May 3, 2023

How to foster customer loyalty with cause marketing

Combine the power of cause marketing and loyalty programs to increase customer retention

In today's world, customer loyalty is more important than ever for businesses. With fierce competition in almost every industry, companies must find ways to not only attract new customers but also retain their existing ones. In fact, depending on what industry you’re in, acquiring a new customer can be anywhere from five to 25 times more expensive than retaining an existing one. One way to tap into existing customers’ mindshare to foster customer loyalty is through value-based loyalty programs that are fueled by cause marketing campaigns.

What is a loyalty program?

A loyalty program is a marketing strategy used by businesses to encourage customers to make repeat purchases and continue to engage with their brand. It's essentially a rewards program that offers customers incentives for their loyalty, such as points for every purchase or a discount for signing up. The goal of a loyalty program is to create a positive customer experience and foster a long-term relationship between the customer and the brand. Loyalty programs can:

  1. Increase customer retention and foster customer loyalty, which can lead to increased revenue and repeat business. By rewarding customers for their loyalty, businesses can create a sense of appreciation and incentivize customers to continue shopping with them instead of their competitors.
  2. Gain valuable insights into customer behavior and preferences, allowing them to personalize their marketing efforts and improve their overall customer experience.

Overall, a well-designed loyalty program can be a powerful tool for building customer relationships and driving business growth. Value-based loyalty programs in particular have proven to be effective in both boosting brand reputation and retaining customers.

Why value-based loyalty programs work

Loyalty programs that are value-based are effective because they give customers a sense of purpose and personal fulfillment beyond just earning points or rewards. When a company associates itself with a social cause that aligns with the values of its customers, it can create an emotional connection that goes beyond the transactional relationship. 40% of loyalty program members (for Gen Z it’s 65%) find it appealing to have the option of earning rewards through a loyalty program to donate to a charity or cause.

The partnership between Sephora and the National Black Justice Coalition (NBJC) is a prime example of a value-based loyalty program that works. By offering customers the option to donate their reward points to the NBJC, Sephora is not only incentivizing customers to make purchases but also encouraging them to support a cause they care about. The NBJC is a civil rights organization dedicated to empowering and advocating for Black LGBTQ+ individuals and their families. By partnering with the NBJC, Sephora is demonstrating its commitment to diversity, equity, and inclusion, which is an important issue for many of its customers.

Sephora gave the option to donate rewards points to the National Black Justice Coalition in 2020

Moreover, value-based loyalty programs can also help companies differentiate themselves from their competitors. In today's competitive marketplace, offering value beyond just the product or service is essential. Customers are increasingly looking for companies that align with their values and support social causes that matter to them. In fact, 83% of millennials favor brands that align with their values, prioritizing ethical consumption over price. By offering customers the opportunity to support a cause they care about, companies can build a deeper and more meaningful relationship with their customers, which can result in increased loyalty and advocacy.

Overall, value-based loyalty programs like the one offered by Sephora and the NBJC work because they tap into customers' emotions and values. By aligning with a social cause that matters to their customers, companies can create a deeper connection and foster loyalty. Additionally, value-based loyalty programs can help companies differentiate themselves from their competitors and attract customers who value purpose-driven brands.

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Using cause marketing to foster customer loyalty

Cause marketing, also known as purpose marketing or social impact marketing, is a marketing strategy that involves a company partnering with a nonprofit organization to promote a social cause. By supporting a cause that resonates with their customers, companies can create a positive image and build stronger relationships with their customers.

One effective way to incorporate cause marketing into your loyalty program is by offering donation options redeemable by loyalty or rewards points. Customers can earn points through their purchases and then use those points to donate to a cause they care about. This not only provides a tangible benefit to the customer but also allows them to make a positive impact in the world.

Here are some tips for using cause marketing to foster customer loyalty:

  1. Choose a cause that aligns with your brand values and mission. Customers are more likely to support a cause that is meaningful and relevant to the company they are buying from.
  2. Partner with a reputable nonprofit organization. Do your research and choose an organization with a strong track record and clear mission.
  3. Communicate your cause marketing efforts to your customers. Make sure your customers are aware of the social impact they can have by choosing your company.
  4. Integrate donation options into your loyalty program. By offering donation options redeemable by loyalty or rewards points, you can make it easy for customers to support the cause they care about.
  5. Measure and communicate the impact of your cause marketing efforts. Share the progress and impact of the cause with your customers, and show them the positive change they are helping to create.

One way to go about this is by using a trusted software technology that can integrate into any existing application – whether it's an at-checkout experience or living directly in the loyalty program home. Change allows companies to integrate donations into any loyalty program quickly, confidently, and securely, so companies can respond and react as quickly as needed to key movements they want to support. Change lets companies maintain their native look-and-feel so the giving experience is seamless, and connects with over 1 million nonprofits to support. By using Change, companies like Care/of and Brex have been able to support causes that are important to their customers while simultaneously increasing customer loyalty.

Brex customers can donate credit card points to nonprofits like Code2040

In conclusion

In today's competitive marketplace, businesses need to find ways to attract and retain customers. By implementing a value-based loyalty program that incorporates cause marketing, brands can create a deeper emotional connection beyond the transactional relationship. Integrating donation options into loyalty programs can enable companies to build stronger relationships with their customers and differentiate themselves from competitors. And, sharing the progress and impact of the cause can help companies demonstrate their commitment to social responsibility and create a sense of purpose for their customers.

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