We’ve found that merchants spend a significant portion of their budget on (expensive) customer acquisition. eMarketing is now at a point where, if you have a large enough budget, you can get customers to visit your site and purchase. Most merchants have a strategy for getting customer attention on their website. But surprisingly they don’t have an effective strategy for making these new potential customers into loyal customers who will make repeat purchases and refer new business.
Here we’ll show you how to take a new visitor and turn them into a frequent purchaser and source of new customers.
First, let’s determine what our customer process is, and rank customers in each stage according to how valuable they are to us. Once we do this, we can observe our customers as a funnel from least to most valuable over a lifetime:
Visits the site once
Visits the site often - but doesn't buy
Makes one purchase
Makes one purchase, considering second purchase in the future
Makes multiple purchases
Makes multiple purchases and refers other customers
Now that we are able to rank the value of a customer, our goal should be to take a customer from the top of the funnel to the bottom of the funnel. How do we do this?
By giving an exceptional reward for their first interaction, you can significantly increase the probability of a second purchase.
By immediately giving your customers a reward that they perceive as exceptionally valuable, you are increasing the likelihood of a customer moving from Stages #1-4 to Stages #5+, and are therefore increase the value of that customer. This may seem trivial at first, but this simplicity sometimes gets lost in a loyalty program’s initial planning phases.
Here are some examples of how you can create an exceptional initial reward and increase the value of your customers:
Reward for sign-ups
How much would you pay to develop your email list? How much is a gold lead worth to you? By acquiring customer information you gain some powerful remarketing options. An anonymous guest user is nowhere close to the value of a customer with an account - even if neither have purchased. So capturing this information is extremely important. You can reward for sign-ups with Sweet Tooth by creating a customer behavior earning rule that gives customers points when they sign-up to the store. Make sure your visitors know about this rule by actively promoting it somewhere prominent on your website so every new visitor sees it. Make it a flashy with a great call to action and watch your customer accounts skyrocket.
Multiply the amount of points for the first purchase
You can advertise to your new vistors a 10X bonus points for their first purchase at the store. Your customers perceive that they are being exceptionally rewarded for their first purchase. While these kind of multiplier campaigns are usually used to promote the initial purchase, they can also give customers interest in making the second purchase - in order to spend their newly acquired points balance. Make sure that you give them something that they can almost purchase with their new points. With Sweet Tooth, you’ll need to set up two rules to do this. First, set up your base rewarding rule. This will be the rule that every customer gets every time they purchase. Then create an Earning Rule that earns 9X the regular points amount (this is the bonus), make sure you set the maximum customer uses to "1" to reward only the first purchase. Now your customers will earn 10X points on their first order and 1X points on every subsequent order, and feel exceptionally rewarded.
Show a dollar amount value for the first purchase
Your new visitors might not the value of points. One technique we've seen many stores using is to actually display a dollar value of the points being earned on first transactions. This might look like "Earn $20 in store reward dollars when you make your first purchase". You can accomplish this with Sweet Tooth by creating an earning rule, then modifying the design templates to display monetary currency instead of points. Alternatively (and less expensively), you can just advertise the dollar value of the credit they are going to receive. Either way, if you effectively communicate the value to your new visitors, you will see an increase in purchases.
Try rewarding for the first AND second purchase more
Instead of just exceptionally rewarding customers for their first purchase, why not reward them more for their second purchase as well? That might be just enough to get the customer in the habit of buying at your store. In fact, you can set up a tiered earning system so that your more regular customers, who already love your store, aren’t taking too much away from your margin. With Sweet Tooth, this type of campaign can be configured by creating Earning Rules and setting the maximum customer uses to "2", then “3”, etc. Note: don’t just set up linear points earning rules and forget about your loyalty program - make sure that you keep things interesting by having special points promotion weekends, and double points items, for example.
Decrease the spending points cost for the first purchase
Once we have customers purchasing multiple times, we need a boost in customer experience in order to get them to our #5 position. To do this, we will give them a full customer experience - one that includes spending their points. Give customers 2x the discount the first time they spend their points, and ensure that the first full customer engagement (discovery>purchasing>rewarding>spending) they have is a positive, enjoyable experience. This will incentivise customers to come back to the store a second time to spend their points on another purchase. Sweet Tooth can allow for an increased first spending discount by creating a spending rule and setting the maximum customer uses to "1", similar to the way we set up the earning rules.
Ask your customers for referrals
Now that our customers have had a full experience, and are completely satisfied with our products and services, it’s time to motivate them to become the most valuabe customer: #6 (a referring customer). 75% of customers trust recommendations from their friends & family more than any other type of advertising. This means that an effective referral is the most effective type of marketing. Setting up a referral program is easy to do with Sweet Tooth. Make sure that you not only reward for a referral’s first purchase, but also for a referral simply signing up (remember what we said in “Reward for sign ups”). If you want to create a full affiliate program (where every referral purchase is rewarded), you can also do this here. Regardless of how you choose to reward referrals, they’re important. This brings us back to where we started with this article: customer acquisition. Organic growth via referrals and word of mouth are an underused tool for most eCommerce websites. If we invest in a positive & complete customer experience, we can reap the rewards of a growing customer base. Companies like Zappos are perfect examples of organic growth by turning their existing customers into promoters.
There are several other ways you can reward customers for their initial interaction. If you can think of any other creative ways, be sure to share with us by commenting below. It's clear to see that the initial interaction is an important one, and if it's handled correctly by the merchant, it can result in a long term, massively valuable customer.