Knowing how to maintain customer loyalty is one of the biggest issues small business owners face. Luckily, today’s modern industry has created a system that may make customers keep coming back to a business: the Customer Loyalty Programs.
If you have been in the business for a while, whether as an owner or as a marketer, chances are this is not your first time hearing about such a program. You might even have adopted this kind of program several times in your business.
So, how is your experience with the customer loyalty program going so far? Has it resulted in any good outcome? If you think you need to start over from scratch, read on because we will discuss many important details about the topic and show you how you may succeed with it!
The Basics of a Loyalty Programs
One of the things that makes it hard for entrepreneurs to compete in today’s industry is how easy it is for people to offer great products at even greater prices. We also regularly see a lot of brands that do a lot of things to acquire new customers. For this reason, having brand advocates and returning customers is key to keeping businesses alive in this modern market.
Returning customers contribute up to 67% more compared to new customers. So, besides considering how to attract new customers to improve your sales, a business owner must also consider the best ways to keep its loyal customers coming because they are vital for long-term success.
It is easy to see why the presence of a working and Effective Customer Loyalty Program is essential. In this very saturated market, a business must find ways to create a meaningful bond with its customers. Unless a business can do so, it will not have enough repeat customers to keep things running.
With a customer loyalty program, a business will typically assign and accumulate “points” for a certain amount of money a customer spends on its products. These points can be redeemed with other products or offers once they reach a certain amount. Therefore, the more money and the more often a customer spends on a business, the better reward they will get.
There are a lot of ways for a business to set up its customer loyalty program. Each will have a different approach depending on its scale and nature. So, you cannot just simply copy what has been done by another business and apply it in your because what works great in one business may bring a significantly different result in another.
Yes, it might take several trials and errors before you find the ideal loyalty program model. However, you should not give up easily because it is, so far, the best way to impress your customers and show them that you appreciate their decision to support your business.
Why a Business Needs to Reinvent Its Loyalty Programs
Many business stakeholders today complain that they are stuck in a slow-growing environment. Everchanging commerce techs, the presence of disruptive platforms, and many other things contribute to the business scene’s stalling growth. While bigger players have the chance to cut down on operational and production costs, small business owners do not have the same option.
One of the few options small industry players get is figuring out how to keep people coming back to their businesses. This roughly translates to knowing how to maintain customer loyalty. It has been proven to be an effective way to maintain market share as numerous studies have proven that customers who are already satisfied with a brand will continue to buy from it.
Still, there seems to be a disconnect here. Many business executives already know the importance of such programs. Even so, only a few of them know how to implement it. Data shows that retailers are still implementing outdated loyalty programs that were created with theories from years ago when customer expectations and market competition were very different than today.
Any consumer behavior theory used by those retailers no longer holds in today’s retail marketplace, which is why retailers, whether they are big or small, must adjust their Innovative Customer Loyalty Programs to compete. While it is true that loyalty programs can still be a powerful tool to maintain market share, they must be able to keep up with modern industry trends and look appealing to today’s digital consumer.
Sure enough, the process of achieving a working customer loyalty program model is not gonna be easy (and cheap). One report says that companies spend up to 5% of their income on developing these programs. So, to be worth all the expense, a loyalty program must be targeted at the right customers and must be run with strong discipline.
A company must also develop an adaptive loyalty program. Customer behaviors change, so your loyalty program needs to change, too! A survey showed that customers love getting surprise deals, special privileges, or gifts. The same survey also showed that a company that does such improvisations in its loyalty programs experiences spikes in sales, all while being less generous with other offers.
Different Kinds of Customer Loyalty Programs for Businesses
Loyalty programs not only benefit customers but also help businesses better target their promotional deals. However, not all loyalty programs are the same and some may suit a business model better than others. The sections below will show you the different kinds available as well as several important points about them.
- Point-Based
This one might sound very basic, but it will work well if you have a point-of-sale system. It is rather uncomplicated and can be managed and monitored through your business’s POS system. It also frees your customers from any trouble because everything is recorded in a database.
Your customers are not required to keep a punch card and bring it every time they come shopping at your place. All they need to do is give the cashier their phone number (or any other related information) and the system will immediately tell how many points they’ve got and what offers they may get for those.
- Punch Card
This one is a more practical way for small businesses that want to keep their customer loyalty program simple. The punch card is usually a similar size to a business card and there are several “punch holes” on it. While it may seem outdated, it takes away the need to set up a specific loyalty program system.
A customer will get a certain reward once they create enough holes. The only drawback with this kind of system is that customers are required to bring the card every time they buy something at your business. Also, you need to equip your cashier with the punching device.
- Paid Loyalty
Besides the point and punch card approaches, more creative businesses also have “Paid” loyalty programs. They know that customers love to be a part of an exclusive club. Therefore, they give the chance for customers to get an exclusive membership by paying an additional amount of money.
Of course, this membership comes with its kind of perks. For example, when you run a winery business, you can provide an 11% discount for your customers. However, to be able to get the discount, your customer must pay a $99 wine club membership fee. This way, you can get money from the membership fee and your customer will feel challenged to “get their money back” by buying more bottles from you.
- E-Mail List
This one is another loyalty program category that is relatively easy to set up. You can hire an email marketing platform to do most of the work for you, and it will probably not cost you a lot. Still, you need to make sure that the emails sent are engaging and will attract people to get the offers.
You have to make sure that the content of your email is fresh and relevant. On top of that, you have to ensure that the emails and offers are sent and updated regularly to your business on the top of your customer’s mind.
Five Steps to Create a Loyalty Program
No one understands your customers better than you! Thus, you should be the one who decides the kind of customer loyalty program that works best for your business. Even so, it is not always an easy thing to do. So, here is a step-by-step guide to help you find the ideal loyalty program for your market and needs.
1. Identify Customer Expectations
One of the main goals of creating a loyalty program is fulfilling customer expectations. That being said, if you already have a program in place but it does not seem to bring any great results, then it probably fails to meet customer expectations.
To know what customers expect from your business (and your loyalty program in particular), you can conduct a quick survey. It may tell you what customers like and dislike about your current loyalty program. This should bring you to a great starting place.
2. Know Your Goals
You might have known that the main goal of a loyalty program is to earn your business some loyal customers. Even so, some businesses have also used such programs to create a buzz-worthy moment that encourages not only existing customers but also new faces to spend their money on your business.
Don’t worry, it is perfectly okay to launch a program that only serves the basic function. However, whenever you see the right opportunities, you should hold yourself back from making another program that comes with a different goal. Just make sure that the new program does not stray too far from your company’s objectives.
3. Develop a Structure
This is where the fun parts begin! At this stage, you need to plan the details of the program. First, you need to decide how to filter your customers. Consider whether all customers are eligible to join the program or only those who have spent a specific amount can do so. You should also consider if there is any annual fee.
Next, you should calculate the earning potential of the program. For example, if you consider giving a 20% discount for every $200 purchase, you should make sure that you still make enough money from it. The same rule applies if you choose to give out freebies. And, if you plan to entice new customers, it is best to offer a first-buy deal.
4. Test the Water
A loyalty program may work very differently in reality than it does on paper. To see if it can bring you beneficial results, offer it to a small group of customers and see if it increases your sales. Also, you can try to launch the program on a slightly bigger scale and tweak it as you go. But, you need to keep your staff updated with the changes to minimize the risks of confusion.
5. Run the Promotion
Once you are done with the testing stage and feel sure that it will provide you with beneficial outcomes, it is time to officially launch it! Don’t be afraid if not all customers are interested in the program. Sometimes, it is just a matter of getting the message to the right person.
Even if they decline the first time you offer them, there is always a chance that they take it on the second time!
The Takeaway
Many marketing experts and business coaches may have told you how easy it is to drive up sales and meet customer expectations. Unfortunately, real-world experience shows you otherwise. Whether you run a big supermarket chain, a small gift shop, or an Apparel Loyalty Reward App, it appears that the key to a successful customer loyalty program is not easy to get.
Thus, knowing how hard it is to create and run the Best Loyalty Rewards Program For Retail Businesses, we have developed the guide above to help you in doing so. We have designed the explanations and points in it to be easy to understand, so, please, feel free to use it whenever you feel like you are in need!
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