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Make customers an offer they can’t refuse

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Constantin Stanislavski, the legendary acting coach of Marlon Brando and other Hollywood stars, focused performers on one central question: What motivates your character?

Online retailers could ask the same question. What motivates consumers to buy, buy again and tell their friends? Consumer loyalty programs can play a major role in establishing a retailer and boosting their bottom line.

"Memberships, loyalty programs and purchase incentives must become an indispensable component of the customer journey."

Who joins such programs? According to the 2019 UPS Pulse of the Online Shopper study:

  • Online consumers who are members of more than five loyalty programs tend to be female (58 percent) and younger (76 percent below age 45);
  • Loyalty program aficionados spend more. In the United States, five-plus loyalty program members average $237 per purchase compared to $173 per purchase for shoppers in fewer than five loyalty programs; and
  • The more loyalty programs, the more varied the online purchases. Shoppers in five-plus programs buy in nearly seven different categories, on average, compared to five categories for shoppers in fewer programs.

Membership programs foster belonging

Consumers enjoy feeling special. A fee-based membership program can build a sense of exclusivity among consumers thanks to free or expedited shipping, free returns, discounts and exclusive offers. Memberships grow business revenues through fees, as well as consumers motivated to make purchases because of membership perks.

Sephora, for example, offers an annual membership program with free, unlimited two-day shipping for eligible purchases. Customers pay a $15 annual fee to enroll — or achieve “Rouge” status by spending $1,000 in a calendar year. This earns even faster shipping at no additional cost. Even more, memberships also deliver valuable customer data — shopping patterns and spending habits — to retailers. The information then helps categorize shoppers and personalize offers.

 For more information or to download the full 2019 UPS Pulse of the Online Shopper research report, visit ups.com/pulse

"Omni-channel sales give retailers multiple avenues to promote offerings and encourage repeat business."

Loyalty programs motivate repeat performances

Omni-channel sales give retailers multiple avenues to promote offerings and encourage repeat business. One company making a splash through loyalty is Zinrelo, a digital marketing company.

“In our experience,” says Samir Palnitkar, vice president of customer success, “a 1-percent improvement in retention rate can grow revenues by 4 percent. Loyalty points and VIP statuses make customers feel special (and) increases brand affinity and the propensity of customers to refer the brand to friends.”

According to the Pulse study, here’s what smart businesses can do to increase loyalty:

  • Know your consumer and what motivates them across a variety of incentives, including rewards, special access, time savings, education and recognition. Design loyalty programs for all types of customers, from the most loyal to the occasional (who may then become loyal).
  • Offer something of value. The 2019 Pulse survey identified the top three benefits of being a loyalty member: free shipping (63 percent); members-only discounts (61 percent); and rewards points (59 percent of survey respondents).
  • Link rewards to desired behavior. Want to migrate consumers from a physical retail location to the e-commerce website? Well, what’s in it for them? Create incentives like an exclusive line of unreleased products (loyal customers first) or redeemable points for every online purchase.
  • Grab your customer’s attention. Customers may switch brands or websites for better benefits. Pulse found that nearly half (46 percent) of customers surveyed globally research items on one website but then buy from another website to claim preferred loyalty rewards.

The best customers deserve the best value. But offer different types of loyalty programs and incentives to casual or impulse shoppers too — plus different benefits to different customer tiers. Personalized loyalty programs maximize profits.

"Knowing your customer’s motivation helps you align programs and incentives with your business strategy."

Purchase incentives drive action

Purchase incentives take many forms, ranging from price reductions to free services. They’re easy to implement and they let retailers test different approaches to customer segments. Focus on options that benefit your business.

For example, the Pulse study found that 51 percent of consumers said a cheaper, slower shipping option would entice them if they had other incentives. What about additional purchases? Some 36 percent of surveyed consumers, indeed, added items to a cart to qualify for free shipping.

An incentive, of course, should always pay for itself. Is free shipping for you? At what expense? And can you incentivize customers to share the cost?

As you set out to conquer the online retail world, go back to those acting lessons with Brando:  It’s all about motivation.

Knowing your customer’s motivation helps you align programs and incentives with your business strategy. It helps you drive customers to specific actions. It keeps you aware of what your customer values so your programs and incentives deliver that value. And ultimately, you follow Brando’s lead from his iconic role in The Godfather: You make them an offer they can’t refuse.

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