By Holly Cordner
Would your business benefit from a loyalty program? If you’re wondering where to start and how to get your customers to participate, read on. These sure-fire tips will help you create a program that will keep customers coming back.
1. Make the guidelines for earning rewards clear
There are a few different systems you can use for determining when customers have earned rewards. The system you choose should be a function of how your business operates and how your customers interact with you:
Reward for purchases – With this type of program, customers purchase a fixed number of items in order to receive a reward. Number of purchases are often tracked with punch or stamp cards.
Reward for visits – Customers come to your business a fixed number of times (7 to 15 is a good number) and are rewarded with a free product or service or a discount on the next visit. This reward works particularly well for salons and spas, where customers spend a fixed amount with every visit.
Reward for dollars spent – A variation on the “reward for purchases,” this program rewards customers for spending a certain amount. An advantage of this program is that all customers must spend the same amount to earn rewards, so it doesn’t matter if their purchases are large or small; a drawback is that it may take longer for some customers to earn rewards, and these people may be less motivated to come back.
Reward for spending a certain amount in a single visit – If customers spend over a certain amount, they get some discount or free item. This type of program may increase customers' spending in a single visit if they are close to a threshold, but it doesn’t do anything to encourage multiple visits.
Rewards points that expire – You can make rewards points “expire” if they aren’t used within a specific time frame (a month, a year, etc.). The idea here is that customers will spend more in a shorter amount of time to earn rewards, but you also run the risk of angering customers if they discover that their points are gone.
Combined programs – Who says you have to limit your program to just one type? You may want to combine a few of these ideas (e.g., a reward for visits plus a reward for spending more in a single visit) to get the maximum loyalty benefits for your business.
Whatever program you choose, be sure to explain the requirements to new customers. Make it clear what types of rewards you offer and what people have to do to get each one.
2. Use your loyalty program to make better business decisions
While a simple punch card may get the job done for rewarding your customers, it won’t allow you to capture their contact information or track customer purchasing habits to improve your marketing. Your loyalty program should, ideally, be set up so you can see how customers are interacting with your business and allow you to communicate with them via text message, email, and even snail mail.
To do this, you’ll need to collect contact information and other information (interests, preferences, etc.) from your customers when they sign up for your program. To get the most information possible, you may want to consider kicking in some incentives for people who complete full profiles (extra points, discounts, etc.).
3. Keep it simple
The easier you can make it for your customers, the better your participation rate will be. For example, consider using a tablet kiosk system where customers can enter their phone numbers to collect points rather than relying on a physical punch or scan card.
Photo credit: CityGro
You should also consider limiting the amount of information you ask for in one go. For instance, you may ask for a phone number the first time a customer checks in, and then ask for other information (important dates, favorite products) during subsequent visits or via email that you collect later.
4. Allow multiple levels of communications opt-in
Some customers choose not to allow communications because they’re afraid that you’ll bombard them with messages. You can fix most of these problems by allowing customers to choose their opt-in level. For instance, you may offer an options to receive messages only once a week or once a month, or allow customers to choose to receive coupons but not other marketing messages.
5. Customize rewards and messages
Don’t let all the valuable customer information you’re collecting go to waste! A great way to get create a more successful campaign is to tailor the messages you send to each customer.
Did a customer indicate that he likes chocolate more than vanilla? Send him an offer for a discount on your hand-dipped ice cream. Is it a customer’s birthday? Send her a birthday greeting and a discount. Does someone come in all the time? Give that person a buy-one-get-one deal for him and a friend. Notice that one of your customers just bought an oil change? Give her a deal on a tire alignment.
Segmentation is your friend. Create messages that feel personal, and use your data to send customers the right messages at the right time. Here’s an example from Sephora using a previously-purchased item as an opportunity to engage (in this case, asking for an item review):
6. Use contests to get people excited
Consider using contests as a way to get more people to check-in. Offer monthly drawings, with entries based on the number of times people visit your business or the amount of points they’ve accumulated. Advertise these contests in your store and through messages to your customers.
7. Remind customers of their points level
Is one of your customers getting close to a reward? Use this to your advantage. Remind customers how close they are to earning a free sandwich or a 50 percent off coupon. This could encourage them to visit your store more frequently until they reach the next level.
Here’s an example email from a local pizza restaurant:
No matter how you decide to implement your loyalty program, you need to understand that loyalty goes both ways. Your customers are rewarded for being loyal to you, yes, but you also need to be loyal to your customers in the form of superior service.
