Have you ever thought if a loyalty program could be a great marketing tool, but felt like it was too complicated? Sure, a loyalty program is a complex marketing tool with a lot of moving parts, such as gamified point systems, various loyalty tiers (i.e. silver, gold, and platinum levels), content sharing capabilities and automated communication; but online retailers shouldn’t shy away from the program because it seems difficult.
How to plan a successful loyalty program
It’s actually quite simple to plan out if you have access to the right tools and information. I’ve set out to make the planning process a little more straightforward for ecommerce marketers with the following tips and an infographic. The first thing to consider is the mindset in retail.
That’s right, there’s something wrong with the way we think about loyalty programs. A lot of writers jump on the “loyalty programs are broken” bandwagon, but I think that’s a wrong generalization to make – in any industry. The first thing retailers need to understand is what exactly a loyalty program is meant to do: build loyalty and increase customer retention.
Keeping that in mind, I’d like to ask you to first consider the traditional “spend a dollar then earn a point for it” rewards program. There’s one major problem with this approach: it captures the eyes of customers searching to save money. Ironically, this type of program usually does nothing to actually build loyalty – the emotional connection and conversational engagement between customer and brand. But that’s not the only type of loyalty program out there, so (thankfully) loyalty is not dead and it’s not broken.
What can we do to change this type of thinking?
We can keep talking about new developments in loyalty, be it on mobile, involving gaming and AR, or any new loyalty program that goes deeper and rewards customers for more than just the purchase event. Here I ask retailers and marketers to think beyond this overly complicated coupon approach and thank customers for any action that helps your business keep customers, grow and get noticed. And that’s the answer to the question in the title of this article… that’s what makes a loyalty program a success.
Keep your customers
Customer retention is vital in terms of getting the most out of your marketing budget. That’s because keeping a customer costs 3-10 times less than trying to get a new customer. The exact number depends on the industry you’re in, but in any case it illustrates perfectly why customer retention is so important, and improving customer retention is usually the reason companies choose to build a loyalty program in the first place. A loyalty program is a framework of offers and incentives to keep customers thinking about a retail brand, and returning more regularly to make more purchases.
Grow your business
As I’ve mentioned, a truly successful loyalty program doesn’t stop there. A good loyalty program will work to engage customers on many other levels. The goal is not only to reward spend, but also help you reach other business goals, whether that’s making your social media campaigns more active, getting more product reviews, or even getting your content seen or shared by more people. These interactions are what keep your brand in the minds of customers and their network.
Think about the activities that contribute to your sales, and pick those that you want to increase, for example reading blog content, watching videos, sharing product pages online, or having customers share their own content with a special Instagram hashtag.
Last, but certainly not least, did you know a loyalty program can also help you get new customers? Customer referrals generate over twice the sales of paid advertising!
In addition to encouraging shares on social, a loyalty program can be set up to actually reward customers who make referrals, and their friends and family who take action and make their first purchase. Some programs go a step further and help you identify your best brand advocates – the people who are most likely to say great things about your company to others. That combination is a one-two punch for getting qualified new customers in your store.
So how can companies start their own loyalty program?
Loyalty programs can be built from scratch in-house, built by an agency that specializes in loyalty, or fast-tracked with a loyalty software provider with a program that’s ready to customize and implement.
No matter how you go about running a program, there’re some important things to think about, like your marketing strategy, touchpoints for customer interaction, and the value of your points and rewards. If you’re a retailer thinking about starting a loyalty program, you’ll find this infographic handy:
Back to you
Have you ever used a loyalty program for your business? I’d love to know more about your experience. Please use the comment section below to share your thoughts and opinion.
And if you want to learn more about loyalty programs, you can read more about them in this article containing examples of great loyalty programs or by downloading our Loyalty Program Success Guide.