How to design a loyalty program? Before you design a loyalty program for your business, you have to ask yourself: “What does loyalty mean to me and my business? What do I count as loyalty? Is it that my customers will always buy only from me and not my competitors? If that’s so, why would they do that? What’s the factor that would make them trust and reward me with their continued business? Have I asked them? And how do I then reward them in the way that’s most meaningful and motivating for them?”
Our Content Marketing Roundups usually pick topics that most people would consider a question with many possible answers. On a topic like loyalty rewards programs, every business and every entrepreneur may have a different view of what loyalty is and what is the best way to incentivize it. There can be no “one size fits all”. Also there is no room for tired old ideas. People like to be rewarded with something innovative, rather than just with money or a bunch of hackneyed bonuses. That’s why we have chosen this topic, for you to get suggestions from those who’ve got smart thoughts on it.
Our picks for this Content Marketing RoundUp include some great quotes from the blog posts of Sallie Burnett, Sophia Bernazzani, Attila Kecsmar, Alex McEachern, Patrick Trochaniak, Ronald Dod, Yu-Kai Chou and Heidi Zak. I hope their writings open your mind to the ways to look at loyalty and rewards. All of them seem to stress that loyalty can be as marketers see it, but rewards must be what customers see as rewards!
Make trade-offs … decide which customers to target and which you deem less valuable: Sallie Burnett
Sallie Burnett in the article “How to Design a Successful Loyalty Program”:
First, set goals around a primary business objective that will drive customer impact – things like increasing the frequency and size of purchases over a defined period. Then evaluate whether potential benefits are sufficiently compelling to drive such behavior and, pivotally, whether your employee training and customer communications yield awareness, curiosity, and action.
The trade-offs come when you decide which customers are targeted and, by the process of elimination, which you deem less valuable. No business can be all things to all audiences; your loyalty program doesn’t have to excite or engage less-profitable customers, it should be focused on encouraging profitable customers to buy more and more frequently, and recommend your brand to colleagues and friends.
Once objectives are defined clearly, they must be distilled into a strategic message that is simple and sustainable over time. Now that you’ve defined your most-coveted market segment, decide how specific message elements can be tweaked to broaden or narrow the appeal of your loyalty strategy.
Leverage loyalty program best practices. Look around you. The leaders in your industry not only have already defined their loyalty strategies, but the very success of those strategies define what you must do. Yes, it helps if you’re creative, but you needn’t entirely re-invent the wheel. Look at your companies unique value proposition to create a differentiated value proposition that will matter to YOUR customers.”
Tap into the “why” behind your product to make your loyalty program compelling: Sophia Bernazzani
Sophia Bernazzani in the article “The Beginner’s Guide to Building a Customer Loyalty Program”:
Customers are cynical about customer loyalty programs and think they’re just a clever ploy to get them to spend more with businesses.
Even if that’s the goal of your customer loyalty program (because that’s the goal of most businesses, to make money), it’s your job to make it about more than the money — and to make it about the values — to get your customers excited about it.
Tap into the “why” behind your product or service to make your customer loyalty program as compelling as possible.
Amazon Prime costs almost $100 per year to join, but the value proposition of paying more money isn’t just about the free two-day shipping. Amazon offers its members a ton of other convenient rewards — like free TV show and movie streaming, and free grocery delivery from popular grocery stores — that speak to the value for the customer (speedy delivery) in a broader context.”
Maximize your rewards program’s uniqueness and create excitement around it: Attila Kecsmar
Attila Kecsmar in the article “Loyalty Program Design – 7 Tips to Build a Reward System”:
Don’t show all of your awesome rewards at once. Try to differentiate rewards by who can see them. This will help you to add mystery to your loyalty program and therefore ensure constant customer engagement. Create categories like these:
- Available for all customers
- Available only for newly registered customers
- Available only for returning customers
- Available only for customers who have achieved a certain level
By pushing monetary rewards to higher customer statuses you can secure your marketing budget and also ground real customer engagement.
The best way to increase the frequency of a customer’s visits is to awaken two positive emotions in them: surprise and expectation. You might offer these:
- Predictable rewards: the customers expect them, and know when the rewards will be available. Seasonal rewards typically have an effect like this.
- Unpredictable rewards: the customers don’t know when the reward will be available; it will really surprise them. Custom-made rewards, such as events, can work like this.
These two types of rewards ensure one important thing: constant attention from your customer.”
The first thing customers notice about your rewards program is what you call it: Alex McEachern
Alex McEachern in the article “6 Strategies For a Creative Loyalty Program”:
The first thing customers will notice about your rewards program is what you call it. Nothing leaves a more lacklustre first impression than simply calling it a “rewards program.” Your business is worth way more effort and creativity than that, and your customer’s attention is worth more, too. Name your rewards program something that reflects who your brand is, what you sell, or the values you want your community to represent.
Golf4her put together an incredibly branded program with their Loyaltee Rewards. As a golf accessories and clothing brand, incorporating a “tee” pun into their program name makes perfect sense. Not only that, but their VIP tiers refer to golf as well, aptly named Par, Birdie, and Eagle. This is just one example of how you should use your brand’s values, products, and attitude in the overall program name and VIP tiers to hook shoppers and pique their interest.
You should also use the same amount of attention to detail one level deeper and focus on your points currency!
Create a clear connection between your brand, program name, as well as the name of your points and how they are displayed. This will create a cohesive customer experience, and show them that your rewards program is part of your brand community experience, not an afterthought.”
Reward customers for completing “quests” like following on Instagram or referring friends: Patrick Trochaniak
Patrick Trochaniak in the article “How to Build the Best Loyalty Points Program”:
A ship with no compass will end up going in circles. The same is true for loyalty programs – set a concrete goal before embarking on your journey to ensure you actually reach your destination. Use metrics to benchmark your progress because they are easily measurable. Determine how much you want to increase your repeat purchase rate, average order value, or purchase frequency to make sure your rewards program stays on track.
After you’ve set your goals, determine how customers will earn points towards rewards in your program. It’s extremely important to give options for how your members can earn points. This will keep them engaged and encourage them to explore more of your brand.
The best way to engage your customers is by rewarding them for actions that make sense for them. What are they likely to engage with? How do they interact with your brand? A great example of this thinking at work is in the jewelry market. As a visual industry, I commonly see jewelry brands rewarding customers for following them on Instagram. Clearly, rewarding for more than just purchases is important!
Skullsplitter Dice rewards their customers for completing “quests” like following them on Instagram or referring a friend. Earning points for completing these actions will motivate customers to interact with the brand more often, meaning Skullsplitter keeps them as a customer for a longer period of time!”
Listen to customers. Tie feedback into your loyalty program: Ronald Dod
Ronald Dod in the article “How to Build a Successful Loyalty Program for Your eCommerce Store”:
Actively listening to customers is the backbone of marketing. It’s an essential part of product and marketing research, and for building buyer personas. In order to create (and improve on) a loyalty program, you need to listen to customers and adjust course to show them you care. Therefore, you must tie feedback into your loyalty program.
Add rewards for non-transactional engagements like completing surveys and providing feedback to your brand. You can get consumer feedback on any aspect of your business you like, but don’t ignore the opportunity to find out how they want to be rewarded.
This research can help you understand customer expectations to craft a program built on what they value most. Also, proactively engage with your customers to solicit feedback. Don’t rely on loyalty program metrics and transaction reports to gauge the effectiveness of your program.
Knowing what to offer will be easy when you lean on the feedback from your audience. While items may very well be free as a result of a loyalty reward, you’re creating a structure with rewards that are seen as more valuable than just getting a free product.”
Create rewards that drive the best behavior and positive action: Yu-Kai Chou
Yu-Kai Chou in the article “4 Ways to Build and Optimize a Customer Loyalty Program”:
Rewards must drive a positive action. For example, if you want to increase average order value, then offer a complimentary cookie with the purchase of any full meal combo. If you want to drive signups to your email list, then offer a free upgrade on a drink today for joining your email list program. Here are the three universal principles that you should follow when creating rewards:
Expand beyond discounting: Discounts lower the quality of the brand and also teach the customer that the item they’re purchasing is worth less than full price. Instead of discounting, add a bonus to a purchase. For example, “Spend $10 and upgrade your smoothie to a large for free.”
Small, quick rewards rule: Too often, franchises and small business owners limit themselves to punch cards that offer the “Buy 9 get 1 free” reward”. These types of rewards are proven to NOT drive customer action because the rewards take too long to get redeemed. What has proven to drive customer and user action are small, quick rewards that can be redeemed by the 2nd or 3rd visit. Therefore, instead of offering a free burger after 9 visits, offer a free small french fries after 2 visits.
Generosity and recognition are key: Your best customers not only spend the most at your business, but they also tell their friends and family to shop at your business. It is therefore in your best interest to make your best customers feel special and recognized. A great way to do this is to encourage and support their word-of-mouth efforts. A great example is the creation of a referral program: invite 5 friends and get a free smoothie. You’ll see an increase in new clientele because customers will be motivated to tell everyone about your business.”
Build customer loyalty with a great product and experience first, then build rewards: Heidi Zak
Heidi Zak in the article “3 Tips for Creating a Loyalty Program Your Customers Will Love”:
Creating a program can be a great idea, but true customer loyalty comes from delivering a great experience and a great product. The program doesn’t create loyalty, it augments it.
The loyalty program is just a piece of the broader relationship you have with your customers. No points, discounts, or giveaways are going to replace all the things you do day in and day out to ensure your customers have a great experience.
That’s why I certainly don’t recommend putting together a loyalty program in the early days of a company. You’re better off focusing on improving the daily interactions with your customers. When a customer feels like they’ve been treated in a friendly, beneficial way, that tangible moment is more important than the technical implementation of a program.
There is a time and a place for a loyalty program. Build your customers’ loyalty first through a great product and a great experience, then capitalize on that with custom rewards.”
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