If you missed reading part 1 click here.
How do they work?
Loyalty programs have been around for decades, but smart marketers are spending more time designing them to fit a specific target market for clients.
It’s important to understand that creating a loyalty program isn’t only for your new customers. To be effective at getting – and retaining – loyal customers, you need to think beyond simply acquiring them.
Some things to remember:
- After they become a customer, reinforce their ‘feel good’ experience with perks so they feel they are part of a ‘tribe’ of very special people. The last thing you want them to feel is that all you wanted from them is their initial visit. They will become resentful and leave. Instead, give them more of what they want and cultivate a long-term relationship.
- Over time, give them opportunities to use their rewards based on things like their personal life events, preferences, and individual desires.
There are many types of loyalty programs. Your programs (yes, you should develop more than one) will be guided by your ‘ideal’ customer and his or her psychographics (see ‘why psychographics matter’). Here are a few:
Let’s say you own a restaurant. Keep track of those guests who regularly visit. This can be done by tracking through an online reservation system or you can accomplish this in-house. Send a personalized ‘thank you’ to these guests and enclose a gift card for them to use on their next visit.
Airlines and Hotels are famous for using multi-visit rewards. From free miles to a free night’s stay after a certain number of visits, these keep customers coming back over and over.
Partner with other complementary businesses:
If you have a Bed and Breakfast, create a package deal with a great nearby restaurant. Make sure there is a real value received by purchasing the package. Offer a stay and a special dinner menu only available to those who purchase your package.
Amazon Prime is the most often cited example of this. By paying a yearly fee, you get free shipping and other great rewards. If you pay a yearly fee and get what you want at a discount, why wouldn’t you be loyal?
Some businesses offer a cash rebate for members at the end of a specified period (make it relatively short) based on the dollar amount they spend. This rebate can be in the form of a coupon to be used at your business. Your customers will think of it as a special gift.
Costco is another often mentioned example of membership. You pay a yearly fee to join, with the understanding that you can shop at any of their store locations and save a lot of money. Sure, most people buy more than they would at the local grocery store, but they are so happy to get real, significant deals on things like small appliances, tires, and necessary items, they are happy to spend their extra dollars there.
Support for a cause:
Often, successful loyalty programs support community needs such as non-profits. Your customers may love that you donate a small percentage of each purchase to a cause in which they believe – especially if you send each of your ‘members’ an end-of-year report letting them know collectively what they provided.
Create a tribe:
Create a ‘tribe’ of people who have the same interest. For one of the restaurants we represent, we created a cultural ‘social club’ based on seasonal fresh foods, specific drinks, culturally appropriate music and art. People come to events initially to enjoy a new experience, but after a few events they also begin to make friends with other ‘regulars’. They already have much in common. You are just putting them together in your place of business and treating them to a really good time.
Create an APP for your business:
Your customers can download it on their phone while they are in your store. Through this APP, you can send them Birthday coupons, advance notice to special sales, freebies for spending a certain amount, etc. The possibilities are endless. The point is that you can stay in touch with them and provide them with ‘feel good’ rewards.
A few words of caution
- Whatever you decide to do with a loyalty program must deliver what you promise at the very minimum. Its even better if you over deliver. This means that if you have a restaurant, you must deliver great food and service once you get them in the door. Your loyalty program means nothing if you fall short.
- Truly give your loyal customers something of value. They know the difference.
- Don’t make them work for the reward, or make it complicated. If they have to keep track of their own points and it takes five million points to get a free roll of paper towels, they’ll simply walk away.
- Understand your ‘ideal customer’. Ask them what they want. What do they enjoy most about your business?
People are becoming more savvy shoppers all the time. Almost 7 out of every 10 millennials won’t be loyal to a brand unless they are really getting something of value from it.
Why do people stop participating in a loyalty program? Most say it’s because the program was too complicated or didn’t offer what was of interest to them.
Next article: Creating a loyalty program to fit your unique customer
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