customer journey determines brand value. You do not have the middlemen to take the blame or responsibility.
Are you forgetting or ignoring re-engagement?
Customer engagement is not a one-time activity. Brands often forget customer re-engagement. In the zest to grow the business, brands tend to acquire new customers. Study shows that a 5% increase in customer retention can increase profit by 25% to 95%.
CRM is no longer a cost but an investment. When done right, it can give you back in abundance.