Business growth

How to rock your customer loyalty program

By Margrethe Lunde
On 05 December 2017

Since the very birth of business, the value of the returning customer has been highly acknowledged.

In fact, the cost of acquiring a new customer is actually anywhere from 5-25 times as high as keeping an existing one.

Mind-blowing, right?

Still, getting loyal customers is a lot easier said than done – and thus, a lot of merchants have discovered and embraced the customer loyalty program.

Competition is fierce, demands are higher, and customers are less loyal than ever. Still, technology and more information are in return giving us new tools to thrive in the business world.

We just need to learn how to use them.

In this blog post, I will go through some of the do’s and don’t’s of customer loyalty programs, so that you can start kicking some loyalty programs’ sweet behind already now.

If you’re not sure about starting up a customer loyalty program yet, here is why you should:

Customer loyalty programs can save you both time and money, all the while giving your customers a better shopping experience.

Did you know that according to a study by the Nielsen Company 72 % of participants state that they would choose to buy from a retailer with a loyalty program rather than one that doesn’t have one?

Or that 67 % say that they would spend more money and shop more frequently in stores with loyalty programs?

Nevertheless – just having a loyalty program is not enough. Times have changed, and here’s what you should be aware of before throwing your hat in the ring.

DON’T:
Expect customers to join your program without anything in return.

Don’t you just hate it when companies ask you to do something without getting anything in return?

Say when the person behind the desk in the kind of random store you visit sporadically asks you if you want to join their customer club. Okay. So why would you spend an extra 10 minutes filling out forms and whatnot, probably providing more information than applicants for a job at the CIA, without any incentive whatsoever?

In my opinion, companies that do this are equivalent to those people who ask everyone to help them move, with promises of dinner or beers that never come.

Yeah. Don’t do that.

By doing so, you’re just expecting random people to selflessly do something for you – and that’s charity, not business.

DO:
Value your customers’ time and efforts.

Obviously, you need to make sure your loyalty program is rewarding enough to keep your customers interested and active. It’s all about giving them an incentive to sign up and to stay on. Offer a discount, special gift or bonus points to customers signing up.

Many stores give a ‘welcome offer’ to new members, perhaps you will get a 10-20 % discount on your current purchase, or a 500 point welcome bonus? You decide.

It’s important to acknowledge that even if they sign up, you still need to encourage them to use it. Make sure that you reward all types of actions, and reward continuous use of the program. Which brings me to my next no-no:

DON’T:
Base your program solely on only spending money.

Many businesses limit themselves to monetary actions alone, which makes them ignore so many valuable aspects of the very concept of customer loyalty programs. Be creative, and reward your
customers for as much as possible.

Attending an event? Point.

Giving a product review? Another point.

Referring a friend? Ding ding, special price for you.

Be creative and have some fun with it. You will soon discover that there are multiple ways to engage customers aside from just spending – that will still earn you money.

DO:
Use the information gained to make better, personalized offers.

By doing it right, customer loyalty programs will not only increase your sales – it will also provide you
with a great source of data that can help you map the behavior and preferences of your shoppers. Use it wisely.

In other words – you will be able to see which items each customer prefers, what they buy, what they keep coming back to, maybe adding it to their wish list, but never actually purchasing and so on.

Say, if you know FOR A FACT that your faithful customer Gregor always buys fishing equipment – why not tip him off when you have a campaign for JUST that type of equipment? Or you could even consider making a personalized discount for a new fishing net that only lucky Gregor will get.

Now that’s customer service for you.

Not only will the information you get help you target your customers individually – it’s also a great source of information when creating and/or developing your shopper ‘personas’ (in this case, Gregor the Fisherman).

BUT – and this is an important one – you need to remember to steer clear of any grey zones within the privacy department.

The EU General Data Protection Regulation (also known as GDPR) will be enforced in May 2018. This is the most important change in data privacy regulations in 20 years – so if you’re collecting data, and haven’t read up on it yet, you should.

Whenever you are asking for someone’s personal information, make sure you have the required consent and permission to use it.

And then – use it wisely.

DON’T:
Make it hard for your customers.

I will say this once, and probably a few times more after that.

Stop making it hard for people.

Do not make them carry around a card, chip, sign or magical amulet to be able to use their membership.

Joining your loyalty program should make shopping easier and more convenient, not the opposite.

Experiencing the joy of thinking you will finally get to use that membership you stayed an extra 5 minutes to get last time, only to suffer the frustration of not having brought the little card or 13 digit membership number, is not something that will make your customers happier.

Quite the contrary, my friend.

I’m not saying you should rule out membership cards completely – I’m just saying you shouldn’t make them necessary criteria for your customers to earn points.

Another common issue is that many companies tend to overestimate people’s enthusiasm with their loyalty programs (shocker, I know).

The inconvenient truth is, that if the rewards are too hard or time-consuming to earn, people will probably not bother.

DO:
Make the loyalty program an effortless extension.

Think easy and effortless. This is supposed to be a prolonged service to your customers, a way of making them feel excited about shopping in your store. Try connecting their profile to something easy and/or convenient, such as their payment card, phone number or similar.

If you do have a smashing membership card as a part of your program, that’s super. Just make sure to have a plan B, if the customer doesn’t have it on them.

In a proper 2017 manner, you should also be able to provide your customers with a website, online app, newsletter or portal that can help them keep an overview of their membership – score/points, or whatever you decide on using.

DON’T:
Get comfortable.

Ok, so you have a great loyalty program.

Now what?

Just because something worked yesterday, doesn’t mean it will work tomorrow – or even today.

Make sure you measure. Everything. All the time.

Good metrics combined with constant customer feedback will give you the insights you so desperately need in order to survive as a merchant and customer shepherd.

Your customers’ needs will change over time, and so will technology, trends, society and just about everything else. So it’s important to stay alert and keep making improvements as you go.

DO:
Gather feedback from your customers.

As with everything else, your customers are the ones using your service. They kind of hold the golden key to your success. So use all available tools (emails, social media, etc.) to find out:

  • What do your customers really think about your program?

  • Are they even using it?

  • Is it easy and convenient?

Not to mention – are they really carrying around that neat little membership card that your whole marketing department thought was really nifty and awesome, but the customers never seem to keep on them? (yes, I’m talking to you, cosmetics store in my neighborhood with the ridiculously small plastic cards).

Find out, and see where you can improve.

Now, I’m asking you:

Are you prepared to go out there and rock that loyalty program?

If the answer is yes – good for you!

If no, not to worry. There are plenty of good third parties out there that can help you to both set up and run your loyalty program.

Do you have any other tips, experiences or advice regarding customer loyalty programs?

We are, as always, eager to hear about it. Swing by our Facebook or Twitter profiles or send us an email.

Margrethe Lunde

Energetic word nerd with a writing speed of 100 WPM and a passion for adventure, good stories, and simplifying the overly complicated. When she's not absorbed in a book or a blog post, she's on "fjellet" (in the fells) or somewhere near freshly brewed coffee.

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