The ability to put yourself in someone else’s shoes is a very useful skill. In the marketing world, it helps people determine what sells. In regards to customer retention, putting yourself in your existing customers’ shoes is the best way to figure out what they want from your loyalty program… and then giving it to them!
That’s why we’ve compiled this list of 10 key questions to ask yourself when creating or revising a loyalty program for your business.
Why ask yourself these questions? Because that’s what your customers are doing when you invite them to join your loyalty program – and the better the answers, the more effective your loyalty program will be.
The Ultimate Guide to Customer Loyalty Programs
Learn how to create a successful loyalty program that retains customers and boosts sales.
1. What are the rewards, and do they apply to me?
Let’s start with the obvious stuff. When people think loyalty programs, they think rewards. So the first question your customers are likely to have is “what are the rewards?”.
For cafes, it’s usually incremental free coffees. For hair salons, it’s often incremental discounts on appointments or haircare products. Whatever industry your business falls into; your rewards need to be relevant to your customers.
There is no shortage of ex-loyalty programs that failed because only a small portion of the brand’s customers were interested in the rewards being offered. There are two ways to solve this problem: variety and personalisation.
The more variety you offer in your rewards, the more you’ve covered all bases. But for businesses that are serious about their customer retention strategies, tailored rewards are the way to go. We’ll discuss this more a little later in the article.
2. How hard do I have to work for the rewards?
Designing a loyalty program is all about finding the right balance between customer spend and customer reward. Obviously, a $2 discount on every $500 spent in-store isn’t going to tempt anyone. Similarly, you don’t want to be overly generous with your rewards and hurt your bottom line.
This situation is often solved with a bit of trial and error. Your initial loyalty program will probably need some tweaking and adjusting before it settles into a functional model that benefits your customers and your brand alike.
On a side note, an upfront reward works wonders for getting customers to sign up. At Stamp Me Loyalty Solutions, we’ve found that businesses offering an attractive reward upon signup build a healthy pool of loyalty program members over three times faster than businesses that don’t offer an upfront incentive at all.
The more you can tip the “spend vs. reward” scale in the customer’s favour to reel them in at the start, the better.
3. How much of my personal information do I need to give you?
In this digital era, consumers are increasingly guarded about who they give their personal information to (be it credit card details, phone numbers, email address and so on).
The more information you ask customers for, the less likely they are to join. Not only does it put customers off for privacy reasons, but it also tends to feel like more of a commitment.
The trick is to make the signup process as straightforward as possible, and don’t ask for a lot of information.
In this way, digital loyalty app providers are a great option. Customers can simply download the app, sign up with their email address and a password, and they’re good to go. The process is light and breezy, and can literally be done while standing in line at the point of sale (POS).
4. Will I be pestered with notifications, special offers and other communications?
Ultimately, the reason people ask themselves Question #3 is because of Question #4.
Customers are far less likely to join your loyalty program if they think it’s opening the floodgates to an endless stream of texts, emails, and other unwanted communications about “special offers” and “exclusive deals”. Make it clear in the program’s promotional material that this won’t be the case.
This isn’t to say that you shouldn’t periodically engage your loyalty program members with targeted communications – just don’t overdo it, and give them the ability to opt out if they want to.
You can learn more about how frequently to send customers notifications here.
5. Do points expire?
When it comes to loyalty programs, less is more – keep it simple.
Once you start introducing a complicated system of rules and exceptions, terms and conditions and so on, customers will either lose interest or think they’re being taken advantage of.
Only a handful of brands (namely Starbucks) have managed to successfully implement a rewards structure where points expire or don’t carry over to the following month or year. If you’re operating a loyalty program where the points do expire, make it as clear as possible when they’ll expire and how customers can get the most out of their points.
By notifying customers when they’re about to lose points, you can motivate them to “hurry in before Friday for one more transaction to redeem your reward!”.
6. Can I work my way up to more benefits and increased perks?
Tiered loyalty programs are a great way to incentivise existing members to increase their engagement, and it also shows them results for their brand loyalty as they enjoy more perks.
If you do decide to implement a tiered system, make sure the customer experience gets increasingly convenient and luxurious with every “promotion”. Sephora’s Beauty Insider program is an excellent example of a well-structured tiered rewards program.
7. What other businesses can I use this program with?
Partnering up with businesses that share many of the same customers (airlines and hotel chains, for example) is a great way to make your loyalty program more appealing. Points are accrued and rewards redeemed for various consumer behaviour across several industries.
Ideally, you want to convey to your customers that this loyalty program is going to save them money in the long-term, and expose them to all kinds of discounts, perks and exclusive offers.
The more partner businesses that are involved, the more gratifying the shopping experience becomes across numerous brands in various sectors.
8. Is the program supporting a cause?
Corporate social responsibility (CSR) has never been more important in the eyes of the consumer than it is now. Customers choose which brands to shop with based on which ones demonstrate good corporate citizenship.
If customers perceive your loyalty program as simply being a mechanism for making more money, they won’t sign up. An effective strategy is to incorporate CSR into your loyalty program, and there are countless ways to do this.
Perhaps customers can earn extra points towards their next reward for recycling, or choosing more sustainable products from your selection.
You can find out more about how CSR affects loyalty here.
9. Will this program improve my customer experience?
Guests sign up to hotel loyalty programs because it gives them access to perks and benefits that ultimately enhance their stay, or reduce the price of future stays. Customers join café digital loyalty programs for discounts, skip-the-queue privileges, pay-in-advance capabilities, and a plethora of other perks.
Whether it’s a free coffee, free beauty class with any cosmetics purchase, or a complimentary foot massage with their next manicure/pedicure appointment, a loyalty program needs to offer the customer a heightened shopping experience than what they would have access to without the program.
By making your loyalty program members feel like VIP’s that are highly valued by your brand, you’re also inspiring a bit of ‘FOMO’ among non-members… Fear of Missing Out!
10. Ultimately… is it worth it?
At the end of the day, all of the information above helps the customer reach a conclusion on this key question – is your loyalty program worth it?
If the answer is anything other than a resounding YES from every customer who becomes aware of your rewards program, you might be making one of these 10 key loyalty program mistakes.
You can read up on some of our tips and tricks for updating or refreshing your loyalty program here.
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