By Pauline van Dongen – Deckers, CRM Consultant a.i. at the Louwman Group, The Netherlands
Recently I joined the Louwman Group again. I’m happy to be back in the automotive and mobility industry!
And – after a few years working in the retail and fashion industry – I noticed quite a lot of differences between short and long purchase cycles and their impact on loyalty programs.
Here are my muses!
Loyalty programs are a powerful tool for businesses to strengthen customer retention and encourage repeat purchases. However, the effectiveness of these programs varies significantly depending on the duration of the purchase cycle.
Let’s start with the short purchase cycle like retail and everyday consumer goods:
– Frequency of purchases: high. Customers make purchases regularly and sometimes even daily;
– Decision-making: relatively quick and often impulsive;
– Contact moments: frequent and brief.
Let’s dive into the impact on loyalty programs and their reward structure, interaction and approach:
– Quick earning: rewards must be earned quickly and frequently to keep the customer engaged;
– Regular interaction: use of apps, emails and push notifications to stay in constant contact with the customer;
– Omnichannel approach: consumers in the retail sector often use multiple channels to buy their next item.
Next, let’s talk about the long(er) purchase cycles, like durable/luxury goods and cars
– Frequency of purchases: low. Purchases are rarely made, often with years in between;
– Decision-making: lengthy and careful, with much research and consideration;
– Contact moments: less frequent but often more intensive.
Longer purchase cycles will have an effect on rewards, customer contact moments and interaction channels:
– Large rewards: customers expect larger rewards that match the value of the purchase;
– Customer contact moments: given the longer decision-making processes, educational content and product demonstrations can be very valuable.
– Physical interaction: personal contact is crucial in sectors with long purchase cycles.
In conclusion and in my opinion, the nature of the purchase cycle significantly impacts how loyalty programs should be designed and executed.
In sectors with short purchase cycles, the focus is on quick rewards, frequent contact moments, and a strong omnichannel strategy.
Conversely, long purchase cycles require larger and longer-lasting rewards, more intensive customer contact moments, and a strong emphasis on personal interaction supported by digital tools.
By understanding and integrating these differences into their loyalty programs, businesses can more effectively meet the needs and behaviours of their customers, ultimately leading to higher customer satisfaction and loyalty.
Contact me on LinkedIn for more talks about short and long term purchase cycles
