4 Best Practices Social Loyalty

1. 4 best practices
for social
loyalty

2. table of
contents
03 Introduction
04 #1 | think strategically about the program
07 #2 | identify & enable brand advocates
10 #3 | THINK BEYOND THE TRANSACTION
13 #4 | DESIGN, EVALUATE, & OPTIMIZE FOR ROI
16 conclusion

3. Introduction
These are challenging times for retail. The key according to Kristine Jacobs, Vice
Although ecommerce is growing rapidly President of Customer Success at 500friends,
and offers a vibrant opportunity to reach is for retailers to “optimize a long-term
new customers, the gains have not been relationship with consumers and maximize “Retailers need to optimize a
equally distributed. In fact, Amazon the value created by each and every way long-term relationship with
accounts for 30% of all product searches customers interact with their businesses.” their customers and maximize
and continues to grow at twice the rate the value created by each and
of ecommerce as a whole. At the same One of the ways retailers can accomplish every way customers interact
time, the cost of acquiring customers is this is through a well-designed and executed with their businesses.”
increasing year-over-year while margins social loyalty program. A social loyalty program
Kristine Jacobs
continue to get squeezed. Given these gives retailers a powerful tool for building VP Customer Success, 500friends
realities, retailers have to find new and durable relationships with their customers
creative ways to maximize the lifetime while leveraging their social connections and
value of their customers. actions to effectively reach new audiences.
More loyal customers mean greater lifetime
value per customer and more profitable
customer relationships, which give a retailer
more opportunity to invest in growth.
© 2013 500FRIENDS, INC. ALL RIGHTS RESERVED. 4 best practices for social loyalty 3

4. best practice #1
think
strategically
about program
design

5. #1 | think strategically about program design
imagine a Program that
Meets Your Objectives
Before discussing what makes a social loyalty
program successful, it’s important to understand
what a successful loyalty program is not. Too Strong Program
often, a company’s loyalty program will consist
of a microsite and a few simple promotions that Objectives Include...
offer all of its customers the same discount.
Although such a program may be easier
INCREASE
to implement than a robust, multi-channel
incentive program, it is also unlikely to create
1 OVERALL LTV &
SHARE OF WALLET
the sort of sustained, long-term relationships
with customers that retailers need to thrive in
today’s competitive marketplace.
2 GROW ACTIVE
CUSTOMER LIST
In order to design and implement a successful
social loyalty program that creates and sustains
GAIN INSIGHT
long-term relationships with customers, retailers 3 INTO CUSTOMER
must think more strategically. A social loyalty SEGMENTS
program is not an isolated feature; it has to be
an integral part of a brand’s overall marketing
and growth strategy.
© 2013 500FRIENDS, INC. ALL RIGHTS RESERVED. 4 best practices for social loyalty 5

6. #1 | think strategically about program design
design for
your audience
The first step in defining a winning strategy
for a loyalty program is to think about whom
it is for and what will appeal to them. In other Match Customer Populations
words, design the social loyalty program for
specific populations. A first-time customer with the Right Rewards
has different needs and expectations than
a lifelong customer. Rather than blanket all
INVITATION
of a site’s customers with a one-size-fits-all INACTIVE
TO AN EARLY
program, a well-designed program will target MEMBERS ACCESS SALE
key customer segments with compelling and
relevant rewards. For example, a first-time
REWARD
customer might receive a special discount 1ST TIME
EMAIL AFTER
BUYERS
on their next purchase to encourage them to PURCHASE
return to the retailer while a well-established
customer might be offered an exclusive gift MEMBERSHIP
3RD TIME
to reward them for their continued loyalty. BUYERS
UPGRADE
TO VIP SERVICE
Before choosing rewards, think carefully
about who is receiving the reward and the
behavior it will drive.
© 2013 500FRIENDS, INC. ALL RIGHTS RESERVED. 4 best practices for social loyalty 6

7. best practice #2
IDENTIFY &
ENABLE BRAND
ADVOCATES

8. #2 | identify & enable brand advocates
recommendations as a
marketing engine
Word-of-mouth marketing is as old as At a time when customers are constantly
business and it is more important today inundated by offers and discounts, whether
than ever before. This is as true for the in the form of banners, emails, or targeted “More and more money
will go into making a great
smallest boutiques as it is for the largest Google or Facebook ads, word of mouth
customer experience, and less
retailers in the world. Jeff Bezos, CEO represents a powerful means for retailers to
will go into shouting about
of Amazon, predicts that “more and reach customers directly. A successful social the service. Word of mouth is
more money will go into making a great loyalty program must find ways to amplify becoming more powerful...”
customer experience, and less will go into the impact of a personal recommendation
jeff bezos
shouting about the service. Word of mouth online. This requires retailers to appeal to
CEO, Amazon.com
is becoming more powerful. If you offer a brand advocates and make word-of-mouth
great service, people find out.” marketing in all of its forms one of a loyalty
program’s central goals.
© 2013 500FRIENDS, INC. ALL RIGHTS RESERVED. 4 best practices for social loyalty 8

9. #2 | identify & enable brand advocates
understand the
customer’s journey
Social loyalty programs should be designed
around the customer’s journey. Retailers
must be able to place themselves in the The Customer Journey
minds of their customers in order to create a
compelling customer experience. A key part
of creating that experience is removing all ADD TO CART
STANDARD
friction to sharing. Writing a review, referring VISIT SITE PURCHASE SHIPMENT NOTIFCATION
a friend, or sharing a purchase to Facebook VIEW PRODUCT INFO
should be an integrated, natural part of the CREATE ACCOUNT PURCHASE CONFIRMATION
customer experience, rather than an irritation
or impediment. At the same time, retailers
must have the right tools to measure their POINTS FOR PRODUCT REVIEW
customers’ engagement in order to identify
OPPORTUNITY
MONTHLY PROGRAM EMAIL
ENROLL IN PROGRAM
potential brand advocates.
CONNECT SOCIAL ACCOUNTS SURPRISE BADGE IN EMAIL
SHARE PRODUCT PURCHASE
1ST TIME BUYER REWARD EMAIL
© 2013 500FRIENDS, INC. ALL RIGHTS RESERVED. 4 best practices for social loyalty 9

10. best practice #3
think beyond
the transaction
Too many retailers think their work ends once a customer has clicked “Buy.” Rather, they
should be finding ways to connect with customers in new and dynamic ways that will increase
customer lifetime value. One of the goals of any social loyalty program must be to deepen the
retailer’s relationship with its customers by engaging them beyond the purchase.

11. #3 | think beyond the transaction
engage
through actions
A well-designed loyalty program reward Every brand has its own strengths and
strategy should be built around more than resonates with customers in different ways. LIST OF ACTIONS:
just buying more to accumulate more A social loyalty program is an opportunity
points. Social media gives retailers many for retailers to extend and reinforce their Purchase
opportunities to engage their customers in brand by appealing to their customers in Enrollment
new and creative ways, such as rewarding innovative ways that match business goals. Connect Facebook Account
customers for social actions like writing The key is that the content offered by a Connect Twitter Account
reviews and sharing purchases to help brand’s social loyalty program should fit Sign Up for Email
spread the brand’s message. Bestowing into the brand’s identity and appeal to its
Open an Email
branded badges and special recognition unique relationship with customers. For
Refer a Friend to Purchase
on repeat customers deepens their example, Spaweek (www.spaweek.com)
Refer a Friend to Sign for Email
connection to the brand and makes them awards points for sweepstakes entries, spa
Follow on Twitter
feel recognized. reviews, and spa check-ins on Foursquare,
Email a Friend
in addition to dollars spent.
Tweet a Product
Write a Review
© 2013 500FRIENDS, INC. ALL RIGHTS RESERVED. 4 best practices for social loyalty 11

12. #3 | think beyond the transaction
engage
through rewards
Program reward structure connects point-
earning engagement to redemption, a
core driver of value and cost for a loyalty
Reward EXTRINSIC REWARDS
(Direct Cost)
program. Rewards should be differentiated Design Tips
by customer segment in order to reward Gift Coupons
a brand’s most loyal customers and keep Exclusive Products
MINE CUSTOMER INSIGHTS
others excited and engaged. Early access, 1 TO INFORM APPROACH Sweepstake Entries
free shipping, and other VIP perks are
Charitable Donations
powerful incentives to keep customers
coming back. Retailer Kate Somerville’s CONSIDER USING TIERS
(www.katesomerville.com) social 2 AS INTRINSIC MOTIVATORS
loyalty program is a prime example of a
compelling reward mix: top-tier members
EXTRINSIC REWARDS
INTRINSIC REWARDS
get an exclusive weekend skincare clinic.
3 ALONE WILL NOT DRIVE
LONG-TERM ENGAGEMENT
(No Direct Cost)
VIP Customer Service
Recognition
SURPRISE & DELIGHT TO
4 REINFORCE KEY BEHAVIORS Badges
© 2013 500FRIENDS, INC. ALL RIGHTS RESERVED. 4 best practices for social loyalty 12

13. best practice #4
design, evaluate,
& optimize for roi
An effective social loyalty program is a significant investment of time and resources.
A program must have clear objectives and target specific customer segments. Most
importantly, a program must be designed for maximum ROI, and it must be measured
at the right moments. Ongoing program optimization lays the groundwork for
continued growth and success.

14. #4 | design, evaluate, & optimize for roi
Balance Reward
Costs to Ensure ROI
From the early stages of program design, Of course, the design and goals of a
ROI is the right context for key decisions. retailer’s social loyalty program should
The retailer CoffeeTable
Some retailers make the mistake of making also reflect their unique challenges
engaged a member segment
their points too valuable or awarding too and circumstances. A retailer that finds
with a sweepstakes entry
many points over time; the rewards can itself constrained by low revenue per
that qualified them for the
end up being more valuable than the customer, for example, might build its
highest program reward.
purchases required to earn them. A retailer program around rewards that emphasize
that gives a customer a $15 reward for recognition and exclusivity—such as early The offer drove engagement while
$12 worth of purchases might have very access to new products or VIP offers. reducing the reward cost among their
lowest program tier. The team at
loyal customers, but it won’t be in business
CoffeeTable arrived at this innovative
long. Marketers have to model the financial
and effective
impact of a social loyalty program and offer by critically
make adjustments to point values and examining the goals
rewards before and after they launch a of their program and
loyalty program. designing a solution
that made financial
sense for them.
© 2013 500FRIENDS, INC. ALL RIGHTS RESERVED. 4 best practices for social loyalty 14

15. #4 | design, evaluate, & optimize for roi
Success With Ongoing
Optimization
A social loyalty program should be first engagement metrics become critical for to program impact beyond the program
designed for ROI and then optimized for decision-making. And finally, ultimate launch—not only in later months but
ROI. Even programs with a large emphasis program impact is what every marketer in perpetuity. Successful optimization
on social components—such as sharing will want to report on, but it’s a mistake to efforts require this long-term view in
purchases to social networks or writing look for that proof from day one. Moreover, order to drive maximum impact on key
public reviews—should be evaluated enrollment and engagement remain central performance indicators.
and optimized based on a measurable
ROI. Optimization in the long-term is the
key component of ROI success, and it
is also the most commonly neglected or
Ongoing Optimization for ROI
poorly understood element of program
1-3 MONTHS 3-6 MONTHS 6 MONTHS & BEYOND
management. It helps to think about the
lifecycle of the program and its measurable ENROLLMENT
elements, and then match a timeline of ENGAGEMENT
IMPACT
measurement and adjustment initiatives
to that lifecycle. For example, in the
early months of a program rollout, the
critical metric for program performance
is enrollment, but as the program ages
© 2013 500FRIENDS, INC. ALL RIGHTS RESERVED. 4 best practices for social loyalty 15

16. conclusion
It is no longer sufficient for retailers A loyalty program gives retailers a powerful
to focus on conversion rates and new tool to identify and engage these incredibly
acquisition. Instead, marketers must renew valuable customers. At the same time, the
their focus on customer relationships and ubiquity of social media has made it more
maximizing lifetime value, the only activity important than ever for retailers to find
that will drive the profitability needed creative ways to reach new customers.
for growth. The data is clear about the By building social components into their
outsize value of repeat customers: they are loyalty programs, retailers can leverage the
responsible for 40% of revenue and they proven effectiveness of loyalty marketing
drive 3-7 times the revenue per visit as with the burgeoning potential of social
one-time buyers. networks to solidify existing customer
relationships and reach new customers.
© 2013 500FRIENDS, INC. ALL RIGHTS RESERVED. 4 best practices for social loyalty 16

17. about us
500friends is a team of eCommerce experts
committed to maximizing the profitability of
customer relationships for the world’s retailers.
phone Visit our website
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