Discover Your Loyalty Margin and How It Drives Retention - 9/3/24

Welcome to The Retention Newsie by The Email Marketers, the retention building experts for 8-& 9-figure e-commerce brands.

Every week we bring you the best case studies, strategies, and tips for keeping more customers, turning them into raving fans, and increasing revenue.

Up this week:

• 🍋 Stretching Loyalty to New Heights with Lululemon

• 📧 The Hidden Power of Loyalty Margin

• 📊 Post-Purchase Emails, AI-Driven SMS Marketing, & More!

Reading time: 4 minutes

How Lululemon Built a Community of Sweaty Loyalists

Slipping on a pair of Lululemon leggings brings a feeling of empowerment and confidence that you can conquer anything.

This Canadian athleisure brand has transformed from a small yoga apparel store into a global powerhouse with $9.6 billion in revenue last year,  and it's not just because of their buttery-soft fabrics.

Lululemon started as a yoga studio that doubled as a design space for comfortable, stylish yoga wear.

The vision was clear from the start.

This people-first approach has been the cornerstone of Lululemon's retention strategy, centered around building a thriving community. Their secret sauce? A three-pronged approach they call the 'Power of Three': in-store events, global gatherings, and a unique brand ambassador program.

Unlike competitors who rely on celebrity endorsements, Lululemon has cultivated a network of hundreds of authentic brand ambassadors – ordinary people who share their passion for an active lifestyle.

These homegrown influencers create organic buzz and establish genuine connections within their communities.

But Lululemon doesn't stop at online engagement.

They've transformed their stores into community hubs, hosting over 4,000 events annually. These range from yoga classes and wellness workshops to run clubs, all aimed at creating personal connections and promoting an active lifestyle.

Their annual Sweatlife Festival is the crown jewel of community events, a two-day extravaganza that unites fitness enthusiasts, wellness experts, and brand ambassadors in a celebration of all things active and mindful.

Lululemon's digital presence is equally powerful. Their #TheSweatLife campaign on Instagram has generated over 1.5 million user posts, turning fitness journeys into social proof and fostering a strong sense of belonging.

The brand's dedication to community-building also drives their product development. By actively seeking customer and ambassador feedback and involving the community in design, they ensure their products meet real needs and desires.

• Empower Local Leaders: Skip the celebrities. Instead, elevate passionate individuals within your target community to become authentic brand advocates.

• Transform Spaces into Experiences: Go beyond retail. Design environments that invite community gatherings and embody your brand's core values.

• Blend Online and Offline Engagement: Combine in-person events with digital campaigns to create a cohesive community experience that meets customers where they are.

• Co-create with Your Community: Involve your customers in the product development process. This not only ensures your products meet their needs but also strengthens their emotional connection to your brand.

• Consistency is Key: Keep your brand voice and values consistent across every touchpoint—from in-store experiences to social media and ambassador communications.

We help 8-& 9-figure e-commerce brands increase revenue and build strong customer relationships through retention marketing: Email, SMS, direct mail, subscriptions, memberships, loyalty programs, and more.

The Hidden Power of Loyalty Margin

Understanding how valuable your loyalty benefits are to your customers is at the heart of the "loyalty margin" concept, an innovative approach to retention marketing introduced by the Boston Consulting Group a decade ago.

Understanding and optimizing your loyalty margin is crucial for sustainable business growth. Here's how to tap into its potential:

1. Measure Your Loyalty Margin: Compare the perks you offer loyalty members with the extra revenue they generate. This balance is your loyalty margin. Are your benefits driving enough additional purchases to justify their cost?

2. Tailor Loyalty Behaviors: Ditch the one-size-fits-all approach. Dive into your customer data to discover which perks hit home with different segments. For example:

   • Frequent shoppers might love free shipping.

   • Trendsetters could be excited by early access to new products.

3. Integrate Loyalty Insights Across the Board: Don’t silo your loyalty program insights. The messaging that resonates here often works wonders for other customer segments too. Apply these insights to sharpen your overall marketing strategy, particularly in email campaigns.

4. Find the Sweet Spot Between Short-Term Wins and Long-Term Gains: Discounts and promotions can boost sales quickly but might chip away at your profit margins. Aim for a balanced mix of monetary and non-monetary perks that keep customers engaged without sacrificing long-term profitability.

5. Keep It Fresh: Continuously review and tweak your loyalty program. Test different benefit structures, track their impact on customer behavior, and refine your approach based on the results. Regular updates keep your program relevant and effective.

Remember, a well-crafted loyalty program isn’t just about rewarding customers—it’s about fueling sustainable business growth.

Your loyalty program should be a win-win, benefiting both your customers and your business. 

• An exploration into why subscription services fail, including too many steps to psychological relief and lack of novelty.

• How AI is reshaping loyalty programs and customer segmentation, enabling hyper-personalization and adaptability over time.

• 9 examples and tips for crafting post-purchase emails that turn buyers into lifelong fans.

• The 12 best loyalty integrations and tools for Ecommerce websites to simplify building effective loyalty programs.

• New data shows that AI-driven personalization in SMS marketing is a top trend for digital retailers.