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Ecommerce tools have made it easier than ever for businesses to create and manage loyalty programs. But creating a quality loyalty program is not as easy. Sure, a store can create a program that offers points or deals to frequent customers, but the question remains — is the loyalty program serving its true purpose? That is, does it engage customers and give them a reason to keep coming back?
According to the COLLOQUY Loyalty Census, the average American household is enrolled in 29 separate loyalty programs — yet they only actively participate in about 12. With more choices than ever available to customers, it's critical to create a loyalty program that actually incentivizes each person to participate.
Read on to learn four ways you can create a successful loyalty program.
1. Keep It Simple
Many loyalty programs today use a point-based system. It's an intuitive model: a customer's actions earn them points, the points build up — and when the customer has enough, they can redeem their points for a reward.
But in order to keep customers engaged and interested, the process needs to be easy to understand — and simple to use. For example, if you send a convoluted, complicated email offer like “You can earn an extra 10 points when you make a purchase this month that you can use for $5 off your next order,” your customers may get lost along the way. Complex offers make customers lose interest.
Try something simple instead. "Earn 10 points. Get $5 off your next order." That's clear. It tells them what they get and how they get it. Get their attention with something simple. Then you can easily outline how your customers gain points, what the points can be used for and how they can redeem their points for rewards in the body of the offer.
2. Gather Data and Personalize
Personalization is an essential strategy in modern marketing —and incorporating it in a loyalty program is no different. By adding personalization, your brand can differentiate itself from your competition and build a relationship with your customers. Gathering customer data at every touchpoint to understand their interest across channels (in store, in person and online) is crucial to a successful program.
Apply this data to offer relevant, individualized incentives that encourage each customer to return. Think about a coffee shop, for example. You may have many customers order the same thing every time. If your loyalty program collects this data, you can send a trigger-based email to them when they have enough points to get their favorite drink for free. Personalize the email with their name, their favorite order and call-to-action to redeem their points for this reward.
This highly specific segmentation is often called hyper-personalization. Each individual gets an experience that's tailored to the way they behave. When a customer feels like your company understands who they are, they are much more likely to return.
3. Incorporate Customer Values
Similarly, it’s important not only to understand who your customers are — you need to show them you understand what they value. Some industries may have customers who find more value in non-monetary rewards.
For example, a company in the financial industry may see better results by offering loyal customers better cash-back discounts on a credit card. But for a travel company, it might be better to award seat upgrades, travel miles or drink tickets to loyal customers.
Consumers are more likely to engage with a brand that understands their values, so incorporating those values into a loyalty program can really pay off in the long run.
4. Develop a Tier-Leveled Program
One major customer complaint about loyalty programs is that it takes too long to accumulate points and earn rewards. This can leave your businesses in a tough spot. You need to satisfy both the customer’s desire to see steady progress and show their commitment turn to something of value.
A tiered system that rewards customer behavior — beyond just transactions — can resolve this. Rewarding customers for things like event attendance, social engagement, brand advocacy or just being a long-term customer can help with this. Customers recognize the progress for each of their actions and can eventually get their reward.
With an ever-increasing flood of loyalty programs out there, simply having one is no longer enough. You don't want to end up with over-complicated program that doesn't actually get used by your customer. Your company should analyze and understand your customers to build a loyalty program that people will actually use. Remember to keep it simple, gather data to personalize your program, incorporate customer value and consider tier-leveled programs for the most successful results.
For even more on how to build a loyal customer base, check out J&C's Customer Experience Guide.