While you may not require a full-featured loyalty program with all the bells and whistles to run a successful business, you do most certainly need a plan for customer retention. If you have a process to store customer preferences, track customer spending/activity, and communicate personalized and relevant messages then you’re on the right track! If your company is not yet set up to do these things, or if you’re looking for additional activity/promotion tracking, and customer engagement, you may want to consider looking into a loyalty program software for your business.
The right loyalty program software will allow you to:
- Track customer activity and identify your top spenders
- Identify customer preferences / custom data that is relevant to your businesses
- Review your most successful promotions (what appeals to your target)
- Have the ability to incentivize customers for spending/visiting more
- Allow additional incentives for specific actions (such as referrals) or events
- Provide an easy way for your customers to sign up for your program, and check their balance
What to look for in a loyalty program software:
- Make sure your customer data is owned by you (not the loyalty program provider)
- Identify if they offer standalone programs for your business or if you’ll have to be a part of their merchant network with other similar vendors
- What are the restrictions on number of transactions or customers?
- What will you require to implement the program (tablet, point of sale system, cards) as each customer loyalty program software system offers something a little different
You’ll want to have an idea of what behavior you want to reward. What is the result you wish to have or the issue you're trying to solve? Once you decide what you’re looking for, you’ll be able to ask the right questions. For example, a dental office may want to focus on referral incentives to draw in new patients. A coffee shop could benefit from awarding customers with points for each customer “check-in” or after X drinks purchased to encourage frequent visits. Retail merchants will often reward X points per Dollar spent or bonus points for special sale promotions to encourage customers to buy more.
Can you afford to launch your own customer loyalty program?
– McKinsey
Repeat customers spend 67% more than a new customer
- Bain & Company
64% of businesses with a customer loyalty program in place reported that it’s been effective, meaning it makes more money than costs to maintain it
- Manta’s and BIA/Kelsey’s joint report
Plus, considering that 80% of sales come from 20% of your customers, it’s imperative have a plan to maintain loyal customers. You can spend under $100 per month to implement a digital loyalty program, so rather - can you afford not to?
However, simply launching a loyalty program is not a magical solution. You’ll need to ensure you’re providing excellent service and an overall great customer experience each time a customer interacts with your business. For example, answering customer support inquiries quickly and providing a resolution to customer issues. Or going above and beyond to “wow” them each time they step into your store or browse your website. Allowing an easy, convenient and pleasant experience will be crucial to the overall customer loyalty objective.
When done right, a loyalty program will offer you a competitive edge by providing customers with a reason to choose you over the competition. Some of the best rewards are even free (or inexpensive) for you to offer. Think about special VIP perks – a unique or fun benefit that is exclusive to members such as a members-only express line, early access to sale events, free wifi, etc.). Plus, with all the specific and important customer data you’ll track, you can compete with larger big box stores by offering a more personal customer experience.
Finally, once you’ve launched your program don’t forget to advertise it! This sounds like a no-brainer but often, merchants/managers are busy with the day-to-day operation of the business that they don’t plan a marketing strategy to create customer awareness about the new program benefits. It’s recommended to designate a staff member to be the loyalty program “champion”. The champion is then responsible for the program – including in-store signage and website presence to highlight the great perks to customers and give them a reason to want to become a member. Simply asking a customer at check-out if they would like a rewards card is certainly not very enticing!