The Secret to Building a Loyal Customer Base: Rewarding Advocacy

Imagine having an army of loyal customers who not only rave about your brand to everyone they know but also actively encourage their friends and family to become loyal customer, too. This kind of enthusiastic advocacy is the gold standard for businesses seeking to build a strong, dedicated customer base.

By incentivizing your customers to spread the word about your brand, you can tap into the power of word-of-mouth marketing and transform your most devoted customers into passionate brand advocates. In this article, we’ll explore how rewarding advocacy can help you create a loyal customer base that’ll keep your business thriving.

Understanding brand advocacy and its impact on customer loyalty

Brand advocacy has become even more significant as consumers increasingly rely on the opinions and recommendations of their peers when making purchasing decisions. In fact, a staggering 92% of people trust recommendations from family and friends (Nielsen).

What is brand advocacy?

When you reward customers for their loyalty, you can exponentially increase your reach and influence, as well as establish a solid foundation of trust and credibility among their networks.

“Engaged consumers actually want to be advocates for their favorite brands. Why? Because they adopt the brand as part of their personal identity. Loyalty programs can turn members into advocates by providing them with a sense of belonging and exclusivity, then harness that positivity by making it really easy for them to invite family and friends to share in that amazing experience.”

Philip Shelper, CEO & Founder, Loyalty & Reward Co

Encouraging advocacy is one of 11 loyalty trends that are on the rise. The impact of brand advocacy on customer loyalty can’t be overstated. When a consumer publicly endorses your brand, they’re not only expressing their satisfaction but also putting their own reputation on the line. This level of trust and confidence in your brand carries significant weight and has the potential to influence the purchasing decisions of others within their network. Forbes reports that referred customers have a 37% higher retention rate.

The role of rewards in building advocacy

When customers feel valued and appreciated, they’re more likely to develop an affinity for your brand and become ambassadors actively promoting your brand among their peers. This not only bolsters your image but also drives organic growth through word-of-mouth marketing, which is considered one of the most credible and persuasive forms of advertising.

Here are three additional ways rewards benefit your business while also building advocacy:

Brand differentiation

Rewards help differentiate your brand from competitors, giving customers a compelling reason to choose you over others. Consumers are bombarded with countless options and are increasingly seeking unique benefits from their preferred brands. By offering personalized rewards for referring others and sharing on social, you can stand out from the pack.

Emotional connection

Rewarding your loyalty members for engaging with your brand between transactions helps build strong emotional connections as your brand becomes a part of their everyday lives. This makes them more likely to advocate for your brand. Delivering more personalized rewards to your customers fosters a deeper emotional connection with them. According to Deloitte, a brand’s ability to leverage emotionally intelligent platforms to recognize their customers and use emotional data at scale is one of the most important opportunities going forward.

Exclusivity & belonging

Humans have an innate need to belong to something bigger than themselves, whether it be a community, group or cause. Loyalty programs can fulfill this need by offering exclusive rewards. A survey conducted by Kelton Research found 94% of Americans would take advantage of an exclusive offer over a price-match. This need can also be fulfilled by donating a portion of your customers’ purchases to their choice of charity or offering points that can be redeemed for charitable donations.

According to Sandra Gudat, CEO of Customer Communications Group, loyalty programs are becoming more socially aware and responsible. Hear more of what Sandra has to say about charitable donations and social responsibility on her podcast episode of Get Personal with Loyalty.

Another way to create a sense of exclusivity and belonging is through a tiered loyalty program. By offering better rewards for reaching higher tiers, your customers are motivated to stay loyal to your brand and work towards achieving higher tiers—creating a sense of accomplishment and belonging while feeling like they’re part of an exclusive group.

One example of a retailer with a successful tiered loyalty program is Sephora’s Beauty Insider program. The base tier, Beauty Insider, is free to join and offers birthday gifts, access to free beauty classes and point rewards. The next tier, VIB (Very Important Beauty Insider), requires a certain amount of spending per year and offers additional benefits such as free makeovers, exclusive events and early access to new products. The highest tier, Rouge, offers even more perks such as free shipping, private shopping events and personalized services.

Best practices for implementing a referral program

Implementing a referral program can be a powerful tool for building a loyal customer base. However, there are several best practices you should follow to ensure the success of your program:

1. Make it user-friendly. Clearly outline the rewards for both the referrer and the referred and provide a seamless process for signing up and sharing referral links.

2. Offer valuable rewards. This could be first access to new products, exclusive members-only events or personalized promotions. By offering rewards that resonate with your customer base, you can increase the likelihood of them referring others to your business.

3. Promote the referral program. Make sure your customers are aware of the program through various marketing channels such as email, social media and on your website. Providing clear calls-to-action and reminders will help keep the program top-of-mind for your customers.

4. Track and analyze metrics. This includes monitoring the number of referrals, conversion rates, and the overall impact on sales and revenue. Using this data, you can make informed decisions on how to improve and optimize your program for better results.

Conclusion

Rewarding advocacy is a powerful tool for building a loyal customer base. By incentivizing customers to become brand advocates, businesses can tap into the power of word-of-mouth marketing and turn their most loyal customers into brand advocates.

To start building your army of brand advocates, contact Annex Cloud today and see how rewarding advocacy can boost your business.