What is loyalty retargeting?
Loyalty retargeting is a marketing strategy that focuses on re-engaging customers who have previously interacted with a brand or business. It is a subset of retargeting, which is a broader digital marketing tactic used to keep a brand or product in front of bounced traffic after they leave a website. Loyalty retargeting, specifically, aims to foster repeat business and encourage customer loyalty by targeting customers who have already made a purchase or demonstrated interest in a brand.
This strategy is based on the understanding that it is often more cost-effective to retain existing customers than it is to acquire new ones. By targeting customers who have already shown interest in a brand, businesses can increase their chances of repeat business, boost customer lifetime value, and improve overall profitability. In this glossary entry, we will delve into the intricacies of loyalty retargeting, exploring its benefits, techniques, and best practices.
Understanding Retargeting
Before we delve into the specifics of loyalty retargeting, it’s important to understand the broader concept of retargeting. Retargeting is a form of online advertising that can help a brand stay in front of bounced traffic after they leave its website. For most websites, only a small percentage of web traffic converts on the first visit. Retargeting is a tool designed to help companies reach the 98% of users who don’t convert right away.
Retargeting works by keeping track of people who visit your site and displaying your retargeting ads to them as they visit other sites online. This is achieved through the use of cookies, small pieces of data stored on a user’s computer by their web browser. When a user visits a website, a cookie is dropped on their browser, and as they continue to browse the internet, the cookie informs the retargeting platform to show specific ads based on the pages they visited on the original website.
Types of Retargeting
There are two main types of retargeting: pixel-based and list-based. Pixel-based retargeting is the most common type and works by using a JavaScript code (often referred to as a pixel) to anonymously follow your audience across the web. When a customer visits your site, the pixel drops an anonymous browser cookie. Later, when your cookied visitors browse the web, the cookie lets your retargeting provider know when to serve ads, ensuring that your ads are served only to people who have previously visited your site.
List-based retargeting, on the other hand, works after you already have someone’s contact information in your database. You can use list-based retargeting when you have a list of email addresses from people who have signed up for your newsletter, made a purchase, or registered for an event. You can upload this list of contacts to a retargeting platform, which will then serve specific ads to them as they browse the web.
What is Loyalty Retargeting?
Loyalty retargeting is a more targeted form of retargeting that specifically focuses on customers who have already made a purchase or shown interest in a brand. The goal of loyalty retargeting is to encourage repeat business and foster customer loyalty. This is based on the understanding that retaining existing customers is often more cost-effective than acquiring new ones. In fact, studies have shown that it can cost five times more to attract a new customer than it does to keep an existing one.
With loyalty retargeting, businesses can target ads to customers based on their previous interactions with the brand. For example, a business could target ads to customers who have recently made a purchase, offering them a discount on their next purchase. Or, a business could target ads to customers who have shown interest in a particular product, offering them more information about that product or similar products. The goal is to keep the brand top of mind for customers and encourage them to continue engaging with the brand.
Benefits of Loyalty Retargeting
There are several benefits to using loyalty retargeting as part of a marketing strategy. First and foremost, loyalty retargeting can help increase customer lifetime value. By encouraging repeat business, businesses can increase the total revenue they generate from each customer. This can have a significant impact on a business’s bottom line, as increasing customer retention rates by just 5% can increase profits by 25% to 95%, according to research by Bain & Company.
Second, loyalty retargeting can help improve customer satisfaction. By targeting ads to customers based on their previous interactions with the brand, businesses can ensure that their ads are relevant and personalized. This can lead to higher customer satisfaction, as customers are more likely to appreciate ads that are relevant to their interests and needs. Finally, loyalty retargeting can help improve brand loyalty. By consistently engaging customers with relevant and personalized ads, businesses can foster a stronger relationship with their customers, leading to increased brand loyalty.
Techniques for Effective Loyalty Retargeting
There are several techniques that businesses can use to make their loyalty retargeting efforts more effective. One of the most important is segmentation. By segmenting their customer base into different groups based on factors like purchase history, product interest, and browsing behavior, businesses can target their ads more effectively. For example, a business could target ads to customers who have recently purchased a particular product, offering them a discount on complementary products.
Another important technique is personalization. By personalizing their ads based on each customer’s previous interactions with the brand, businesses can make their ads more relevant and engaging. This could involve showing customers products that they’ve shown interest in, offering them discounts based on their purchase history, or even addressing them by name in the ad. Personalization can significantly improve the effectiveness of loyalty retargeting efforts, leading to higher click-through rates and conversion rates.
Using Data for Loyalty Retargeting
Data is a crucial component of any loyalty retargeting strategy. By collecting and analyzing data on their customers’ behavior, businesses can gain insights that can help them target their ads more effectively. This could involve tracking which products a customer has viewed, which products they’ve purchased, how often they visit the website, and more. This data can then be used to segment the customer base and personalize the ads.
There are several tools and platforms available that can help businesses collect and analyze this data. These include customer relationship management (CRM) systems, web analytics tools, and retargeting platforms. By leveraging these tools, businesses can gain a deeper understanding of their customers and tailor their loyalty retargeting efforts accordingly.
Best Practices for Loyalty Retargeting
When implementing a loyalty retargeting strategy, there are several best practices that businesses should keep in mind. First, it’s important to ensure that the ads are relevant and personalized. Customers are more likely to engage with ads that are relevant to their interests and needs, so businesses should use the data they have on each customer to personalize their ads as much as possible.
Second, businesses should be mindful of the frequency with which they show their ads. While it’s important to stay top of mind for customers, showing ads too frequently can lead to ad fatigue and may even annoy customers. Businesses should monitor their ad frequency and adjust it as necessary to ensure that they’re not overwhelming their customers with ads.
Respecting Customer Privacy
Another important best practice for loyalty retargeting is respecting customer privacy. This involves being transparent about how customer data is being used and giving customers the option to opt out of retargeting efforts if they wish. Businesses should also ensure that they’re complying with all relevant privacy laws and regulations, such as the General Data Protection Regulation (GDPR) in the European Union.
Respecting customer privacy is not only a legal requirement, but it can also help build trust with customers. Customers are more likely to engage with brands that they trust, so businesses that are transparent about their data practices and respect customer privacy can benefit from increased customer loyalty and engagement.
Conclusion
Loyalty retargeting is a powerful marketing strategy that can help businesses increase customer lifetime value, improve customer satisfaction, and boost brand loyalty. By targeting ads to customers based on their previous interactions with the brand, businesses can encourage repeat business and foster a stronger relationship with their customers.
However, like any marketing strategy, loyalty retargeting requires careful planning and execution. Businesses should ensure that their ads are relevant and personalized, monitor their ad frequency to avoid ad fatigue, and respect customer privacy. By following these best practices, businesses can maximize the effectiveness of their loyalty retargeting efforts and reap the benefits of increased customer loyalty and profitability.
