Advanced Audience Segmentation: The New Way for Loyalty Programs

How to reduce churn and boost retention with your loyalty program? The key is audience segmentation. Learn the how-tos from our article.

Antavo’s article on advanced audience segmentation.

Loyalty programs increase customer retention and allow for business growth, and with audience segmentation, organizations’ reward programs may become even more beneficial. In today’s digital world, customers are embracing these programs – according to Gartner, the adoption for loyalty programs grew by 70% in retail too — but this creates a highly competitive market. In order for loyalty programs to deliver the desired effect, they need to be unique, behavior-based, and full of personalized value. 

The Power of Segmentation

Your organization’s loyalty program strategies should be adding to the customer experience as a whole. Ensuring that your customers feel cared about will, in turn, maximize your company’s ROI. Research by Forrester indicates that 89% of US online adults belong to at least one loyalty program. In order to achieve success with your loyalty program, and create one that stands out from the rest, your organization should use the power of segmentation. Before we discuss how to create an unmatched program, let’s examine a common issue many loyalty programs are struggling with.

NikePlus membership unlocks new benefits for athletes.
NikePlus membership not only unlocks new benefits for athletes but Nike alos credits 50% of its quarterly digital growth to its members

A Glitch in Your Loyalty Program System

Personalization is key to winning over modern customers. A common problem across organizations is a lack of relevance in their loyalty programs. The typical punch card or email discounts are no longer going to cut it in terms of a thrilling experience in today’s competitive market. Forrester states that while 90% of marketers we surveyed use email programs as part of their loyalty strategy, only 5% of US online adults agree that email offers are well timed to their needs. 

Engaging customers in the same way isn’t effective, as each customer shops differently. Therefore loyalty programs should cater to different audiences with relevant offers and campaigns, preferable using offer management to better target these segments.

Antavo offer management backend in detail
Using Antavo’s sophisticated offer management tool, you can design offers based on any data you are tracking.

Brands mistakenly focus too much on behavioral drivers and not enough on emotional aspects when it comes to building loyalty programs and measuring their success. With a plethora of options in the market, customers are more likely to return to organizations that make them feel appreciated and valued –essentially, those that trigger positive emotions. 

Keep in mind that behavioral incentives are easier to measure, but emotional incentives will drive customer retention and business growth. With the insight-led customer experience platform Mapp, you can unify, store, and activate your customer data in one place, allowing you to create seamless, emotion-centered experiences. 

Audience Segmentation: A How-to

Now that we’ve seen where organizations may go down the wrong path, we can map out the right way to succeed in loyalty programs. A customer-centric approach is a guaranteed way to increase loyalty. With the advancements we’ve made in technology today – combined with tiered programs and audience segmentation – this percentage should show a significant increase. 

Customer behaviors and data can be monitored and used as leverage for personalized loyalty program offers. With real-time segmentation and lookalike audiences, your organization can create tiered programs – and people will pay for it. 

Audience segmentation is not limited to a number of segmented groups. However, each group you create must also have strategies and experiences that match the specific audience. It’s probably safest to work with a maximum of four groups. Based on customer lifetime value (CLTV), you can effectively target each tier.

Strategic Tiers – Getting Customers to the Next Level

A tiered program triggers an emotional competition of sorts for customers. They will continue to spend in order to unlock new offers or more valuable rewards. Tiered programs, for example, allow your organization to target your segmented audiences more accurately, producing a rush of shopper endorphins.

Tiered Program
Antavo’s tiered programs drive next-level incentives and use high-end benefits to prevent customers from switching over to the competition.

Segmenting your customers should be based on their characteristics. Common segments are found in demographics, location, or behavioral data. If you understand the characteristics of the segmented audience, you’ll be able to drive a more personalized customer experience and see a higher customer satisfaction rating. 

Identifying Character Traits – Pressing the Right Buttons

Once your segments have been identified, monitoring customer data gives your organization the key indicators for which group to prioritize. Your customers should not all receive the same offers since each segment will provide a different ROI. You can segment your customers based on their purchasing behaviors, for example by allowing you to offer your top spenders exclusive offers. And in contrast, this opens the door to targeting your at-risk customers with strategies to avoid churn and maintain retention. Customers will see that their offers are personalized to their buying patterns and not simply another automated email, making them feel valued and appreciated. 

Providing loyalty offers to your top tier is beneficial in many ways, but it’s equally important to push your second tier to continue buying if you want to level up. These customers will be your most loyal ones, and will be where most of your loyalty program budget goes. Offer them experiences over discounts, such as new product early access or surprise perks. 

Watch your customers’ behaviors and trends. If they are redeeming rewards more frequently and you see an increase of traffic on a Thursday, this is your chance to introduce a flash sale or a product launch on that day. Set up an analytics overview and don’t miss out on an opportunity from your end. With solutions like Mapp’s insight-led Customer Engagement, you can be sure that your datasets are organized, and your offers are personalized.

Mapp customer insight tools give your team members all the data necessary to create personalized loyalty program strategies.
Mapp’s customer insight tools give your team members all the data necessary to create personalized loyalty program strategies.

Putting It All Together 

Creating segmented audiences and finding the perfect loyalty program strategies doesn’t have to be a task your organization needs to tackle alone. There are resources and tools at your disposal to build the perfectly segmented and tiered loyalty program for your company. With a focus on your customers and an emotional approach, your organization can reduce churn and boost retention through your loyalty program with segmented audiences.

If you’re interested in learning more about loyalty programs and loyalty program technology, get in touch with Antavo’s experts by booking a demo or sending an RFP

In the meantime, here’s an ebook about gamification in loyalty programs — a perfect read if you’re looking for more ways to emotionally engage fun-loving customers.

Download Antavo’s ebook on “Best Practices for Gamification in Loyalty Programs”
Headshot of Esther Lago Mapp Digital’s Partner Marketing Manager

Esther Lago

Esther is Mapp Digital’s Partner Marketing Manager. She works with consulting and technology partners to grow joint marketing plans and further Mapp’s brand through strategic alliances. She is also a Harry Potter fan and loves all things digital.

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Antavo's listing in Gartner.
Antavo's inclusion in Forrester.