Ask any marketer what they’re responsible for, and you’ll be met with a rambling list. To get through the day, they must ruthlessly prioritize, working on the things that matter most to their stakeholders.
But each stakeholder has their own preferences and agendas, swayed by what their peers are trying, competitors are doing, or industry experts are saying. Lately, that strategy of the week has been incrementality. That’s what marketers have focused on, and they’ve seen big wins in topline revenue.
Here’s the problem: as they grow their new customer base, their existing customer base is falling out the bottom of the bucket.
If they can’t find a way to retain those customers, they’re going to have to work twice as hard to get more. Blake Ziolkowski, Sr. Director of Merchant Sales, explains:
“When I worked for Patagonia, I recall Yvon Chouinard emphasizing how important it was to retain customers. If you think about it, 1 lost customer could mean 100 lost customers because of how fast word of mouth travels. The success of 1 new customer ripples outward slower and drives only a few new customers.”
Of course, that’s not to say that you should relentlessly pursue loyalty plays. That would also be taking a short-sighted view of your business.
What marketers really should be doing is running incrementality and loyalty strategies in parallel. Below, we explain why. But first, let’s run through a quick review of each concept.
What’s loyalty?
Loyalty is about creating strong, long-lasting relationships that push customers to choose your brand repeatedly over competitors. It’s closely tied to retention — the act of keeping customers coming back by actively engaging them with relevant content, experiences, and offers. And it matters because acquiring new customers costs significantly more than keeping existing ones — between 5 and 25 times more.
In virtually every sector, margins are tight and competition is fierce. Loyal customers create a valuable revenue flywheel, spending more themselves and recommending your brand to other future customers.
What’s incrementality?
Incrementality is all about gaining new customers and measuring how much marketing played a role in getting them.
It answers the question: “How many additional sales or conversions happened as a direct result of X marketing campaign — above and beyond what would have happened without it?”
That data is invaluable. Without incrementality analysis, it’s tough for marketers to know what’s working and what isn’t. Modern merchants and issuers need to measure incrementality to properly manage their budgets and optimize for channels and campaigns that actually attract (and convert) potential customers.
Why do you need both?
If you don’t develop loyalty and drive incrementality at the same time, you end up in a catch-22.
Concentrate exclusively on incrementality, and you may drive thousands of new purchases. But if the quality of your product is low, the buying experience is poor, or they don’t see a reason to transact again, you may never generate more revenue than you already have. You’re incrementally adding users but it doesn’t matter. Ultimately, you’re ultimately losing market share.
Concentrate exclusively on loyalty, and you’ll dramatically improve overall customer lifetime value. But without reeling in new business, you’re counting on your existing customers to evangelize your brand, limiting how much you can grow.
Don’t end up with a leaky bucket problem
Though incrementality is important, it’s not the end all be all. Unless you double down on your acquisition efforts, you’re going to miss out on long-term revenue — not to mention glowing reviews, word-of-mouth referrals, and increased average order values.
Plus, building loyalty isn't as hard as you think. With Kard’s straightforward rewards-as-a-service API, merchants:
- Get free impressions on 47M+ cardholders
- Spur 40% more repeat purchases
- Shift their market share by 13%+
- Drive 51%+ in-store sales
Issuers have just as impressive results:
- 95% of activated cardholders make another purchase after receiving a reward
- Targeted and local offers boost average customer value by 71%
- Cardholders who earn rewards make 47% more transactions per month
See just how easy it is to get started and see results with Kard. Book a demo with our team today.
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