Customer Retention & Loyalty Programs Flashcards

Which post-purchase email sent within 24 hours of delivery has been shown to significantly increase repeat purchase rates?

Answer: Personalized product review request combined with a 'complete the look' recommendation

A review request paired with relevant product recommendations capitalizes on post-purchase satisfaction while driving the next purchase consideration.

What is 'customer effort score' (CES) and how does it relate to retention?

Answer: A metric measuring how easy it is for customers to interact with a brand, with lower effort correlating to higher retention

Research shows that reducing customer effort in service interactions is more predictive of loyalty than delight-focused strategies alone.

An ecommerce brand wants to identify customers at high risk of churning before they leave. Which approach is MOST effective?

Answer: Use predictive churn modeling based on declining engagement signals like reduced visit frequency and lower open rates

Predictive churn models analyze behavioral signals to flag at-risk customers proactively, enabling timely and targeted retention interventions.

Which loyalty program mechanic creates urgency by making earned points expire if not used within a set timeframe?

Answer: Point expiration policy

Point expiration policies leverage loss aversion to drive engagement and redemption, pushing customers to interact before losing their rewards.

What is the 'endowed progress effect' in loyalty program design?

Answer: Giving customers a head start on points or progress to make them feel invested and more likely to complete a goal

Starting customers partway toward their first reward (e.g., 'You're already 20% of the way there!') increases completion rates due to the feeling of momentum.

A DTC brand implements a VIP program for top 5% spenders with exclusive early access to new products. This is primarily designed to address which customer retention challenge?

Answer: Retaining high-value customers who might be targeted by competitors

Exclusive VIP benefits make top-spending customers feel uniquely valued, increasing switching costs and reinforcing their preference for the brand.

Which of the following BEST exemplifies 'community-based retention' in ecommerce?

Answer: Building a branded online forum or social group where customers share experiences and connect with each other

Community-based retention creates social bonds between customers and the brand, making switching costly not just financially but socially.