How to increase CLV in a competitive toys and games market

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This article is brought to you by Retail Technology Review: How to increase CLV in a competitive toys and games market.

By Nathan Lomax, Co-Founder, Quickfire Digital.
 
E-commerce for toys and games is a kaleidoscope; it’s vibrant, ever-changing, and fiercely competitive. Success isn't just about snagging first-time buyers, it's about building lasting relationships with parents and maximising customer lifetime value (CLV). Loyal customers are your gold mine – studies show they spend a whopping 67% more than new customers!

But in a world where kids' tastes shift faster than a toddler's mood, how do you keep parents engaged and coming back for more? Well hopefully this piece will steer you in the right direction, diving into battle-tested strategies designed to foster customer retention.

Loyalty Programs: Your Secret Weapon

Loyalty programs are a tried-and-true method for boosting CLV. But with so many variations out there, which one best suits your toy brand? Here are some popular options, along with real-world examples to spark your imagination:

  • Points: Award points for purchases, reviews, and social media engagement. Think of them as virtual gold stars, redeemable for enticing rewards like discounts, exclusive products, or early access to new releases. Take a page from LEGO's VIP program, where members earn points for purchases, reviews, and attending in-store events. These points unlock exclusive LEGO sets, early access to hot new releases, and double points on specific categories, keeping parents engaged and excited.

  • Tiered: Create a tiered system with escalating rewards based on purchase history. It's like offering VIP access to the coolest toys in your virtual playroom. Hasbro's "Fan Club" loyalty program serves as a stellar example. They offer three tiers (Bronze, Silver, Gold) with increasing benefits based on spending. Higher tiers unlock exclusive discounts, birthday gifts for little ones, and invitations to member-only events, making parents feel valued and appreciated.

  • Subscriptions: Offer curated monthly subscriptions tailored to age groups or specific interests. Think of them as surprise packages brimming with joy delivered right to their doorstep. KiwiCo's STEAM (Science, Technology, Engineering, Arts & Math) subscription boxes cater to different age groups, keeping kids engaged month after month with creative and educational activities. This not only provides recurring revenue for your brand, but also builds anticipation for the next exciting delivery.

Data: Your Playground 

Loyalty programs become even more potent when fueled by data. Here's how to really make your data work for you:

  • Know Your Tribe: Analyse purchase history to identify customer groups with similar preferences. Imagine a tribe of parents who love educational toys. Targeted recommendations with personalised suggestions for new learning games and activity kits become a breeze!

  • Predictive: Use purchase data to anticipate future needs and interests. Think of it as offering the perfect toy before parents even start browsing. For example, analysed data showing a recent purchase of a coding robot for an 8-year-old can be leveraged to suggest age-appropriate coding tutorials or more advanced robots, catering to the child's growing interest in STEM fields.

  • Engagement Check: Monitor customer engagement with your loyalty program. It's like taking the program's temperature to see what's hot and what's not. Analyse which rewards are most popular and which ones are rarely used. This data becomes your roadmap for future program updates, ensuring you're offering the most relevant incentives for your audience.

Personalised Inserts: The Delightful Touch

Ditch the standard packing slip! Personalised inserts that resonate with your customers create a delightful surprise, adding a layer of magic to the online shopping experience. Here are some creative ideas:

  • Tailored: Generate unique discount codes based on past purchases or browsing history. Imagine a customer who recently bought a Lego set receiving a 20% off discount code specifically for building blocks, keeping the building fun going!

  • Recommended: Suggest complementary toys or games based on their children's age and previous buys. For a customer who bought a doll set last month, recommending a dollhouse creates a sense of serendipity and encourages further purchases.

  • Engaging Entertainment: Include fun activities, puzzles, or colouring pages featuring characters from popular toy lines. This keeps children entertained while the package is being opened, fostering a positive brand association from the very beginning. Imagine a toy company partnering with a popular cartoon network including colouring pages featuring the show's characters on the packaging inserts.

The wrap up

The toy market may be a competitive playground, but with the right strategies, you can transform your brand. By implementing these battle-tested tactics – from crafting loyalty programs that resonate to leveraging data for personalised recommendations, you'll nurture stronger customer relationships and watch your CLV soar (over time). Remember, loyal customers are the foundation of long-term success. So, put these strategies into action today and turn your toy store into a go-to place for happy kids and engaged parents!

Bonus Tip: Embrace the Power of Storytelling

In this space, imagination is the currency. Don't just sell products, weave stories that capture hearts. Highlight the joy of learning through play with your educational toys. Showcase the imaginative adventures sparked by your creative sets. Let parents see how your products become treasured companions in their children's growth. By weaving these narratives into your marketing efforts, you'll build a deeper emotional connection with your audience, further strengthening customer loyalty.

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