Customer loyalty programs in the marketplace today all compete for the same thing— new and repeat business. The key to running a successful program is to plan wisely for it.
Keeping in mind the old adage that says it is seven times more expensive to find a new customer than to retain an existing one, the ability to market directly to existing clients is, to say the least, invaluable.
It comes as no surprise that consumer programs that are clearly defined and targeted are more likely to make it in the retail world.
Here are some tips on how retailers can get the most out of customer loyalty programs:
1. Know who your customers are, what they want and what they don’t want. A program that is designed to meet consumer needs will be more popular than one that doesn’t. We need to understand how customers want to engage in the program, what kinds of rewards they want and how they want to be communicated with.
2. Be clear about what you want to achieve. The program can then be tailored to your customers to support your objective. For example, you may want to devise special deals for specific consumer groups, like increasing sales of expensive electrical goods among high-income earners. Alternatively, your program may be structured to capture consumer information and spending preferences.
3. Reward in a way that persuades customers to behave so that it benefits your business. Ideally, a loyalty program should reward customers for increasing or changing spending habits to benefit your business. We shouldn’t just reward customers for ‘spending as usual’.
4. Keep profits in mind. There is nothing worse than a customer loyalty program that doesn’t make any money. Retailers should think about how much time and effort they are putting in to the running of customer loyalty programs, especially the ones that do not reach the intended audience.
5. Make it easy for customers to use the program. Today’s technology-savvy consumer prefers the convenience that online programs provide.
6. Communicate frequently with satisfied and dissatisfied customers. Staying top of mind is a challenge for any customer loyalty program.
When communicating loyalty programs, ensure you provide clear, concise and attractive offerings.
Customer loyalty programs should be driven by a group that can influence your customers. This can be a direct or indirect sales channel. You need to engage your sales channel to ensure they are aligned with your objectives and can deliver the same message to your consumers.
When customers leave a program, it is imperative that retailers know why. Find out what it would take to provide a better experience, and then do it. If at all possible, identify those who are about to leave the program and find a way to change their mind. For instance, consider implementing a system to monitor program and customer activity.
7. When in doubt, seek expert advice. Running an effective loyalty program can take enormous effort. There are expert firms that can provide advice guidance and solutions.
* Accumulate is a provider of customer loyalty solutions to Australian retailers, helping businesses grow and better engage their customer bases by improving the way they communicate and interact with clients.
* The opinions expressed in this article are those of the author, and don’t necessarily reflect the opinions of DYNAMICBUSINESS.com or the publishers.