Seems like everyone has a customer loyalty program, from the Tesco club-card right through to McDonald’s free McCafe loyalty card. In fact, 75% of retailers in the UK provide some kind of loyalty program, and 92% of the adult population are currently signed up to at least 1.
Loyalty programs are so popular because most organisations realise, in and increasingly competitive environment, nurturing relationships with existing customers is absolutely essential. And, according to a Harvard Business School article, the greatest benefit of loyalty programs is improved customer retention.
Even though many large organisations spend £1,000,000’s creating, promoting, and managing customer loyalty programs, it’s still possible for small organisations to create successful programs with much less investment.
And here are some tips and ideas…
Implement a loyalty program right for your own customers
Loyalty programs come in many forms, from the basic stamp card and cash rewards to exclusive plans that require up-front membership fees.
If you have a retail (food or other goods) business, rewards for purchases and discounts are good choices.
If you’re a service provider, like a hair salon or nail bar, VIP programs and special offers can work well.
And offering concierge services for loyal customers can be a good approach for B2B organisations.
When creating your program, consider the difference between transactional and discount programs…
Transactional programs reward customers when they make a purchase. A good example of this would be a business offers customers a £50 gift card when they accumulate purchases adding up to £1,000. These types of programs are simple to understand, market and administer, and can be as low tech as a stamp card.
But discount programs offer customers special savings just for being members (usually by carrying card). These can be a little more complicated to manage, but can be popular with customers who purchase the same products or services regularly.
It’s wise though, to invest some-time in understanding your own customer data to better understand how they engage with your business, so you can create an appealing program that is right for your customers. 1 thing to keep in mind, is the most successful loyalty programs are those designed to reward the customer for how they already interact with the business and that reinforce the existing relationship.
Simplicity is key
Make sure the program is easy for your customers to understand and use…
Points based programs can be confusing for customers, unless you can offer them an easy and simple way to keep up with their points electronically, such as an an app.
Low tech stamp cards or swipe cards (depending on your point of sale system) are easy to understand and use.
Providing members with 20% off every Friday is also about as simple as it gets. Even exclusive (VIP) programs can made simple and uncomplicated. For example, exclusive (VIP) members receive a 20% discount off all services. Rather than 10% off haircuts, 15% off a colour and 20% off a blow dry, which comes across as much more complicated.
Make the joining process as simple as possible. A goo way is to invite customers to type in an email address or fill out a short electronic form on an iPad at the point of sale. Customer participation will reduce dramatically if you require them go home and register online. Because your asking them to do a bit of work for you.
Simple can also mean affordable. Don’t just reward with cash back, gift cards, or other items you have to purchase, offer them resources you already have, such as free product, discounts and buy 1 get 1 free.
Use social media
Social media is an an easy and affordable way to spread the word about your program, as well as staying in touch with your customers.
If you have the time to generate and post content yourself (rather than buying paid promotions) it can be very cost effective.
However, it can also be very time consuming and difficult to determine the success of your efforts. You might want to consider investing in some paid (but still relatively low cost) social media promotions if your budget permits. Such as Facebook post boosts, and you can also access many tools and strategies to help improve the effectiveness of your social media promotions.
High tech solutions
If you want to go higher tech and a bit more hands off, there are lots of organisations that provide third party customer loyalty and rewards programs.
Many of these are apps your customers can use to receive special offers. And these programs typically come with a monthly fee, some of which are very reasonable.
However, the goal of a customer loyalty program is to build relationships with your customers, and a third-party provider might not be the most personal approach.
But, again, what you choose depends on whats right for your customers, and how much time you have to devote to the program.
Update your loyalty programs regularly
It’s important to keep your customers interested in and excited about the program, so you need to change it regularly. You don’t have to make significant changes, just little tweaks to keep it fresh. Add in a game, have special bonus periods, create a competition, factor in a referral component at some point.
The key thing, is to be creative and make it fun for your customers and your organisation.
We operate a few different loyalty programs, depending on the product. An example of this, would be our Infinity printing service, where we provide a free month if a customer pays up front for a 12 months service (only pay for 11).