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5 Questions to Consider Before Starting a Loyalty Program

September 24th, 2012 ::

If you’re a retailer or in the hospitality business, a loyalty program is a truly valuable opportunity to continually engage with customers and build a more loyal customer base (obviously!).

Unfortunately, having a loyalty program and having an effective loyalty program are two different things.  I found some interesting, yet sobering, statistics online that, to me, scream opportunity:

  • 85% of loyalty program members haven’t heard a thing from the provider since signing up
  • 81% don’t know the loyalty program benefits or how/when they will receive rewards.
  • Only 1 in 4 consumers feels “very loyal” to providers (and just as many have zero loyalty).

This is an opportunity because if you put together a great loyalty program that is actually fun and valuable for your customers, you are way ahead of the curve. An article that appeared on Social Media Today this summer offered 5 very helpful questions to consider before starting your loyalty program to ensure your program rocks.  Here they are:

1. Would your customers benefit from a tiered membership program? You know these programs: the more you spend, the bigger the savings or rewards. The successful ones are simple and engaging: spend $50, get a $10 coupon to use during the next 30 days; spend $100, get a $20 coupon, etc.

2. What exclusive rewards would be most engaging?  This is where you can get really creative! You could try a “surprise and delight” tactic, in which you reward your best shoppers with something truly special, like a gift card, free product, or special event. Other ideas: samples, early access to a sale or product, after-hour shopping or VIP parties, etc.

3. Do you want to link rewards to a credit or debit card? These types of programs track a customer’s sales and trigger offers at set amounts. Some retailers allow customers to earn rewards via social media interactions as well, which I think is a really cool, engaging idea.

4. Can you partner with an affiliate? You’re also familiar with this concept, since you have been able to apply airline and hotel rewards for shopping, dining, etc. for years. If you go this route, find a partner whose products or services are complementary to yours and fit into your customer’s lifestyle.

5. How will you cross-promote your program and encourage interaction on social media? Your customers could earn points or rewards for “liking” you on Facebook, following you on Twitter, etc. Again, get creative, but keep in mind what makes most sense to your customer base.

If you have a loyalty program, what strategies have worked best for you?  Share your tips and ideas in the comments below.

Image courtesy of Wikipedia

The views expressed here are the author's alone and not those of Network Solutions or its partners.

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Posted in Marketing | 11 Comments »

  • http://twitter.com/mplifyr mplifyr

    The most successful loyalty programs quite simply move away from just offering rewards! So many people think “loyalty” is about offering giveaways (ex: free desserts), giving discounts (70% off first time buyers (Groupon model)), “Buy 10, Get 1 Free” deals and offering gift cards). If done correctly, these types of deals can work, but so many other ‘loyalty platforms’ are not doing it correctly. Loyalty programs must create engagement, customer satisfaction and they need to target their most loyal customers (returning customers, VIPs and even employees). Most importantly, they also need to not drive down the profit margins of businesses running them. A loyalty program with embedded gamification concepts, the ability for businesses to create many combinations of deals, redemption offers and engagement activities for their customers, the ability to segment their customers, social sharing tools and flexibility for their users are all major factors that are required.

    • Anonymous

      I couldn’t agree more, so thanks for sharing your valuable insights! However, I tend to write about the easiest ways to do X, while you offer suggestions for taking loyalty to the next level – all great tips, but how easy is it for a time-starved small business owner to do those things?

      • http://twitter.com/mplifyr mplifyr

        Certainly time-starved businesses need a tool that is easy to implement, does not strain their resources, can be completely managed by the business (rather than going through a 3rd party) and does all of the things you mentioned in your article above and more. I think it all lies within a single tool and finding the right solution to do all of these things for you is the key (rather than a bunch of different tools). We’ve built mplifyr to accommodate everything mentioned above and more and are in the final stages of going through a revamp of our site so if interested, please check us out around December. Great article Monika and we look forward to reading more in the future from you. Thank you for your reply! :)

        • Anonymous

          Of course! Can you believe I was not even thinking about tools – and I know there are a few good ones out there – I think this topic deserves a follow-up article. :)

        • Anonymous

          Of course! Can you believe I was not even thinking about tools – and I know there are a few good ones out there – I think this topic deserves a follow-up article. :)

      • http://twitter.com/mplifyr mplifyr

        Certainly time-starved businesses need a tool that is easy to implement, does not strain their resources, can be completely managed by the business (rather than going through a 3rd party) and does all of the things you mentioned in your article above and more. I think it all lies within a single tool and finding the right solution to do all of these things for you is the key (rather than a bunch of different tools). We’ve built mplifyr to accommodate everything mentioned above and more and are in the final stages of going through a revamp of our site so if interested, please check us out around December. Great article Monika and we look forward to reading more in the future from you. Thank you for your reply! :)

  • http://www.facebook.com/john.muir.96 John Muir

    Thank you Monika for the article….just found the posting 2 months after you submitted…still just as timely—John

    • Anonymous

      Cool – glad you liked it John!

  • Ray Lorenzo

    Any experience integrating a loyalty program with nsCommerce? Have not been able to find a platform with easy integration. Thanks for feedback.

    • Anonymous

      You know what, I haven’t tried – nor have I heard anyone else talk about it. Definitely a question for your account manager at NetSol/web.com.

    • Anonymous

      You know what, I haven’t tried – nor have I heard anyone else talk about it. Definitely a question for your account manager at NetSol/web.com.