Move over loyalty programs. Hello “covert loyalty” strategies.
The marketing landscape has changed. Is your loyalty program keeping up?
Think loyalty marketing and many people might instantly envision loyalty programmes. But in today’s tech-savvy retail world, there are countless other ways to engage and retain customers – many of which are less expensive and more efficient than traditional loyalty programs.
“Loyalty programmes were originally designed to help brands better understand their customers,” says Adam Simms, the co-founder of LoyPal, a customer-growth platform that helps brands unlock value from their existing consumer base.
“Until recently,” he continues, “many brands knew very little about who their actual customers were. For example, if someone walked into a shop off the street and made a purchase, there was little way to recognise a repeat customer.”
Loyalty programmes helped solve this problem. Plus, they helped deepen a brand’s relationship with its customers.
But the rise of e-commerce means that today’s brands have plenty of information about their online customers, says Simms. “And mechanics, such as emailing in-store customers their receipts, mean brands can identify who their customer is without requiring an overt loyalty proposition.”
As a result, Simms says that traditional loyalty programs – which can be complex, time-consuming and expensive to run – can often be replaced or supplemented with more modern “covert loyalty marketing” tactics.
What is covert loyalty marketing?
Covert loyalty marketing could also be described as “personalised” loyalty marketing, where incentives and communication (like email or SMS) are tailored to each individual customer, rather than being based on an overt loyalty program proposition.
For example, while a traditional loyalty programme might offer defined benefits to a member at a defined moment in time – such as a discount offer on the anniversary of the customer’s first purchase with the brand – covert marketing is more personalised.
“With covert marketing, the discount offer can be made at a timeframe that is most relevant to that customer’s behaviour. For example, if it’s taken longer than expected for the customer to transact with the brand.
“In other words, it’s about interacting with customers in a way that is right for them – and isn’t simply defined by whatever loyalty tier they fall into.”
Consider this example:
Let’s say Sarah shops with a large, national fashion brand, which offers a traditional tiered loyalty program. By spending $500 in six months, she qualifies for the “silver” loyalty tier, and is offered a $20 voucher at the end of the season if she spends another $100 in-store.
By comparison, if Sarah was shopping at a fashion brand with a personalised or covert loyalty strategy that same $20 voucher could be invested in a way that was most relevant to her and more likely to stimulate incremental behaviour. For example, an incentive to build basket size or a gift with purchase.
Why covert marketing is important
It’s widely accepted that investing in retaining customers is more cost-effective than constantly acquiring new ones. However, as many retail brands will confirm, it’s also becoming increasingly difficult to retain customers, too.
“Customers have more choice regarding what to purchase, when to purchase and where to buy from than ever before. So, securing loyalty is arguably more important than ever.”
“That’s why it’s so important to talk to customers in a way that’s compelling and relevant.”
In fact, studies have shown that 80 percent of consumers are more likely to buy from a brand that delivers a tailored experience, while 48 percent of customers expect specialised treatment for being a good customer.
How to get started with covert or personalised marketing
LoyPal can help brands launch a powerful and cost-efficient covert loyalty programme that unlocks more value from your existing customer base.
LoyPal has worked with fashion and beauty brands like endota spa, Assembly Label and Bared Footwear, as well as major national brands such as P&O Cruises and Sky City.
The process of launching a personalised marketing program is simple with LoyPal, and involves cleaning customer data, segmenting it, and then guiding brands on engagement tactics.
“A covert loyalty marketing approach can be used on a standalone basis, or to augment the overt value proposition with additional interactions that drive increased customer experience and incremental revenue.”