Start with loyalty

Why your start-up needs repeat customers right away

By Lia Grimberg

Loyalty and customer-centricity are concepts typically applied to mature businesses, while start-ups predominantly focus on brand and growth marketing. For new businesses, customer acquisition takes precedence, leading them to allocate most of their time and resources to activities like branding, SEO, SEM, and digital advertising, all geared toward attracting a broad audience and building a prospect pipeline.

However, what if loyalty concepts and data-driven marketing were ingrained from the outset?

Leapfrogging is notably more straightforward than the arduous process of rectifying legacy systems and retrofitting processes and mindsets. The critical question to consider is whether to prioritize acquiring new customers or nurturing repeat customers. Did you know that loyal customers buy 90 per cent more frequently, spend 60 per cent more per transaction, and deliver 23 per cent more revenue and profitability than firsttime purchasers1? Increasing customer retention rates by 5 per cent can increase profits by 25-95 per cent.

Net Revenue Retention (NRR) is emerging as a pivotal metric used in determining a startup business’ potential longevity. Even though it is used primarily for subscription businesses, it should have broader applications. If repeat business and long-term revenues pique your interest, let’s begin by defining the four Rs of loyalty principles:

1. Recognition - Utilizing customer data, you must extract insights to truly understand your customers and their interactions with your business. Loyalty operators should identify their top and potential customers and invest in them accordingly.

2. Rewards - It’s essential to establish a fair exchange of value for your customers’ data. While many loyalty managers tend to associate rewards solely with cashback, points, travel perks, or merchandise, rewards can encompass anything that holds value for members, such as entertainment, access, community, time-saving features, or environmental, social, and governance initiatives.

3. Relevance - Data collection and storage can be costly endeavors for retailers to undertake. Customers are more likely to abandon a brand if they don’t receive value in return for sharing their data, whether in the form of tailored offers, relevant products, personalized communications, or an enhanced overall experience. In fact, 33 per cent of consumers are inclined to abandon a brand lacking personalization. Would you be willing to lose a third of your customers due to a lack of personalized experiences?

4. Relationship - Loyalty functions as a two-way street; customers who show loyalty expect reciprocity for the brands that they engage with. It’s about engaging in a dialogue rather than engaging in one-sided communication.

Now that we comprehend the vital loyalty principles and the advantages of establishing customer-centric systems and processes from the outset, let’s delve into the five steps to ensure your start-up is poised for success:

1. Set Your Objectives - One of the primary reasons loyalty programs fail is a misalignment among C-suite executives regarding objectives and a lack of communication about these objectives throughout the organization.

In order to ensure success, retailers will want to clearly define meaningful metrics, their prioritization, and what constitutes break-even or success for each metric.

2. Customer Strategy - Every facet of your business, including location, customer experience, merchandising, pricing, operations, and marketing, should commence with the customer in mind.

What are her needs? More importantly, how are you fulfilling these needs in a unique way? What value do you offer in exchange for her hardearned dollars, and how do you reward her loyalty? Remember, value need not solely be financial; it can encompass various forms like time savings, relevant communications, access to a community, or engaging entertainment.

3. Collect and Analyze Data - Unless you’re a small, local business owner, customer data is pivotal for scaling your understanding of customers. To meet customer expectations of personalization, establish systems and processes for: (a) collecting data at the customer level; (b) deriving insights to identify pain points and opportunities; (c) disseminating insights throughout the organization; (d) making informed data-driven decisions; and (e) personalizing and delivering relevant content and marketing.

Many businesses falter at step (b), failing to analyze the data, rendering it an expensive and underutilized resource.

4. Marketing and Loyalty Technology - Prioritize strategy before technology; don’t make the mistake of designing them in reverse order.

Loyalty and marketing technology should serve to enable users to create a unified customer view across all of their brand interactions, analyze data efficiently, manage loyalty programs more effectively, and execute highly personalized, segmented, and trigger-based marketing communications.

5. Seamless Operations - Execution is crucial for the success of loyalty programs. It hinges on factors such as integrated systems, effective communication with both staff and customers, and seamless integration into in-store operations. Develop comprehensive customer journeys across all touchpoints and rigorously test these experiences to eliminate friction and ensure flawless customer interactions.

Establishing your business with a customer-centric, data-driven, and loyalty-focused approach from the outset is significantly more straightforward than retrofitting processes, organizations, and technology later down the road. The benefits span from increased ROI to deeper customer understanding and the creation of emotional connections. While it may not be a simple endeavor, I strongly recommend engaging a knowledgeable partner or consultant who understands customer mindsets, interprets customer data, and can help implement the necessary technology to bring your vision to life.

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Lia Grimberg is the Principal of Radicle Loyalty, a personalization and loyalty consulting firm. Radicle Loyalty helps you find the root of the issue, the radicle. We analyze your data, gather insights, and use it to personalize your communications with your customers. Radicle Loyalty creates marketing strategies and designs loyalty programs to correct customer behaviour and drive emotional loyalty.

With more than 20 years in loyalty both as a practitioner and a consultant, Lia honed her loyalty and marketing skills during her corporate career at companies such as The Bay, Loblaw, LoyaltyOne, The Home Depot, and American Express.