Customer loyalty programs always pay off. And it's not just because 68% of your customers will participate more in your advertisement or marketing strategies when a loyalty program is introduced. Rather, a customer loyalty program establishes a relationship between your business and the customer.
This relation gives the customer the incentive to purchase more from your business and your business the opportunity to benefit from these additional sales. Besides, a loyalty program comes with added perks of special treatment, exclusivity, discounts, and promotions, and who doesn't like to be in the 1%?
Think about the Pareto Principle and the 80/20 rule for a second: if considered ideal for any situation, one should expect that 20% of the causes give birth to 80% of the consequences. When applied to your customers, the Pareto Principle would see 20% of your customers determining 80% of your sales.
But every avid business owner knows that it is much harder to make a sale from a new customer than from a repeat customer. That is why you want this 20% of your customers to fall under the bracket of repeat customers. This is how you get sales that are 16 times more efficient than those from one-time customers.
Your business challenge, then, is creating programs that continuously meet client expectations and inspire repeat purchases (customer needs and market dynamics are continually changing). Lucky for you, this is the work of a customer loyalty program. Let's face the question: how do you build a customer loyalty program that converts successfully?
There are different types of loyalty programs you can adopt for your retail business. But the trick to creating a successful customer loyalty program will depend significantly on your chosen concept. Remember, your customers have the power to make or break your business – and it all starts with a choice.
A choice of whether they like your products and the added benefits of purchasing from your retail stores or if they would get better services from your competitors. You want to be as novel and unique about your customer loyalty program as you can be while remaining flexible to change with the changing needs of your customers.
Your loyalty concept is the roadmap to achieving such an outcome successfully. And once you have your concept ready, every additional step of building your customer loyalty program becomes effortless. Well then, how do you develop a concept that keeps your customers making those purchases?
Start From The Future
Basically, this means that you should work backward. So, instead of designing your program structure, rewards, logic, reporting, and user journeys, start by defining what really matters for the customer once they meet your program.
For instance, the concept of understanding the customer overall by analysing their purchase behaviours, needs, and wants is becoming a key metric for businesses today. More than that, customers are becoming attuned to personalization and individualised services.
Therefore, factoring in the concept of "me loyalty" for each of your customers is bound to give you better results in the future. So the question to ask now is, "how do I build a loyalty concept that satisfies every unique need and desire of each of my customers?"
One way to achieve this outcome is by tapping into the power of the emotional satisfaction customers seek when making purchases. Adam Posner explains it well in his report "For Love or Money," where he outlines behaviour, belonging, and belief as the three primary reasons customers join a loyalty program.
The advantage you have when creating a loyalty concept based on emotion is that it will keep your customers glued to your loyalty program well into the future.
Take FOMO, for example. The behaviour of consumerism is highly attributed to the fear of missing out. Therefore, tapping into this emotion by creating urgency and portraying a limited and exclusive perception gives customers the incentive to purchase.
Overall, the idea behind the future logic is that it provides better value for both the customer and your business. If your customers feel more satisfied with your offer, it becomes easy to lure them back for purchases.
Let Your Concept Solve Problems
We live in an era where consumers trust certain brands more than they trust their government. Why? Brands are becoming well-known for solving some immediate customer problems. Additionally, companies are responsible for driving change and growth within society and communities.
That said, if you want to win your customers by building the best customer loyalty program, solve their problems. All you need is a little creativity. For example, customers today prefer to work with companies that protect the environment and animals. Therefore, create your loyalty program incentive around solutions to these problems.
A simple example is offering rewards to customers purchasing healthy products for the environment. Make it more interesting by including a charitable donation for a percentage of purchases made on these products. As you continuously make this conscious shift with your program, you are likelier to inspire customers to join your movement.
This is where you fill out the pieces of your loyalty program. For instance, what geographical locations do you want to reach? What design do you want for your program? Are you incorporating the program into your entire business structure or on specific channels? Do you want to offer points, rewards, or tiers?
What methods will your customers use to engage with you? How will you design your enrollment and opt-out process? What metrics do you have to track your program KPIs? Will you include loyalty campaigns in your marketing strategy?
Determining the answer to each of these questions should help you start to put your program puzzle together. Your next step is choosing the loyalty programs you want to incorporate into your business.
The most common types include tiered programs, perks programs, loyalty communities, reward redemption, referral or influencer programs, and paid programs. As you choose the type of loyalty program to implement, determine the kind of rewards you can afford to give as well.
Remember, the best loyalty program best fits your business and customer needs. Also, don't consider the rewards you offer as a loss, especially if you choose to give financial benefits. Consider it an investment you make for your business in the short and long term.
When choosing your reward, the challenge should be determining the right balance between loss and profit. Remember the psychological effect emotions have on loyalty programs, specifically the impact of scarcity on FOMO. Therefore, always include a limitation to your rewards. And if you have the proper budget, include a surprise gift.
You can do a lot with your loyalty program to inspire subscriptions and purchases. Once you understand your customer, take advantage of the solutions technology provides to develop a program with an ROI. For instance, secret tiers or gamification like treasure hunts can expand your market reach through referrals or word-of-mouth marketing.
Nonetheless, learning how to build a customer loyalty program doesn't have to be challenging. With our Erply POS solution, you can create sales campaigns encouraging your customers to make repeat and bulk purchases. Your choices are versatile, too, including coupons, gift cards, customer points, and price lists. So, if you want to know more about our Loyalty program selections, consult with us for free.
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