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Email Best Practices: Loyalty Programs

Customer retention is a cornerstone of an effective loyalty program. While it is always necessary to bring in new customers, existing customers may have greater value. They have already expressed an interest in your product or service, and it cost less to keep a customer than to acquire a new one. One of the best ways to retain customers and to attract those who may have not have made a purchase or interacted with the company for some time is with a personalized email.

Hyper-personalized emails related to loyalty programs can offer a variety of incentives to returning customers, but overall, they also tend to build an emotional connection with the customer. This emotional connection has been identified as one of the most powerful elements in customer retention and loyalty.

Get Personal with Personalized Email

Email personalization stats speak for themselves. First, email itself is significantly more effective than direct mail campaigns, with an ROI of more than 28% compared to just 7.5% for direct mail. People still list checking email as the main reason they go online. When the subject line of an email is personalized, customers are 26% more likely to open it. Over half of customers say they would go elsewhere if they received an email that was not personalized. Proven approaches, such as birthday emails or emails with videos in them, are substantially more successful than others, generating revenue or click-through rates that are 200% or upwards of 300% higher than other types of email. Some companies have found that when they add video, their click-through rates are as much as eight times higher. 

RELATED POST: How to Improve Loyalty Program Redemption Rates

While customers respond well to using first name in email marketing, personalization should go beyond this. Emails tailored to customers based on shared data drives engagement. There are several different types of personalized emails in particular that brands should focus on. 

Personalzied Milestone Email

The birthday email mentioned above is an example of this type of email. The clothing retailer Kohl’s sends out birthday emails that offer promotional discounts. An email campaign for existing customers should let them know that the brand values them as individuals, and remembering their birthday is one way to do that. 

Kohls Milestone Birthday Email
Personalized Birthday Email

Tier Status Achievement Email

Loyal customers want brands to recognize them for their valuable patronage and loyalty. Customers should be notified when they achieve a new level of status tier in a loyalty program, and these congratulations should be included in the subject line. One example is the email that Delta sends customers at the one million mile mark. In addition to the congratulations, the customer can choose a luxury gift from a company such as Tiffany’s. Making these special gifts commensurate with the customer’s status level gives them a sense of exclusivity. 

Tiered Loyalty Program Example Status Email

Related Article: Types of Loyalty Programs

Reward Status Almost There Email

This is an excellent way to upsell. Customers who only need to increase their purchase a little bit in order to earn a reward are particularly responsive to these types of emails. CVS sends out an email when its customers are closed to earning a reward that includes a coupon on their next purchase to further encourage engagement.

Loyalty Email to Increase Member Engagement

Points Expiration Reminder 

High breakage rates indicate that your customers may be earning points but they are not actively engaged in your loyalty program. This may be caused by a variety of reasons — points expiring too fast, members don’t see value in spending points, they quit the program or they never earned enough points to redeem for anything. 

Hyundai’s points expiration reminder offers several ways for members to remain active, including purchasing something or redeeming points. Multiple emails sent at different intervals to remind customers will increase customer redemption rates. After all, your customers get value from the loyalty program when they redeem points they’ve earned.

Example Loyalty Program Points Expiration Email

Monthly Reward Statement Email

These are routine statements that maintain a positive relationship with the customer in addition to giving them an opportunity for redemption. A monthly reward statement email should also include value-added content and special member-only offers as well. This type of ongoing customer communication via personalized email helps build emotional engagement.

Related Article: 6 Quick Tips to Increase Loyalty Program Participation

Winback Lapsed Customer Email

This type of customer loyalty email can be particularly important since the brand may be in danger of losing the customer altogether, and it can be an essential element of your overall customer retention strategy. Brands should analyze their data to proactively monitor customer purchase frequency to identify when customers purchase behavior is trending down and send the email before they’ve already lost them. Ann Taylor Loft offers customers a substantial discount, such as $25 off, for returning. When determining the offer, make it compelling. Don’t send a lapsed customer that you want to win back the same offer you are promoting to the general public and in all your other emails. It doesn’t look sincere or like you care. Using the first name in email marketing of this type also makes the customer feel recognized and valued.

New Member Engagement Email

To drive new member engagement, Sephora offers a promotional code as well as offering ways to benefit more from membership. These benefits include getting a free birthday gift and an offer for free beauty classes. It’s important to engage customers soon after they sign up for a loyalty program to keep their interest high. Personalization helps the customer feel the email is from a friend instead of a faceless company. 

New Loyalty Program Member Engagement

Related Article: 7 Strategies to Get Your Customers to Join Your Loyalty Program

Email to Collect Customer Feedback

One of the best ways to find out what customers want is simply to ask them, but getting them to reply can be a challenge. Brands should offer something of value to customers who respond. For example, some enter responders into a drawing for a valuable prize. Using the customer’s first name suggests that the brand is specifically interested in that customer’s opinion as opposed to sending out a mass mailing. 

GameStop PowerUp Rewards Customer Feedback

Customers expect brands to use their data only in the way companies have promised and to use it effectively. Email personalization stats also indicate that a flood of irrelevant emails will cause customers to unsubscribe. Personalized data can allow brands to make meaningful offers to customers, but email personalization best practices go beyond getting customers to click and buy. The larger aim of personalization is to increase emotional engagement, which can be even more powerful than discounts and other offers in driving customer loyalty. By tailoring the above email personalization examples to individuals and making emails relevant, brands can more effectively retain loyal customers.