How to Grow Your Business with a Customer Loyalty Program

If you’re trying to discover what it takes to create your own fan club, creating a customer loyalty program is a great first step. Reward programs offer incentives for customers to continue supporting your brand by offering point accrual systems, special discounts, and even access to exclusive merchandise.

Persuading a customer to purchase from your business once is great, but convincing them to return time and time again is priceless. Savvy business owners know that loyal customers are a proverbial gold mine--not only do they bring their own wallets, but they bring friends and family with them.

Creating loyal customers isn’t easy, though. Every customer is different, so it’s difficult to create the perfect customer experience. There are a number of factors to consider when optimizing your customer experience for loyalty: Do your products meet their needs? Do you offer high-quality customer service? Are your prices competitive? Is there anything better available?

If you’re trying to discover what it takes to create your own fan club, creating a customer loyalty program is a great first step. Reward programs offer incentives for customers to continue supporting your brand by offering point accrual systems, special discounts, and even access to exclusive merchandise.

A recent blog post by Salesforce revealed that rewards programs lead to an estimated 80% increase in repeat sales for companies who offer them. With figures like that, it’s not hard to see why these programs are attractive to business owners.

That said, SalesForce also reports that while customers are quick to enroll in rewards programs, they often do not actively use them. The average customer is enrolled in 30 customer loyalty programs at a given time, but use fewer than half of them regularly. This figure tells us that while rewards programs can be effective, they won’t actually move the needle on customer loyalty unless they are effectively implemented and managed.

Implementing a rewards program isn’t something that should be done in one afternoon. It’s important to take time and identify key goals you want to accomplish with the program. Whether it’s to bring back lost customers or to make the buying experience better for existing customers, thinking through these goals will help you find the right program for your company.

Finding The Right Program

Punch cards. Points. Cash back. Coupons. These are just a few of the possibilities to explore when deciding what kind of program to offer. Remember: the purpose of this program is to encourage customers to make future purchases from your business, so base your decision around them. The program your customers want and the program that will make you the most money are one and the same.

You probably already have a regular customer or two -- leverage their experience to find what kind of program will work best.  Here are a few of the common types of rewards programs you could consider:

  • Points programs: For every dollar spent, customers accrue points which can be converted to currency to use toward future purchases.
  • Frequency: When customers reach a certain threshold of purchases, they receive a reward (free product, coupon, etc.)
  • Tier program: If customers purchase a certain amount of product, they earn status which gives them access to premium products and services.
  • Discount: Customers enrolled in the loyalty program are given access to exclusive coupons and deals.

Of course, you’re not restricted to just one reward program. Many businesses find ways to incorporate these types of programs together to cater to different customer segments. Best Buy, for example, offers membership tiers for those who spend large amounts of money at their stores, while also offering points programs to more casual shoppers.

Once you know what type of program you’d like to offer, it’s time to take a look at the how.

POS Systems and Loyalty Programs

A crucial part of implementing a reward program is ensuring you have the right point-of-sale (POS) system to support it. Sure, you could go with a punch card system and stay strictly paper-based, but if you want a system any more robust than that, you’ll need the proper technology.

In order to really customize a rewards program to fit your customer’s needs, you need a POS system that can safely store and track customer data. Customers should be identified by a phone number or email address to link all their purchases together and ensure that they receive rewards with every purchase. The best way to do this is to seek out a point-of-sale system with CRM integrations or a rewards program feature built-in.

A strong rewards program offers a few bonus insights as well. By tracking customer purchase data, you can understand their shopping habits better. Essentially, it allows you to segment customers by their preferences. Then, when you want to promote a product, you won’t have to blindly distribute coupons to all your customers. You can target specifically those who you know will be interested.

The importance of choosing the right POS system can’t be overstated. The right POS will do most of the work for you, so long as you know how to properly use it.

Managing A Rewards Program

Once you’ve decided what kind of program you want to implement and which POS system will help you do that, it’s time to strategize. You want your customers to anxiously anticipate promotions, which requires effective organization, management, and advertisement of your rewards program.

First, look at this from the point of view of your ideal customer and tailor the experience to them. Your ideal customer can be a specific demo- or psychographic, or even specific individuals. They will act as your baseline for evaluating the effectiveness of your program. If you see their habits change, then you know adjustments need to be made.

Your next step is to set rules for your program. For example, you might want to limit how many points can be used towards a single purchase or how many promotions can be used in a single order. Of course, these rules need to be clearly defined and displayed or you’ll risk alienating your most important customers.

Once you’ve set rules, determine which products you want to play a major role in your rewards system. If you’ve recently launched a new product, bundling it with a best seller can be the most effective way to gain traction. If there’s a particular product you want your customers buying time and time again, feature it often as part of your loyalty rewards program.

All of this information is useless if customers aren’t aware of the program, though. Before launching a loyalty program, it’s important to train employees to know how the system works so they can inform customers about it during check out. Placing signs around the store or offering a special discount just for signing up are other good ways to advertise a program.

A 2017 report from Forrester Research showed that merchants who offer a rewards program earn $42 more per transaction than merchants that don’t—that’s a lot of revenue just waiting to be captured! However, you won’t be able to reach it if your program is not properly implemented and managed. Careful planning and purposeful execution are crucial to the success of your customer loyalty program. When done right, a loyalty rewards program can turn a one-time sale into a lifetime customer.

Taft Anderson

Taft Anderson is the former Product Marketing Manager of Swipesum. A graduate of Washington University in St. Louis' Olin Business School, Taft is a content and branding expert.

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