When high-growth ecommerce companies shift from transactional short-term relationships to building long-term emotional relationships, they see dramatic business results.
Powered by Shopify Plus and Smile’s reward programs …
- inkbox increased repeat purchases by 80% in one month
- Evy’s Tree lifted their customer retention rate by 58% while reducing monthly ad spend +$1K
- Baby Tula’s 85,500 members earned 4.21 million points with a 24% redemption rate during the program’s first 30 days
Whether your business exists online or offline, there are two types of customer relationships: transactional and emotional.
Transactional relationships describe customers who care more about price and speed of delivery than the actual shopping experience.
Emotional relationships, on the other hand, grow out of a customer experience that establishes a deeper connection between the brand and the customer. These emotional relationships create the depth and loyalty that serve as the foundation for all profitable, sustainable businesses.
In this article, we’ll explore how to make transactional customer relationships deeper and more emotional through three actionable steps …
- Implement a Points Programs to Incentivize Actions
- Grow Your Customer Base Through Referral Programs
- Improve Customer Retention Through VIP Programs
Keep reading to dig into the steps …
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1. Implement a Points Programs to Incentivize Customer Actions
Points programs are by far the most popular type of program and work by incentivizing and rewarding customer actions. Since you can reward customers for virtually any micro-action (such as product reviews or social sharing), points programs make it easy for you to include customers in every piece of your brand experience.
The key to building customer relationships that last is focusing on the emotional side of commerce. Building emotional relationships with customers will prompt them to look for more opportunities to engage with your brand. This could be something as simple as filling out a product review, referring your brand to a friend, or following your store on social media.
For inkbox, a Shopify Plus merchant who inspired a worldwide obsession with temporary tattoos, this meant intentionally targeting the way their customers thought about and related to their brand.
After launching, they focused heavily on customer acquisition. However, even though this helped increase brand awareness and familiarity, it didn’t do very much to create a committed, profitable customer base.
With a desire to move away from one-off conversions, inkbox started to focus on retaining the steady customer traffic they had acquired through inkfam:
By targeting the most immediate opportunity post-purchase — namely, connecting with the brand and sharing about them on social …
inkbox was able to increase their repeat purchase rate by 80% in one month.
Their customer retention strategy not only maximized the value of each customer but also built lasting emotional relationships in the process.
Given the highly relational nature of their product, Baby Tula, places the “Collector’s Club” front and center through a chat-like CTA box across their site:
“We added Smile,” says Baby Tula’s Marketing Manager Jessica Carlson, “because it was an all-in-one solution with VIP, loyalty, and referrals. We initially wanted a referral program to increase referrals; however, the VIP program is great for customers to share branding of our Collector’s Club.”
In fact, Collector’s Club is Baby Tula’s first rewards program. In one month, its 85,500 program members have earned 4.21 million points and redeemed 1,084 rewards at a 24% redemption rate.
By positioning your points as having significant value, customers will be motivated to earn and spend them quickly so as not to miss out. The trick to keeping this perceived value high is making sure that customers always have points to spend.
Rewarding them for creating an account and celebrating a birthday are two highly effective ways to not only keep their account balances up but also deepen that emotional connection. Who doesn’t love receiving a gift from a friend on their birthday?
These strategies, combined with promotional marketing events like bonus points days and new rewards, will help establish heightened value with your brand, bringing customers back to your store more often and, as a result, further into an emotional relationship with you.
2. Grow Your Customer Base Through Referral Programs
In an industry driven by aggressive price competition and increasing noise from ads, prospective shoppers are looking for voices they can trust, and getting your best customers to refer your store can have the same impact in their social circles as a celebrity endorsement.
This is the result of a phenomenon known as “social proof.” When we see others behaving in a certain way, we begin to act in a similar way because we prefer to do things that have already been done or have already worked in the past.
With a referral program, you can drive acquisition by incentivizing existing customers to share your brand with others, creating a social precedent that encourages other customers to share and engage with your brand.
Since 84% of shoppers trust recommendations from people they know, your existing customer base becomes your best and most trustworthy advocates.
You can make a referral program even more successful by optimizing it for a new customer. That means that the incentive for shopping with you should be at least as good as the incentive for your existing customer.
Evy’s Tree has done an incredible job of this with their Who’s Hoo Rewards & Referrals program.
By offering existing customers 1,000 Who’s Hoo Rewards Points (a $10 value) and new customers 10% off, they’ve made each successful referral highly valuable for both sides.
Combined with the other benefits of joining, Who’s Hoo Rewards has increased customer retention 58%.
On top of that, empowering their existing customers to do their marketing for them has saved them over $1,000 a month in ad spend, allowing them to focus on growing their business instead of paying for traffic.
“We use [Shopify Scripts] to offer a variety of discounts and to repackage our pricing and merchandise,” says Samantha Donohue, the IT expert at Evy’s Tree. However, they don’t use these discounts simply to convert but to build emotional connections with customers. “Being able to offer different discounts allows us to pinpoint emotional triggers that lead to more sales.”
No matter where you choose to promote referrals, don’t treat your program like an add-on. Building it into your existing rewards and marketing structure will help establish its value and get more of your customers excited to take advantage of it.
3. Improve Customer Retention Through VIP Programs
The final type of program we’re going to talk about is VIP programs. With VIP tiers, you are encouraging repeat purchases through gamification. Customers are motivated by the pursuit of higher status and increasing rewards. Your customers will even start to brag about how much they have spent.
As customers move up through your program, you have the chance to offer more experiential or emotional rewards such as invitations to special events, early access to new products, and choose your own sale days.
These mark a clear departure from transactional relationships as the emphasis is placed on how customers feel about earning each of these rewards.
Similarly, the status associated with moving through your program creates an extremely high switching cost. The strong sense of community and brand identity they unlock can’t be bought anywhere else, and as customers begin to see themselves as part of a larger group they like identifying with they’ll be more likely to fully commit to your brand.
Mpix is a fabulous example of what it means to build a VIP program for your best customers. The home decor and photography brand is committed to helping their customers preserve life’s greatest moments, and they strive to create more of those with their three-tiered Mpix Rewards program.
As customers move up through the Silver, Gold, and Platinum levels, they’re treated to more points per dollar spent which can then be immediately invested in their next photo keepsake. This cycle helps establish repeat purchase behaviors while also allowing customers to invest their rewards into the products they already know and love.
However, where Mpix’s VIP program truly excels is the community it’s built for their brand. With a thriving Instagram presence, Mpix knew that their rewards program could help push this sense of inclusivity even further.
Offering points for following and sharing their beautiful brand on social media has led to an …
Incredible 70% increase in Instagram followers and 11% increase in Facebook likes.
Clearly, Mpix customers are excited to join this growing community and stay engaged over time, promising exciting things for the Mpix brand in the future.
The Power of Emotional Relationships for Repeat Purchases and Retention
The reality is that most of today’s brands are built on transactional relationships, but that is not sustainable. Focusing only on acquisition will stagnate your business, keeping it from growing into a profitable enterprise.
What dictates how successful your brand’s empire can become is the depth of the emotional relationships you develop with your customers. If you want customers to stick with you, refer you new business, and stay excited about your brand, you need to seriously consider how they feel about your store and the customer experience you’re offering.
As you scale and expand your business, it’s increasingly important to focus on loyalty, retention, and a sense of community, Rewards, referrals, and VIP tiers help you get there.
About the Author
Stuart is a Senior Rewards Specialist at Smile.io, helping enterprise retailers get the most out of their customers. With experience in virtually every industry, he has helped build rewards strategies for some of ecommerce's biggest brands and continues to find new ways to make every customer smile.
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