Two Online Retail Sales Strategies that Work: VIP Loyalty Programs and Social Proof

Cat Millar
by Cat Millar 03 Oct, 2016

Retailers employ a variety of strategies throughout the year to boost sales; however, with the vast number of shoppers browsing for the perfect gifts online on Black Friday -- 103 million Americans shopped over the 2015 Thanksgiving-Black Friday weekend according to the National Retail Federation -- the holiday season definitely warrants additional preparation and investment.


According to our research on Black Friday 2015 shopping behavior, we found two strategies that can provide significant returns for retailers: rewarding VIPs and Social Proof.


Rewarding VIPs Shows You Appreciate Their Loyalty


Black Friday is the perfect time of year to spoil and surprise your VIPs with specific personalized offers to encourage them to make bigger purchases. Our research shows that less than one percent (0.3 percent) of customers contribute up to 30 percent of online revenue overall. Discovering that 0.3 percent and harnessing their purchasing power, on Black Friday and all year round, should  be a top priority for all retailers. Luxury retailers can particularly benefit from customer loyalty strategies - this segment had the highest percentage of revenue (Black Friday 2015) from return visitors of all those we examined: 33 percent. 


However, VIP programs have to be intelligent, data-driven and measurable to be a true success.


The first step is to use customer data to examine average order value, lifetime value, frequency of purchase and when the customer made their first purchase to easily define who your VIPs are. 


These individuals expect a return on their investment in you as a brand, which means going beyond discounts and focusing on the tangible benefits you can offer that will add value to their experience. VIP rewards can be as simple as offering exclusive free shipping and returns over the Black Friday weekend, or could be more sophisticated, such as providing early access to sales, personalized discounts for their favorite brands or products, and a dedicated call center line to ensure they get priority support to make the purchases they need. 


Customer retention is key - a five percent increase can drive up to a 75 percent increase in profitability. Ensuring your VIPs know you care is critical to ensure the best results possible. If you don't show them how much they matter, they will find a better experience elsewhere. 


Two key points to remember when developing VIP reward programs:


1) You need to have a granular understanding of customers to be able to tell whether you can offset the costs in offering advantages to VIP customers in the added revenue they are likely to contribute as a result.

2) Picking a single primary metric for success is also key. It enables you to easily validate the success of the program and using a metric like NPS score or AOV means you can actually get a measure of engagement. 


Crafting an intelligent VIP program in this way has the potential to make VIP status aspirational for other customers, encouraging greater spending in order to qualify for the advantages being offered. 



Leverage Peer Pressure Purchasing Through Social Proof


Consumers follow the leader. Generally, if they can see others doing something, they imitate that behavior. Using social proof in this way enables you to turn "should I buy it?" into "I have to have it." People are already more likely to purchase products during Black Friday, but being able to demonstrate what others are buying in real-time can enable you to increase purchases. 


If you can also encourage people to purchase the stock that you need to sell because it's going out of season, etc., you can find a win-win by providing the support and reassurance customers are looking for in making a purchase with the advantage of  being in a better position to sell this stock. 


An easy way to leverage peer power is to put product reviews and ratings at the forefront of the experience so shoppers see this information as soon as they click on it. Showing people what others actually thought of a product can be just as powerful as showing how many people looked at an item or purchased it. 


Consumers are in a rush on Black Friday. The same pressure they feel in-store fighting in the aisles is just as strong online, but you can make your proposition is even more compelling by surfacing a pop-up that tells them the rating of the product as they're looking at it. Pointing out the product has a five-star rating can seal the deal and, if search results have been personalized properly, should help convince them to keep the purchase rather than returning it after the holiday.


The "Fear of Missing Out" (FOMO) phenomenon is a powerful and highly effective strategy.


Using urgency pointers and countdown timers amplify that pressure to encourage more purchases during the extra rushed holiday season.


Two key points to make a social proof strategy work:


1) Low stock pointers are effective, driving up to a 3.2 percent uplift in conversions. If you only have a certain number of items left, displaying this information, especially to customers who have spent a lot of time on the page, can snap them out of their inertia and push them into making a purchase. 

2) Countdown clocks and sales timers typically deliver 3.1 percent and two percent uplifts. Both can help build up anticipation and create excitement before a sale even starts by stoking fear of missing out. This strategy ensures people will be moved to act and make their purchases as quickly as possible.


You can even use FOMO before the sales start. As mobile commerce has become more common, encouraging the creation of wish lists ahead of the big day means experiences can be tailored to enable this type of purchasing. Email notifications can then encourage repeat visits as customers always have something to go back to and can take advantage of discounts as and when they become available. 

When finalizing your Black Friday 2016 campaign strategies, don't make the mistake of discounting the important roles that VIP loyalty programs and social proof play. Rewarding your VIPs is a retail best practice to utilize year round. And, encouraging action due to social peer pressure, reviews and ratings, will only grow in importance as shoppers become savvier and rely on these ratings to make informed purchases.