If you’re into a business for a long time now, you should know that the philosophy behind having a customer loyalty scheme or program is simply to reward the repeating customers and thereby increase your business sales. This is in fact a very powerful strategy used by many big shot companies. Did you know that Starbucks’ customer retention program contributed to the growth of the company and they claim that it has played a pivotal role in its 30% rise in profit and 15% jump in their total revenue earned in 2014? Even Best Buy took to customer loyalty program after they experienced a sluggish growth in their revenue continuously through many years.
In order to keep up with the big shot online retailers like eBay and Amazon, Best Buy increased reward points from 4-5% in order to lure customers and get them coming back to them. This is a successful and well-proved strategy with some additional changes and the stocks and shares of a company have more than doubled since last year. Irrespective of whether the goal is to improve sluggish revenue or increase sales, customer loyalty schemes and programs seem to have become a staple for some of the biggest corporations. If you wish to know more on customer loyalty programs, here are some facts that you should know on them.
Designing a successful customer loyalty program – The tips to follow
As per a survey, American households hold memberships of 29 loyalty programs but at the same time it has been seen that they are active in only 12 of them. This means that companies keep losing money on effort and time and customers fail to get value from those businesses to which they were previously loyal. If you want to know what it takes to create a successful customer loyalty program, here is some retail insight that you should take into account.
- Understand the needs of your target audience: Before you start off with this endeavor and spend on reward programs, it is important to get hold of your target audience and what the popular interests are like travelling, petrol, kitchen or clothing. Unless you have a detailed knowledge and understanding of your target audience, you can never achieve success. You need to know their demographics, their present trends of preferences, the factors that motivate them and their knowledge of competitors. You should also know what they need and place them against what they want. You can tap into the social media to know more on your customer needs and their behavior.
- Be realistic about what you want: Every single loyalty program should drive the achievement of a business goal. It is vital for you to set the goals and the business targets, whether in sales or customer retention, acquisition of new customers, which need to obtained through this program. You need to work hard towards monitoring such goals.
- Offer an array of rewards: Once you’ve jotted down the types of rewards which will incentivize your target audience, you have to take immediate steps to offer them in different ways to the customers. The 3 kinds of rewards that are offered by companies are tangible goods (like t-shirts, coffee mugs etc), digital (points, badges and social media shout outs) and sweepstakes (instant win, giveaway trip or lottery). Nowadays, digital rewards are the future of reward programs and hence it is better to go digital.
- Make the goals achievable: Although we know that the sky is the limit with regards to sending your clients to redeem the rewards but you should try to keep your feet on the ground when you set your goals. If you make tasks extremely tough to crack, very soon you will find a negative response from the audience. There should be no rule about the total amount of tasks that a user has to complete to redeem any reward. The entire point of loyalty programs is to enhance user engagement and ensure improved customer experience.
- Go wherever your audience is: This is indeed a good reminder in the current world of social media. The customers of your brand are segregating in different groups around the web and it depends on the brand to reach the target audience wherever they are. You should keep hanging out in the forums, social media sites like Twitter, Facebook, LinkedIn, communities and blogs. Once your brand gets the required attention, you can utilize the loyalty program in order to make your customers stay.
- Try using a simple system of points: Perhaps the most common loyalty program methodology that is used by companies. Customers who are almost permanent tend to earn more points and this translates into this kind of reward. Irrespective of whether it’s a freebie or a discount or some specialty treatment, customers usually work towards some points in order to redeem the reward. There are many companies who falter in this method and they make relationship between points confusing and complex.
- Thank customers before they buy: When it comes to going through retailer range reviews, you must have come across something called reciprocal loyalty. This is when a brand or a company offers their gratitude by saying thanks to a customer even before he has made any purchase. As for an instance, a brand could think of saying thanks to consumers who have just spent time on their site, followed them or tweeted them. When you offer them such thoughtfulness before their purchase, this instils a good sense of loyalty for the customers.
Just as monitoring and assessing in-store product ranges is important, a company also needs to take care of such customer loyalty programs so as to enhance customer retention. The more are the number of customers for your company, more will be the revenue that you earn. Hence, taking small steps here and there to please them and make them stick to your company will do more good than harm for your company. Take into account the above tips to design a successful customer loyalty scheme.