5 ways to build a more successful loyalty programme
Attracting customers to shop at your business isn’t always the hardest part of being a retailer. The hardest part of actually keeping them! With so much competition, keeping yourself in your customers’ line of sight is always a challenge. To build up a loyal customer base, you have to prove to them that it’s worth their while. This is where customer management and loyalty programmes’ come in.
Loyalty programmes are a fantastic way to reward customers for supporting you over a long period, and to incentivise new customers to become repeat customers. However, many programmes struggle to gain currency with customers. Usually this is because retailers are after a quick return, rather than investing in strategies to provide customers with longer-term incentives. The key to a successful loyalty programme, no matter what it is that you sell, is to keep things straightforward and compelling. Here are the top 5 ways you can make your loyalty programme more engaging:
1. Rewarding shoppers for various activities
On average, consumers belong to about 14 different loyalty programmes, but only engage with 6.7 of them. Why? Because the price of earning rewards is too steep. If you only reward customers for spending money, you may not be forging a strong enough connection with your shoppers. They might have purchased from you once, but this isn’t necessarily going to turn them into a repeat buyer. Between 60-80% of consumers don’t become repeat customers, even if the experience was ‘satisfactory’, because they lacked a connection with the brand.
In this climate, brand loyalty isn’t easily created. You need to give your customers a reason to care about you, and by extension your rewards programme. The best way to do this? By making it as accessible to participate as possible. Rather than only giving rewards for purchases, give them recognition for the different ways they can interact with your brand. In fact, this is exactly what 75% of customers want from the loyalty programmes they are part of. In the world of multi-channel retail, these ways have never been more plentiful! Consider offering rewards for:
- Social media follows and/or shares
- Getting friends to sign up
- Leaving a product review
- Subscribing to email promotions and other publications
- Donating to causes that you support
This serves another purpose besides building a more active loyalty programme. It creates a community around your brand by encouraging interaction on your platforms. Communities create emotional connections, so this gives your customers a stronger motivation to participate in your brand’s culture.
2. Not making it too difficult to earn great rewards
It’s all very well making it easy to earn points, but you need to offer ways to redeem them too! This is where a lot of loyalty programmes fall flat. If there are too many strings attached to the redemption process, or the time between earning and gratification is too long, your customers are quickly going to lose interest. To keep interest alive, you need to make your programme as straightforward as possible to participate in.
Keep it simple by using a points-based system — there’s nothing customers hate more than a complicated earnings process. If your customer checks their status, you want them to be able to see instantly what their progress is (and where they could put their points to use!) Keeping things at one point for every dollar ensures that it’s easy to understand.
Keep the threshold for redeeming low — if your customers have to spend big before they see a return, this gives them very little incentive. Even if certain categories of rewards cost more, you need to provide some ‘low-hanging fruit’ that is easily accessible to your newer customers. Acquiring new customers can cost your business up to five times more than retaining your existing base. So, your loyalty programme should be an incentive to be loyal, not a deterrent.
3. Offering double or triple points to drive sales
Here’s a common scenario: your customer has had their eye on one of your products for a while now. They have the intention to buy ‘at some point.’ However, a vague future intention to purchase doesn’t help your sales figures. You need to give them that extra ‘push’ to fulfill this intention, or it’s quite likely they never will. The best way to do this? An exclusive, time-sensitive offer.
Double or triple point reward deals are much more valuable to you than a regular discount sale. Whilst the latter would be just as likely to convert your customer, it doesn’t tie them into any future purchases with your brand. Double or triple points, on the other hand, give your customer a major incentive! It also adds more value to their purchase, because the idea of redeeming points becomes much more accessible.
The hardware store MyDIY.ie does this well. They occasionally offer double and triple points on certain products to entice customers to buy.
To get the most from this loyalty promotion, it’s a good idea not to make it too commonplace. After all, it’s a rarity that increases the perceived value of an offering. If customers know they will have another opportunity in a few weeks time, they are far less likely to rush to the checkout. Keeping these offers to 2-3 times per year give them enough regularity for your customers to look forward to them, but not so commonplace that it isn’t an exciting event!
4. Personalising your promotions to encourage reward redemption
Personalisation is one of the biggest buzzwords in online retail. Today, it’s routine for merchants to provide a list of suggested products based on what customers have already viewed. Or otherwise to link them to items they have viewed multiple times. In fact, surveys show that 53% of consumers believe that retailers who personalise their shopping experience offer a more valuable service, whilst 43% are more likely to shop with retailers that offer personalised recommendations. With this in mind, why wouldn’t you personalise your loyalty programme as well?
But sending customers loyalty promotions for random products is unlikely to bear fruit. You need to get your customers genuinely excited about your offerings. You want to get them thinking about how your loyalty program will help them to realise their desires. If your program doesn’t feel ‘useful’ to this end, your customers won’t want to participate.
Nespresso is a great example of how brands can successfully personalise their rewards programme. The Nespresso Club sends its members free samples of soon-to-be-released coffee blends. But they don’t choose which samples to send at random. Nespresso utilises the data from both online and in-store purchases, so they understand the tastes of each customer. By sending customers personalised samples, this increases the likelihood of those in their programme buying more products. It also makes their customers feel like individuals, and genuinely valued by the company.
5. ‘Gamifying’ your rewards programme
Video game designers know better than anyone how to keep their players engaged. They leverage people’s competitive instincts to keep them striving for the next level of play. Picture the average video game in your mind. There are ‘level-up’ bonuses, leadership boards, and trophies when you complete certain achievements. This is the essence of ‘gamification’ – it constantly reminds participants of the rewards (real and potential) that come from their efforts.
Research proves that gamification has a measurable impact. According to a 2017 study, the use of game tools such as performance bars and leaderboards in non-game settings increases so-called ‘task meaningfulness’ in participants. If you integrate this strategy into your loyalty programme, you will create a more interesting and engaging experience for your customers.
Here are a couple of examples:
Tiered rewards programs – These are some of the most successful loyalty programmes. Why? Because they provide customers with the most powerful incentive – exclusivity.
Non-tiered loyalty programmes can’t provide this, because customers are aware that they are one of thousands. But creating upper levels for the ‘chosen few’ with unique benefits is a big drawcard. This is especially effective if your products are available from multiple vendors. Airlines have known this for a very long time, hence why their frequent flier programmes reward their most loyal, long-term customers with perks like airport lounge access.
Sephora is one of the masters when it comes to tiered loyalty programmes. The first tier of their Beauty Insider programme is free to join. But access to the other two levels is only possible if you spend a certain amount annually. These come with escalating benefits, from free shipping to exclusive events and even early access to new products. This gives your customers a clear message: the more you spend, the bigger your reward will be.
Tracking your customer’s progress – To build a successful loyalty programme, you need to consistently incentivise your customers. A one-time email communication when your customer joins your program is not enough. The retail space is extremely crowded, and people will quickly forget about you (and your programme!) Providing consistent updates is a great way to remind customers of how they can benefit by supporting your brand. Consider placing their loyalty status and the number of points they have to spend at the top of every email. That way, they will have this in mind as they look at your new product offerings!
Building a successful loyalty programme can seem pretty daunting, but it really comes down to a couple of key principles; keeping things simple, and not putting barriers in the way of your customers’ efforts to earn/redeem points. If you keep this in mind, you stand to see a more dedicated customer base as well as a jump in sales!