Redefining Customer Loyalty with Fiona Stevens from LoyaltyLion

Kristen: 

Hey, Fiona, welcome to the show. Thank you so much for being here today.

Fiona: 

Thank you so much for having me.

Kristen: 

I am excited to dig into this. As my listeners know, customer loyalty is my favorite thing ever. It's what this whole podcast is here to talk about. So can you just start off by telling us a little bit about yourself, and your role with LoyaltyLion?

Fiona:

Yep, absolutely. So I am head of marketing at LoyaltyLion, so I'm always trying to put together the most insightful content that we can to help our merchants deliver better loyalty programs, really. For anyone who doesn't know LoyaltyLion, we're at data-driven loyalty and engagement platform, and we power growth for merchants across Shopify, Shopify Plus, Magento and BigCommerce, as well.

Kristen: 

Yeah, you guys are basically the go-to for loyalty programs out there. Every merchant that I've talked to, anytime I asked, they're just like, "Oh, it's just... It's LoyaltyLion." You guys set up really great stuff. And there's amazing content on your blog, too, which we will make sure to link to you guys' content in the show notes of this.

Kristen: 

But just to start off this conversation, customer loyalty is a term that is thrown around a lot. I throw it around a lot. What actually is... what really is the definition of customer loyalty?

Fiona: 

I think that it's a really interesting question because I mean... In its most basic form, loyalty is repeat purchase, isn't it? It's getting people to come back and buy from you time, and time again, and in the face of quite a lot of competition, a lot of people are selling the same things. But it's actually so much more than just that repeat purchase. It's about increasing customer lifetime value, really. It's about getting customers to shop with you for longer, and getting them to spend more with you, getting them to keep coming back, and actually engaging with you in between purchases. So it's not just transactional. It's actually a full on relationship that they're building with your brand.

Fiona: 

And then it's also advocacy. It's encouraging people to talk about you to others, whether that's referrals, or reviews, or mentions on social media. And someone who's truly loyal will really want to shout about your brand. So we all kind of look at it in the most simple terms, low tier's someone who will come back and shop again, but a truly loyal person will do so much more than that.

Kristen: 

Yeah, that's such a powerful definition because that really encompasses everything that is customer loyalty when you put it in that sense, because it is... You can think of it just as... on the data front, customer loyalty is just did someone come and buy in 30 days, 60 days, 90 days. We've talked on this podcast before about the buyback window in this really data-focused way of looking at retention and loyalty, but then there's also this whole other side of it.

Kristen: 

That is the stuff we talk a lot with brands about is the stories behind the products, or the reason that I will buy an Outdoor Voices' shirt for $45. But heaven forbid will I spend $40 on something much more useful? Like, it's just the things that are very non-qualitative that also go into customer loyalty.

Kristen: 

So on your front, really... Why is this customer loyalty is so important now, really more than ever for DTC brands?

Fiona: 

I think there's a few reasons, really. I think competition is the main one. I think that the barriers to entry are really low now. So there are so many people setting up different stores, and a lot of them are actually selling quite similar products, I think I already mentioned. So e-commerce, I think it's growing something like 13% year on year. So it's literally the fastest growing industry that you can operate in.

Fiona: 

And people get caught in price wars, don't they? And you feel like you have to discount. You have to take part in Black Friday, you have to drop your prices because your competitors are. And actually, I think that's why customer loyalty is so important because it actually lets you avoid doing that. Like you say, you would spend $45 on that shirt because you love that brand regardless of what a competitor is offering. So I think that's kind of the first reason why it's so important. It's just... It helps you differentiate from your competition, and actually avoid discounting and things.

Fiona:

But then the other reason is acquisition is just so much more expensive than retention, and it's only getting more so. So you have this entire bank of customers who have already shopped with you. They already trust you. They already know you. And it's much cheaper and much more effective to work on them than it is to go out and win a whole bunch of new people over. And even within that, you've got different segments of people to approach. So of course you have your loyal customers, but you also have your at risk customers. And we define that as somebody who hasn't returned to make a purchase within an expected timeframe. That's obviously going to be different between... You stock up on your consumables like toothbrushes or something like that way more often than you buy a mattress, or something.

Kristen: 

Mm-hmm. Yeah.

Fiona: 

So you have to figure out what that expected timeframe is for your store. But that's a whole another segment of people that you can check in with that... with again, it's just so much more cost effective than a new customer because they already know your brand.

Fiona:

And then I think... probably the last thing is personalized experiences. Loyalty helps you to do really one-to-one marketing. You can include stuff in emails that is entirely unique to that one person, like their points balance, or any rewards that they have available. They know that you're communicating with just them. That's an email that nobody else has got. And I think that's what consumers really want today.

Kristen: 

Yeah, it's really that that personalization is something I think that we've seen really come out of the new year, and into 2020. And I think that's only going to get more important. It's really what we're seeing is the brands that are making the difference are the ones that can really personalize those experiences. And that's where loyalty programs especially really help create those personalized experiences.

Kristen: 

So what was driving loyalty 10 years ago is going to be very different than what's going to be driving loyal customers now and in the future. It used to be sales, and discounts, and access to things. I think in the future it's obviously changing. So what are you seeing is starting to drive customer loyalty this year, and kind of looking in the future?

Fiona: 

I think is interesting. I think we've inherited a bit of a problem in terms of loyalty, really. Because typically, the big programs that we all used to be part of, the frequent flyer programs, the hotel points, all those kinds of things, they were quite clunky programs. They were difficult to use. It was difficult to really understand how your points were... how to exchange them, but also it took a long time for them to actually add up to anything. So I think there's this kind of inherent misunderstanding now that, "Oh, I don't want to join a loyalty program because it's not going to give me anything back. And it's just complicated."

Kristen: 

Yeah.

Fiona: 

That's something we've definitely inherited. And consumers today are so much more savvy about what they got in return for their data. So I think a key driver now is getting that value exchange right. Their customers are so much more discerning. They need to know what they're getting in exchange.

Fiona: 

So I think what's driving loyalty now, as you say, is completely different. And I think it's about... There's so many different elements. I think the brand is actually one of the most important. So we did some research recently that showed... I can't remember the exact numbers, but it's coming out soon. So stay tuned. But millennials, particularly, they're starting to buy on the basis of their beliefs. They want to shop with brands that align with their values. So whether that's... you're a vegan, and you only want to buy vegan-friendly products, or whether it's you fundamentally believe in sustainable packaging, and you know that a brand over here does that really well, people more and more starting to buy on that rather than pricing and other things.

Kristen: 

Mm-hmm.

Fiona: 

So I think that's one thing that's really driving loyalty now, as people want to pick a brand that stands for the same thing as them, and shop with those brands only. And so I think paying attention to that in 2020 is going to be really crucial.

Fiona: 

And I think the other thing that's driving it is actually... it's just so much easier to do now.

Kristen: 

Yeah.

Fiona: 

The Shopify app store is just a game changer. You can plug in an app, and you can actually... From the comfort of your living room, you could create a technology stack, or an ecosystem that people like Macy's have probably spent decades trying to build. And you've just got access to all these tools, and they're all connected.

Fiona: 

And I think that's driving the growth in loyalty so much. And obviously, the consumers are then on the other side of that. They're seeing far more effective, far more fun, far more engaging programs come into the market. And they actually... That inherited problem that we were just talking about is starting to fade away because consumers can see that they're really getting something in return if they join the program. If they give up their data, they're going to get something great in return. And it's far simpler both for them to engage with it, but also for a store to implement it now.

Kristen: 

Yeah. And I think a big thing of underlying both of these things is that there's kind of like a mistrust, almost, built-in mistrust with loyalty programs. And so that's a challenge for brands to get over that mistrust that, "Hey, this is a program is actually going to be really beneficial for you, and it's going to be wonderful." And then using your values to kind of overcome that mistrust is a way that this kind of all webs in together to be this nice kind of package view of it.

Kristen: 

And just on my side of things, I actually did this exercise recently, where I was thinking about the brands that I love. And I was trying to figure out, okay, what's the psychological tick that made me align with these brands. Because I know that I shop in alignment with my values, and Outdoor Voices was the one that I kind of had this aha moment, where I was thinking about kind of the story of how I found Outdoor Voices.

Kristen: 

And it was two years after I graduated college. I had been a collegiate athlete. My focus on physical activity was very, very intense and elite. And I did that for two years after college. And then I ended up really injuring myself. And I had this whole kind of mental journey that I had to go through to understand that I basically ended up in the exact spot, in the mindset that moving and fitness doesn't have to be painful. It can be fun and recreational, and something that my body is good at. And at that same time, I ran into Outdoor Voices. And then it just became this really natural relationship, where now, my husband was folding our laundry the other day, and he was like, "You really have... 90% of your closet is Outdoor Voices."

Kristen: 

And you think... Their clothes are great, and I'm not buying it because of price point or anything. There's a reason that I'm choosing Outdoor Voices over say a Lululemon legging, about the same price point, but there's a really deep connection. And it's that value. And I think the brands that are winning... This is a really long tangent I went on. I think the brands that are really winning in this loyalty are the ones that are able to hone in on those values and mindsets versus demographics of customers, and then build the relationships off of that.

Fiona: 

Definitely. I couldn't agree more. And it's actually, it's so interesting watching how that's coming out in people's programs. So we've got some really lovely examples. Say Pacifica Beauty is one of them. If you send back your empty mascara packaging, then they'll recycle it for you, and you can earn points by doing that.

Kristen: 

Wow.

Fiona: 

And then we also have Stay Wildish, and their rewards program is, instead of getting monetary incentives or rewards, they actually... You can exchange your points for planting a tree, or I think they do dog booties, a couple of other things. So actually, they're also giving you the capability to pick the cause that you care about within the program, which...

Kristen: 

Wow.

Fiona:

It's really... I'm excited about what else we're going to see people starting to do this year with that.

Kristen: 

Yeah. It seems like there's going to be a lot of creative ideas coming out. And I'm sure you have a ton more examples that we can dig into. I'm curious if you... Do you have any tips or advice for companies that are thinking of starting a loyalty program? How do you start to figure out even how you set up the one that's going to really work for your specific customers?

Fiona: 

It's a really good question. There's a lot of different factors, but I think the first thing is just know who your customers are. You really need to understand what they want to see, and the kind of behaviors that they're likely to go with. So there are some programs, Annmarie Skincare is the one that comes to mind, they're all about building a community. They know that the people that buy their products are actually really interested in skincare. It's something that they're really passionate about. So they've created this community, where you get exclusive content and all these different bits and pieces. And they're really... they're just showing people that there are like-minded people to engage with out there. So that's what they're really trying to achieve.

Fiona: 

But then you get other people who, particularly subscription-based businesses, people like Dr. Axe, where it's much more about making it worthwhile to come back and purchase again, and make sure that you always get your nutritional stuff from them. And they use tiers to do that. So if you are a subscriber, you're in a special tier, and that helps you to unlock better rewards that other people can't access. And so there's a really kind of motivational piece. They're encouraging people to come back and engage. But I think... Sorry, I have a bit of a roundabout answer to that, but I think the first thing is really understanding who your customer is, and what they want. And then understanding actually, what kind of engagement can you get from them. So there are so many different things you can reward.

Fiona: 

So think about how your marketing that you're already doing can connect up with your loyalty program. So for example, you can offer points for reviews, incentivize people to leave you a review on something like Trustpilot, or Kendall, or whatever review provider you're actually using. And that if you know that your customers have a propensity to leave reviews, then great. Start offering points for that, and increase engagement in your program.

Fiona: 

Similarly, if you know that your customers are really big into social media, if that's your demographic, then give them points for mentioning you on Facebook, or using your brand hashtag on Instagram. Or actually, just give them points and rewards for liking and following you. Again, that gives you another channel to communicate with them in between purchases. But it's also strengthening a section of your marketing that you're already going to be doing. It's not really any extra work for you.

Kristen: 

Yeah. That's such a good actionable tip, too. Because it's really... you're creating kind of that holistic experience too, that we talk a lot about. That the first ad needs to connect to the brand voice, and the experience and everything needs to connect to the very last touch point. And so starting to think about... Okay, if we're going to create a rewards program, looking at what's already happening, what's a natural engagement for your customers, and then just start rewarding that. And then you're able to just kind of tie this all together. It's a really smart place to start. And I think a lot of brands listening are going to really appreciate that tip because it just... It brings it out of this chaos feeling of how do you engage customers, down to start with what is already happening, and kind of go from there.

Fiona: 

Completely. And look, it's a daunting thing, setting up a loyalty program. Again, going back to that kind of legacy. It has to be an all bells, all singing, dancing, huge thing. It really doesn't. You can start very small. As long as you know what your branding is, and it should always tie into your brand. So we've got some fantastic names of programs, where people are really just taking their brand name and going one step further. And they can actually... We always joke about if LoyaltyLion have a loyalty program, our tiers might be different lion characters. Could have a Mufasa, and a Simba, an Aslan, or you know...

Fiona: 

So definitely knowing what your brand is. Your loyalty program shouldn't be separate. It should be built on your brand, and it should be an extension of it. But it doesn't have to be complicated to begin with. You could start by literally just rewarding purchases, account signups, and maybe one other thing. But get it out there. If you've got one or two customers, you've got one or two people who could come and shop up with you again, and actually, who could talk about you to other people.

Fiona: 

So, yeah. I think that would be... Again, one of the biggest things is don't feel you have to wait until you've got absolutely everything lined up. It's actually really exciting for customers if you start releasing new types of rewards down the line. Yeah.

Kristen: 

Yeah. And I mean, I love that because you can also just start with these small things. But then you're also getting access to that two-way dialogue, which is unique in a loyalty program is when you have a customer opt in to that level, I think it opens up a channel, where you can actually go back and forth with customers. And so early adopters of your loyalty program are the perfect people then to start talking to, and getting feedback on the program, and actually then just developing it from your own customers and what they want to see out of it. It takes a lot of the guesswork out.

Fiona: 

Absolutely. I could not agree more. And I think we, and myself as a marketer, I completely relate to this. We're scared to ask our customers what they think.

Kristen: 

Yeah.

Fiona: 

They're the best people to tell us. And it is, it's an unnerving thing to send out a survey and say, "Tell us what you want." Because people might say something that you don't feel you can deliver, or they might suggest something you haven't even thought of, and you know... But straight from the horse's mouth is absolutely the best way to get that, and to know what to build into your program.

Kristen: 

Yeah, absolutely. So really, what are your kind of... We've talked a little about a lot of different tactics. Do you have kind of a top three to five hit list for people who are... If you’re running... create a loyalty program that actually really works for your customers?

Fiona:

Mm-hmm. Ooh, good question. I think the first thing would be how to tie into brand, how to make it part of the customer journey. So the top thing would be, where's it going to sit on your site? Make sure it's in your navigation, make sure it has its own page, it's embedded, it looks exactly the same as the rest of your site. It is literally integrated into a customer's shopper journey.

Kristen: 

Mm-hmm.

Fiona: 

Then I think the second thing would be communicating it really clearly. So have a frequently asked questions page. Make sure your welcome emails have really clear instructions as to this is how you earn points, and this is how you redeem them.

Fiona: 

And then build that into your email strategy. So loyalty emails perform really, really well. I think it's something like 14 times better than your average marketing email.

Kristen: 

Wow!

Fiona: 

And the reason for that is because it's so personalized. But again, you're already sending emails. So just build in the loyalty information, build it out. If someone signs up to the program, make sure that in your welcome email it's really clear who you are as a brand, and how people engage with it. When there's a reward available, reminder email. Make sure again, you just keep giving information as to how do you actually go and get that reward, and what's the value of it. So you're just constantly communicating, this is why you should join the program, and this is how you use it, is really important.

Fiona: 

And then the third thing I would say... Think about how you can build on advocacy. So reviews and referrals are just so important because that's how you get more people to your brand far more cost effectively. And they're already... They're so much more likely to convert because they know that somebody else trusted you, so they can also trust you. So yeah, offering points for referrals is one of the things I would bake in from the very, very beginning.

Fiona: 

And what else? I think just being more imaginative with your rewards as well. Essentially, what loyalty programs should really do is make someone feel really special, feel like a VIP. And there's really cost effective ways of doing that. So actually not all your rewards need to be financial at all. You could offer somebody early access to new products, or early access to sales. That doesn't cost you a penny, but it makes somebody feel special. So yeah. I think thinking a bit outside the box with your rewards is, again, a great place to start because it's what will make your program different. And that's what will attract people to your brand over somebody else's.

Kristen: 

Yeah. And it's going to be, I think something that will really differentiate brands from each other in, like we talked about, such a crowded space that is DTC. Do you have any favorite examples? I know you've mentioned a few. But anybody doing some really creative, cool stuff that you guys have gotten to work with?

Fiona: 

Yeah, definitely. I think one of my all time favorites, and they're one of our longest standing clients, it's been up and running for a while, but theCHIVE, actually, have gamified their loyalty program. So it's actually a leaderboard. People can literally see where they rank against other people in terms of the points and things.

Kristen: 

Wow!

Fiona: 

And it's amazing how much engagement that inspires. And we've all got things we rank on. It's a bit like a Fitbit or something. You always look at your friends and go, "I've done more steps than you." But it actually works really well with a loyalty program. And I love watching that one because you can just see people. If they leave a review or make a referral or whatever, they get more points, and they jump up the leaderboard. If they share photos, again. And it just encourages so much engagement. It's really interesting to watch.

Fiona: 

And then I think... I've already mentioned Annmarie Skincare and that community, but I think that's another one that I just really, really love because you... They call it their... I think it's their insider tribe. And you even just by joining, having a look at the website, you feel like you're part of something. And then their Facebook group, the community they're building, it is actually something quite special. And it really sets them apart. And it makes you, as I say, it just makes you feel again, like a VIP and very special, but it does make you feel that you're part of something bigger, some bigger movement. So yeah, I think those are probably my two ones to watch at the moment.

Kristen: 

Oh, exciting. We will make sure to link to both of those in the show notes, guys so you can go check them out. I just love seeing the creative ways people are starting to launch these. And I think it's only going to get really more exciting as the year progresses because retention is getting... it's kind of finally getting the light.

Kristen: 

I think we all, on the loyalty retention side of things, have been shouting about for a while. So it's really exciting to see. Just to wrap up, what are you really excited to see? What do you want to see more from the DTC space, and DTC brands this year?

Fiona: 

Hmm, good question. I think it's innovation. I've really... I love, as you said, I love seeing where people take the programs. And I just want to see people be more inventive with their rewards. You know, people are so inventive with the stores that they set up, with the brands with their... from the name of their store, to the different channels they market on. People are seriously innovative, especially in this space. And some of the things they sell, as well. Honestly, what people are actually selling... And it's stuff I've never even thought, or didn't know existed.

Kristen: 

Yeah.

Fiona: 

It's amazing. And it's one of my favorite things to do, actually, is just go through some of our newer stores and be like, "I did not know that was a thing. Let me order it immediately." But we should be as innovative and inventive with loyalty programs. I've mentioned a couple of things like early access to sales, and things like that. But what else could you be doing with your rewards that just is really different? I'm really looking forward to seeing more of that this year from DTC brands.

Kristen: 

Yeah. We'll have to do a followup with you in a couple of months. And we'll do it at the end of the year, and we'll see. Maybe we could give an award to the most innovative loyalty program we see of the year.

Fiona: 

Yeah, definitely. We actually... We do a Hall of Fame. And we started it last year.

Kristen: 

Oh, awesome!

Fiona: 

I wish it was a physical award ceremony. It's not, unfortunately. It's not the Oscars just yet.

Kristen: 

Not just yet.

Fiona: 

But we do compile a list of different categories, and who we think is being the most innovative in that space. And again, I'm really excited about this year, as I think it'll have progressed quite a lot.

Kristen: 

Yeah. That's amazing. Well, just before we sign off, where can people find out more about you, find more about LoyaltyLion, if they want to follow along?

Fiona: 

Yeah. Sure. So you can head to loyaltylion.com, and you'll find all of our loyalty content, our blog. We also have an Academy where you can work through different modules, and just find out a bit more. And if you've been thinking about loyalty, but you're not quite sure, or perhaps you're trying to convince someone else, you can also create your own business case for a loyalty program on the website, as well. Or you can find us on the Shopify app store, too.

Kristen: 

Awesome. Thank you so much for being here today, Fiona. This was so much fun.

Fiona: 

Thank you for having me. It's been great.