WHAT YOU NEED TO KNOW ABOUT CUSTOMER LOYALTY PROGRAMS

These days, customer loyalty and rewards programs are all the rage for all types of businesses.  From offering BOGO’s (buy one, get one free), free shipping and points for future items, these types of programs not only compensate your customer for purchasing products through you, they can also keep your customer base coming back for more and for a longer period of time.

However, many businesses fall flat with these types of programs by not planning and executing properly.  The bottom line is that you should look at this program as enhancing your customers’ experience and always strive to put their needs first.  Whether you start your own ‘VIP Club’ or ‘Rewards-style’ program, we’re here to help with our list of dos, don’ts and examples of how to start rewarding your customers today.

THE DO’S

  • Set parameters for your rewards based on what’s best for your business.  While for online companies, offering a free shipping reward is a great way to get people to order, this may not be your best reward if you have a substantial amount of foot traffic.  Additionally, set parameters based on how much a customer spends or how often they purchase, creating tiered levels of rewards, and giving your most loyal customers a special level of service.
  • Strive to build lasting relationships with your loyalty programs.  Engage your customers by giving them rewards they truly want, will use or will benefit from.
  • Think about your budget.  Starting a rewards program could get expensive if you don’t plan properly, so always track your budget on costs for the rewards.  This will allow you to calculate your Return on Investment to see which rewards work best, which don’t work and what you can change within your program to make it a better fit for you and your customers.
  • Track your customers’ purchasing habits.   By tracking what a customer purchases, you can offer them a reward that will truly help them.  For example, if they purchase two of a specific item at once, they get 50% off the third, or a discount on purchases of 10 or more of an item.  Additionally, if you see that a handful of customers purchase very little, offer a small discount to entice them to purchase more frequently.
  • Clearly state the parameters of your program to all customers and keep the process simple.  Make sure all users know how they obtain rewards or points by providing a handout of the guidelines.  Also, by creating a simple process for access to program rewards and account information, you are more like to run the program properly and have more users.
  • Partner with other businesses.  For example, if you hold an open-house event for VIP clients, partner with the catering service for discounts on your products and their services.

THE DON’TS

  • Don’t use a ‘one-size fits all’ model for your rewards program.  Tailor each reward or provide options that customers will find usable that way they will be happy with the reward they receive, and will be more likely to continue to purchase from you again.  Think outside the box, and keep in mind what will benefit your customer the most.
  • Don’t just give stuff away, or give your customer leftovers from an event.  They will not appreciate the reward, nor will they be enticed to purchase more.
  • Don’t make it difficult to sign up for your program.  Offering the ability to easily sign up by registering their email address with the first purchase is a quick way to get all of your customers started.
  • Don’t make rewards impossible to obtain.  If your customer has to spend $10,000 at your store to receive a $20.00 coupon, chances are you will never have anyone actually receive a reward, which completely defeats the purpose.  Think like PetCo – for every $100.00 you spend, you earn a $5.00 coupon to be used on anything at their store.  The reward level is easily reached, and the reward is completely fair for all users.

HOW TO START REWARDING:

Even with a small budget, here are some ways for you to start testing what loyalty program works best for you:

  • Celebrate with your customers by offering a small discount during the month of their birthday.
  • Offer additional services, such as product warranties, with little mark-up.
  • Reward referrals to your business by offering a coupon or discount.
  • Upgrade shipping with a specific purchase amount.
  • Offer your VIP customers a free preview night, or open house, in which they will be the first to see your new products.
  • Notify those in your rewards program of sales early so they can get a head start on shopping.
  • Have your customers create a ‘Wish List’ and when they reach a specific amount of purchases, you surprise them with a free gift.

Remember, the end goal of a loyalty program is to build a two-way relationship that benefits both users, so think about what your customers really want, and you’ll see the gains from increased sales and profits.

Have any questions about customer loyalty programs, or have any advice or ideas to share?  Comment below with your questions, or call 1.800.627.2920 or email adv@DOWElectronics.com to talk with our dedicated marketing team!

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1 Comment

  1. I think customer loyalty programs work best when you have insiders and outsiders. You must treat different customers differently. This is where i think technology can play a huge difference because it allow for one-to-one.

    Reply

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