As customers are always looking to switch suppliers, you need to be ahead of the game due to the abundance of choice out there. Loyalty schemes are the most effective way to make sure customer’s stay with you and spend more money. If you want to build a loyal clientele, sometimes keeping the customer satisfied isn’t always enough. Just by your customers being satisfied, doesn’t mean they can’t take their business elsewhere for a better deal.

To increase loyalty, you need to recognise their needs and reward your best customers. A loyalty scheme is used as an incentive for your most valued customers.

The advantages of loyalty schemes

Loyalty schemes allow you to focus on your best customers and improve customer satisfaction levels.

 Loyal customers + Incentives = More sales = More return (£).

By increasing loyalty, you can increase profitability and extend the amount of time customers spend with you.

Loyal customers can become your best promoters, they can recommend you to others, which in turn saves you marketing costs. A loyal customer’s gratification is more influential to people than any advertising campaign.

Planning the right loyalty scheme

Loyalty schemes are popular for customers because they feel they are getting something extra when they are buying your product/service, which is why you should offer customers something they will want. However, it should also be planned with profit in mind.

Think about what you want the customer to buy. For example:

What do you want to achieve out of this?

Are you looking for return customers?

Do you want your customers to spend more?

Do you want them to promote your business?

The rewards you offer to customers can vary from fixed discounts to extra goods or prizes. There are lots of different ways you can offer your customers incentives. Here is a list of ideas:

  • Stamp scheme – Very popular with companies in the hospitality, transport, telecommunication and entertainment sectors. For every purchase, you get a ‘stamp’ and at the end of the card, you get the last product for free/discounted.
  • Discount for bulk orders – If you have noticed some customers are buying your product/service in bulk, why not offer them a bulk discount for example if they buy 10 they get 20% off the order.
  • Point system – This is another popular loyalty program for frequent customers to earn points, which they can use to buy products with at a discounted rate.
  • Customer referral program – For every person, they get to sign up/ buy a product they get a discount on other products. This helps your brand awareness and also helps you get new customers.
  • Become a VIP – Having a choice for customers to pay a price per month/annually for a VIP experience will make them feel important with VIP-only incentives and rewards. It can also make it easier for purchases and beneficial for both business and customer.
  • Partnering with another company – This can help provide all-inclusive offers and is effective for new and returning customers and growing your company.

Whichever reward scheme you choose, you should make the scheme clear, simple to use, eye-catching and realistic. If customers have to spend a lot to only receive a small reward, they will not be interested. However, you should make sure you can recover the cost quickly.

How loyalty programs fail

Most existing loyalty programs are unsuccessful because they fail to meet their objectives. You should address the issues before they become a problem. After this, you will be ready to build an effective base of loyal customers.

  • Confusing loyalty scheme

Avoid letting your loyalty scheme be confusing to the customer, this makes it difficult for them to keep track of their rewards. You should make sure it is very clear how to get the scheme. The quicker and easier your customer can sign up and start earning rewards, the better. Complicating the process can turn customers off if it seems like too much effort and they will not use it. Make sure it is obvious why your customer signed up and what they’re going to get out of the deal.

  • Difficulty in earning rewards

One of the top reasons why loyalty programs fail is due to the customers feeling that the rewards are too difficult to earn, making them go somewhere else with an easier rewards system. You should offer achievable rewards that your customers can earn frequently. For example, offer a small reward like £10 off when the customer spends £25 at your store. This will show your biggest spenders that they are earning a small reward on nearly every visit, this, in turn, increases their satisfaction and frequency of visits. The quicker and easier your customers can earn rewards, the more likely that they’ll keep coming back and using your loyalty program.

  • No promotion and awareness

For a loyalty program to work, your customers need to know that it is there. A loyalty program that no one knows about is instantly going to fail.

Your employees are your greatest advantage here because they interact with customers on a constant basis, so they should know the loyalty program inside and out. Make sure your employees are asking customers if they want to sign up for the loyalty program and describing the benefits accurately. This will help sales and show how enthusiastic your company are to keep loyal customers.  Your loyalty program should always be visible with signage in your store, on your website, during the checkout process, advertised on the customer receipt, on emails you send out, on everything!

Promoting your loyalty program on social media will give you a huge impact. The customers who are more interested in your company are probably already following your brand on Facebook, Twitter, Instagram or elsewhere. This is a great opportunity to draw them in with an eye-catching post/image/video content with your promotion on there. Plus it can also entice new customers to join in on the benefits.

  • Get smart

People take their smartphones with them everywhere they go. Which is why this is a great way to capitalise on, as it can be one of your greatest business tools. There are lots of mobile apps for tracking rewards however, there are consumers that don’t want another app on their home screen.

To substitute this, try sending emailed receipts with reward balances displayed on the email. This will help the customer see their reward balance without navigating to a web page or launching a mobile app. Automated reward tracking allows you to throw out the old methods of keeping track of rewards. By them signing up, you can collect an e-mail address from each customer who joins, and use that to maintain communication with the customers.

  • No Data, big problem

Even though the main focus of your customer loyalty program is for repeat visits, it’s a great opportunity for data collection. You should already have a database full of customer information, including important sections like ordering habits. By taking advantage of this information, it gives you a peek into customers’ likes and dislikes of your business/products. It also shows you when the highest and lowest sale times are in a day/week/month/year. Use this to your advantage and increase sales with targeted offers. For example, if you know a customer likes a certain product you could give them a discounted rate for a similar product.

You can keep changing your loyalty program to reflect what the data analysis shows. With the right data to back up your decisions, your loyalty program, products, and brand will continuously evolve and improve. This is important for your business to keep up to date with the latest trends and make sure your customer satisfaction rate is always high.

Getting to know your customers

A loyalty scheme can generate a lot of data and used to improve your business. Loyalty programmes show your customer behaviour and can show who are your best and your worst clients. This will help you when you are planning and organise your loyalty scheme to fit around your customers.

Your best customers will be bringing in a lot of your profit however, your worst customers who spend little and buy discounted goods – can cost you money. This is where your loyalty scheme can improve this, by rewarding the customers who spend more with better discount rates and encourage smaller spenders to buy more products. For example, if they can have 10% off when they spend over £30 or 20% off when they spend over £55.

Final Note:

Loyalty schemes help to win back one-time customers. The data created by a loyalty scheme can offer valuable information. This makes customers easier to win over because you know everything about them including their buying history and where and how to reach them. This information can also show you where you are going wrong and help you improve your product range and stock selection. Make a note to check out your competition, they are either already offering their customer rewards, or planning to. Your loyalty program should keep you ahead of the competition and retain your best customers. Most loyalty programs fail because there is no set plan. Planning is important because you should address any issues you come across before they become a problem. Having an effective loyalty program will help retain existing customers and also bring forward new customers.

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