Are You Wasting Your Time Investing in the Wrong Type of Customer?

February 14, 2019 Tim Peckover

No matter what you sell, the success of your brand depends on the customers who deliver the most value. These valuable customers are the ones who have made more than one purchase at your store with a registered account. If you run a rewards program, these customers are your program members.

While it might be hard to imagine how valuable a single rewards program member can be, they are actually crucial to the long-term success of your business. A single rewards program member is worth ten one-time shoppers, making it more valuable for you to focus on retaining your existing customers than acquiring new ones.

Don’t believe me? Let’s break it down.

Registered accounts actually care about your brand

The most important characteristic every customer in your brand community shares is a passionate love for your brand. This emotional connection is what motivates them to want to join your community in the first place, and is evident in how they engage with your community over time. Through the process of joining, they visibly align themselves with the vision and values your community represents and make a commitment to choosing your brand over others.

Program members are dedicated to your brand. One-time shoppers are dedicated to finding deals.

This type of dedication is the furthest thing from the minds of customers who check out as guests. One time shoppers can often be attracted to your brand by discounts or other promotions, but bargain hunters are there for a quick, singular purchase at the lowest price possible. If you ever want them to shop again, you’ll need to offer even more aggressive sales in the future. While this is great for those shoppers, it’s terribly expensive and unsustainable for your business.  

Members are interested in emotional relationships that stand the test of time

This mindset, then, is what separates valueless customers from your emotionally invested program members. As committed members of your community, they’re interested in more than what you’re selling and how much it costs which means they won’t be easily swayed by a competitor’s promotions. Each program member’s alignment with the values and vision of your brand community motivates them to come back and make purchases again and again, making them infinitely more valuable than even 10 discount-focused guests.

Repeat customers multiply value beyond the initial purchase

Customer lifetime value is a great metric to help you gauge the strength of your brand community. The key to having an out-of-this-world customer lifetime value is focusing on the customers that drive the most value to your business. A small but dedicated group of high-value customers can offset any low-value ones you might have, multiplying your efforts into long term, scalable revenue.

Since up to 2/3 of your brand's profits are connected to customer engagement, focusing on your most engaged customers is the clearest path to success. The best part is, your program members are already primed to multiply value by engaging in valuable actions!

Rewards members spend at least 13% more per order.

Whether it’s by earning points and subsequent rewards for leaving product reviews, engaging with you on social, or making purchases, each action your members engage in drives value back to your business. So even though they only make up around 8% of your customers, repeat shoppers contribute over 40% your revenue. Talk about value!

Repeat customers spend up to 7 times more than one-time shoppers.

Customers that don’t belong to your program have removed themselves from the value multiplying equation. As guests, the only possible value they can give to your brand exists in a single transaction. With no motivation to do anything else, it’s easy to see why spending your resources on chasing them isn’t the best business decision.

As committed members of your brand community, your program members are continuously motivated to drive value through a variety of engagement actions. With each interaction and additional purchase, they deepen their connection with your community and are able to turn a single purchase into a powerful multiplier.  

Every registered customer can become a brand advocate

Even though retention is key, you still need new customers for your business to thrive and grow. As a result, your success relies largely on people hearing about your brand and coming to take part in what your community has to offer.

Since people are 4 times more likely to make a purchase when they’ve been referred by a friend, giving your customers the opportunity to share the value of your brand has a huge impact. This is one of the biggest benefits of running a rewards program. By offering your members a reward for sharing your community with friends, every single member can be easily motivated to share your brand with everyone they know.

Through your referral program, members are incentivized to invite their friends to check out your brand and make a purchase, often with an offer for new customers attached to it. When a friend’s purchase is complete, the sender of the referral gets the joy of having shared the value of the community with a friend, but they might also receive a reward of their own in return.  

A referral is the most trusted form of marketing, but guests won’t be motivated to make one.

Without joining your referral program, guest checkouts don’t have the same opportunity to both share and earn the value a successful referral promises. Without that motivation to share, they won’t cross over from being mere customers to becoming advocates that are passionate about sharing your brand as often as possible.

The power of reciprocity gives your program members the encouragement they need to refer their friends to your community. With the promise of receiving value themselves, every program member is empowered to become a brand advocate that expands your brand’s marketing reach and lowers your acquisition costs. When you compare this to the lack of sharing potential from guests, it’s clear that your program members are exponentially more capable of growing your brand community and, as a result, are much more valuable.

One-time shoppers place an order — repeat customers build your community

The customers that deliver the most value to your business are going to be the driving force behind your success. That means your focus needs to be on customer retention rather than acquisition, and thankfully your rewards program members are the primary drivers of the value you need.

Not only do members deliver value in the ways that they care, engage with, and advocate for your brand, but everything they do works towards building your brand community. That community is what enables your long term success, making motivation to join it (and not one-off purchases) paramount to your sustainable growth.

Ready to shift your focus to retention?
Use rewards to multiply the value of every customer!

Previous Article
Introducing Nudges: Boost Rewards Program Engagement in the Moments That Matter
Introducing Nudges: Boost Rewards Program Engagement in the Moments That Matter

An effective rewards program relies on your customers staying engaged. Nudges allow you to prompt engagemen...

Next Article
Why Domino's Points for Pies Promotion is a Brilliant Idea
Why Domino's Points for Pies Promotion is a Brilliant Idea

Domino's Points for Pies promotion offers customers rewards for eating pizza, even if it's not from Domino'...


Join 30,000+ entrepreneurs already ahead of the game

Welcome to the Smile community ✨
Error - something went wrong!