July 24, 2015
It’s in no doubt that loyalty programs are vital to the success of any business, small businesses even more so. Loyalty programs are a brilliant method in promoting loyalty among existing customers, attracting new customers and driving sales. On average loyal customers make up only 20% of a business’s customer base but account for up to 80% of revenue! But it would be foolish to just dive straight in with any old loyalty scheme. What might work for one business may not work for another. There are a few intricacies that need to first be appreciated when creating a loyalty scheme that will satisfy your customers and boost your profits.
Do have goals when you are initially planning and creating your loyalty program. Is the aim of the loyalty program to increase traffic during slow periods, increase customers spend per visit, or find new customers? Knowing what or who you want for your loyalty scheme will help market the program effectively and efficiently to the right people and help you get the most out the experience.
Don’t be unrealistic with your goals however. If your goal is to increase spend per visit don’t expect your revenue to increase by 500% in the first few weeks. These types of ventures can take a bit of time to get going so you may see a slow start before it really takes off. So relax, if you have put thought and effort into your program then it will only be a matter of time before you are reaping the benefits.
Do keep it simple. Keeping your loyalty program to simple points per spend/visit/item bought system will make it a lot easier for your customers to engage with your program. Allowing your customers to immediately get engaged in the program will make them more motivated to participate and give you a more loyal, profitable customer.
Don’t make signing up long and difficult. This could lead to customers getting bored during the sign up process making them likely to give up. Unnecessarily long winded sign up processes could lead you to lose interested and profitable customers. You can avoid this by taking down only essential information (e.g. name, email address etc.) and have your employees fill out any information the customer doesn’t need to do. Another good tip is to give customers the option to sign up both in person and online to give as many different customers as possible a chance of joining your loyalty program.
Do be creative with your loyalty program and reward your customers for a variety of actions that will directly and indirectly drive sales. Good reviews and referrals can be invaluable to your business so let your customers share in the joy and show that you appreciate their support. This will only help to encourage positive behaviour and lead to new business while at the same time cementing the loyalty of existing customers.
Don’t limit your loyalty program to just transactions and discounts. There are so many loyalty schemes that customers can choose from. They can be offered a discount almost anywhere they like. So what differentiates your program from your competitors? Offer customers an experience that is unique to your business and you can steal loyal customers from right under the competitions noses.
Do make rewards attainable so customers stay interested in your program. Make sure customers feel as though they are getting rewarded for their loyalty otherwise they won’t stay loyal for much longer. In order for customers to feel satisfied a good rule of thumb is to allow customers to be rewarded every 12 visits at most (less preferably!). This will depend on your type of business but the principle behind it is to keep your customers motivated by never feeling a million miles away from a reward.
Don’t make rewards too easy to gain as this will lead to lost profits in the long run. There is a difference between loyal customers and people who want free stuff. The former is very valuable to your business whereas the latter will only stick around until they find a cheaper alternative. Find a good balance between making your rewards attainable and not giving away your stock. This will reward your best customers and attract more loyal customers, while at the same time discouraging the bargain hunters.
Do set up a mobile based program. Most customers now have a smart phone and studies have shown that 75% of customers would prefer an app for their loyalty scheme. A big advantage of mobile based schemes is that they let you access a wealth of data about your best customers and your most popular rewards that regular card based programs just can’t. This data can be used to personalise rewards for the best customers and promote your best rewards to encourage more loyalty. Your customers will also be pleased they don’t have to carry another punch card. Have a look at our blog The Brand New Generation of Loyalty Programs for more details.
Don’t scare off customers by making it too complicated. When you are creating a mobile based loyalty program it can be tempting to make the most of all the fantastic functionalities at your disposal. However, be aware of overcomplicating your loyalty scheme as this will only serve to confuse your customers and put them off. You can also use a paper based program in conjunction with the mobile loyalty scheme for those who aren’t as comfortable with new technology.
Do make the most of data available to enhance your customer’s experience. Many companies won’t use data to improve their services for fear of a privacy backlash, but when used sensitively your customers will appreciate a more personal reward. If you can use data collected to provide a well thought out and targeted bonus for your very best customers, it will be very much appreciated.
Don’t take advantage of your customers trust. Gaining trust is an important factor in customer loyalty so you must be very careful when a customer gives you their personal information. Taking advantage of this trust by spamming your customers email inbox or giving away their information will not only lose you a loyal customer, but also damage your reputation as a business.
Do be willing to change it up if you feel you are not getting enough from your loyalty program. There is most likely a reason behind your lack of success and the people who will know this best are your customers, so ask them. A quick survey perhaps or even a few questions from your employees at point of sales may do the trick. The answer could be as simple as changing your rewards or tweaking your points system. Your customers will want a rewards program that is relevant to them so are in the best position to shed light on your problem.
Don’t give up. Loyalty schemes are tried and tested methods and have been successful for decades. Rethinking your marketing strategy so more of your customers are aware of your loyalty program and all its benefits might give it the boost it needs. Many big companies, such as Nandos and Starbucks, have been built off the back of customer loyalty so perseverance is the key if you are finding that your program isn’t taking off as you’d hoped.