Customer loyalty programs are still a contentious issue in company boardrooms around the world, despite their apparent success in almost every area of business.
In the UK, the country’s two biggest supermarkets, Asda and Tesco take greatly differing views to customer loyalty. The former believe their reputation and consistently low prices should be enough to secure the loyalty of British shoppers.
Whereas Tesco, have invested heavily in their Clubcard as they perceive it to be a crucial tool in keeping their customers from straying to other suppliers. Regardless of which side of the argument you fall down on, you have to recognise the power and potential of well-executed customer loyalty programs.
If you’re thinking of adopting a loyalty program for your business, you’ll want to read on for the three main dos and don’ts of implementing a successful, profitable and valuable loyalty program.
Do: Understand Your Customer
If you’re running a successful business, the chances are that you already know quite a lot about your customers. However, you’d be surprised at how many companies throw this knowledge out of the window when they implement a new customer loyalty program.
You must understand exactly what your customers want, which is why in-depth demographic knowledge is key. For online gambling sites that are scrapping it out with one another, price and affordability is key to customers searching a saturated market. That’s why these sites offer bingo bonuses, to stand out from the crowd.
In a more luxury-orientated business, price is not always everything. Exclusivity and the personal touch is key, which is why loyalty programs that incorporate offers with other luxury brands are popular in this sector.
Don’t: Lose Sight Of Data
Why are you engaging in a customer loyalty program? Obviously, you’re implementing one to increase your customer retention levels, which in turn will boost the average spends and profits. But, you’re also doing it to get a greater insight into customer behaviour.
A loyalty card, for example, allows you to specifically monitor the purchases and shopping frequencies of every customer you have signed up to the scheme. Don’t forget this, ever. Use the data that you accrue to not only increase your knowledge of shopping habits but to adapt and improve your loyalty program offerings.
Do: Make Rewards Realistic
There is no greater put off to customers than a loyalty program that is deemed unfair or unrealistic. If you are to go down the tried and tested route of offering shoppers reward points for money spent in your store, make it realistic.
If a customer needs to spend thousands just to get a cheap reward then they are not going to bother signing up. Offer them something that is valuable in terms of both their time and money. Supermarkets get away with low reward to spend ratios as customers view their shopping there as essential, and subsequently see any potential rewards as an added bonus.
If your brand is non-essential, then don’t be afraid to offer a little more, an added incentive for customers to come back.
Don’t: Force It
The best form of marketing when it comes to customer loyalty programs is organic marketing. Ideally, your customers will discover your program via word of mouth, from other satisfied shoppers.
Your loyalty program should be sought after and have an air of exclusivity to it. Forcing it down your customer’s throats at every opportunity is going to alienate them and lessen the allure of the program.
Do: Personalize Your Program
Unfortunately for many businesses, there is no one size fits all approach for customer loyalty programs. What appeals to one customer is likely to put off another or not appeal to them at all.
Making your program digital is therefore key as you can tailor your rewards and offers to specific customers. Through using a detailed analysis of their previous purchases, you can come up with offers that will satisfy individuals, thus increasing their loyalty and the likelihood of them recommending you to their friends.
Don’t: Overcomplicate It
If you constantly change your customer loyalty program or make it so complex as to confuse people, your program is going to be a failure. Customers don’t want confusion, as it’s an unneeded barrier to their personal pursuit of shopping.
Instead, they want simplicity and something that has little impact on their usual shopping rituals. As a rule of thumb, if you have to explain the concept of your loyalty program more than once to someone working for your company, it is going to be far too confusing for customers.
Make your scheme something so simple that it can be explained with a simple advertising poster rather than a lengthy explanation from store staff.
Do: Make Partnerships
One mistake that retailers make is thinking that their store is the most important one in the world to their customers. That is simply not true. Even if you sell almost every product imaginable, your clients are inevitably going to shop elsewhere for their goods.
Therefore it’s a good idea to seek out commercial partnerships with other retailers or brands, who offer something that may be of interest to your customers. It can be mutually beneficial for both parties as well as being a major reward for both of your customers.
Don’t: Sell Customer Information
For years, there has been a strong contingent of shoppers who have been dead set against signing up to customer loyalty programs for privacy reasons. As mentioned earlier in this article, loyalty programs allow you to gather huge amounts of information on your clients.
It can be tempting for many to sell these details to marketing companies in order to make a quick buck. If you do go down this route, be aware that you’re not only risking your future sales, in fact you’re burning prospects in front of your very own eyes.
Your customers need to trust you in order to shop with you. If you sell their information to ANYONE, you immediately begin to corrode that trust and thus lose future business.
