Boosting Customer Loyalty

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 I can’t think of single more powerful tool for a business in the modern time than loyalty; it reaches across and slaps the face of businesses that choose to trade only on price and gives you a warm feeling knowing that every time you make a sale you’re giving your best customers something back.

– Steve Toze, Marketing Director, Mountain Bike Hall of Famer, Rockets & Rascals

A study by Marketing Metrics found that the probability of converting (having someone take a desired action) among existing customers is 60% to 70%. Meanwhile, the probability of converting new shoppers is only 5% to 20%. In addition, research has shown that repeat shoppers spend 33% more compared to new ones.

Clearly, repeat shoppers are the best type of customers to have. Not only are they easier to sell to, but they also tend to spend more. As a smart retailer, this is why you should make every effort to ensure that your existing customers are happy and that they come back for more.

One way to do this by implementing loyalty programs.

Thanks to advancements in mobile and point-of-sale technology, rewarding loyal customers is easier than ever. No need to worry about those physical cards that take up space. Customers won’t have to fill out forms just to enroll in your loyalty program. With the right tools, you can run a rewards program that’s seamless, easy, and automatic.

For example, retailers can implement rewards programs simply by switching on a POS feature and customizing their loyalty setting (ex: $50 = $1.00 Loyalty). Customers are automatically added to the program and they can easily redeem their loyalty points as credit against future purchases.

Alternatively, you can also use loyalty apps such as Collect to add more features to your programs. For example, retailers using Collect can create targeted and personalized offers and send them through smartphone notifications. Retailers can also reward customers not just for purchases, but also by spreading the word to their friends.

One example of a store using Collect is Bird on a Wire, an Auckland-based free range rotisserie chicken restaurant. Customers earn points whenever they spend at the store and they earn rewards based on their purchases. It truly is a great way to incentivize people to come back.

Modern-day loyalty program best practices

Having a sleek rewards program is great, but it won’t be very effective if you don’t use it well. For one thing, you have competitors who likely have similar programs in place, so you need to find a way to stand out.

Office Depot cites that “consumers on average are enrolled in 7.4 loyalty programs. However, each year 53 percent of these members stop participating in at least one loyalty program a year, citing irrelevant reward offerings (68 percent) and slow reward accumulation (50 percent) as top barriers.”

You can address these loyalty program barriers using a number of tactics.

Let’s start with the issue of irrelevant rewards. We’ve noticed that many loyalty programs lack a “personal touch” that make shoppers feel extra valued. Yes, giving customers points that they can redeem for any purchase is a solid approach, but in order to make your loyalty program stand out, you may want to add some special perks for each member.

For example, retailer Sephora has a great loyalty program called Beauty Insider that not only gives members points for every purchase, but also sends birthday gifts, invites to exclusive shopping events, and complimentary beauty classes. On top of that, members of the program can get tailored recommendations based on their profile.

Office Depot is another retailer that’s doing creative things with its loyalty efforts. It started implementing a program that gives customers rewards based on their frequently bought items, shopping behavior, and the amount of information that they shared with the brand. According to its announcement, “Customers can sign up for one of three membership types that best describes them: Local Businesses, Loyal Customers or Star Teachers. Members will then receive personalized offers designed exclusively for them.”

Aim to include customized perks and tailored rewards to your loyalty program. This will not only take care of the irrelevant rewards issue that customers have, but it’ll make them feel genuinely rewarded (and in turn more loyal to your brand).

Slow reward accumulation is another concern cited by shoppers when it comes to loyalty programs. To address this, you’ll need to go beyond the “points for purchases” model and find other ways to reward customers. For example, you could offer perks when customers check into your store, engage with your brand online, or tell their friends about you. (Note: Collect lets you do this).

Get creative. Find positive actions that your customers can take and reward them for it. Check out Walgreens’ loyalty program. Aside from giving people points for the dollars they spend, the pharmacy also rewards members for the healthy activities that they get into.

Users earn points when they link their fitness device to the Walgreens app and they get additional points when they participate in healthy activities like exercising, eating right, tracking their weight, blood pressure, etc.

The program engages people and all those points give them more reasons to shop at Walgreens. Plus, since shoppers are sharing their activities with Walgreens, the company is able to collect more data and get to know their customers even more.

Action steps:

  1.  Take your rewards programs to the next level. For instance, if you’re still using physical cards, it’s time you switch to a system that’s POS or mobile-based. Explore your options to see what works best for you.
  2.  Find ways to personalize the loyalty program experience of your customers. Perhaps you can start sending birthday presents or even consider offering bonus perks based on their previous purchases.
  3. Aside from rewarding customers for their purchases, come up with more creative ways to earn points. You can, for example, give perks when they check-in or when they participate in any in-store events.

Francesca Nicasio is a retail expert from Vend, a point-of-sale, inventory, and customer loyalty software that helps over 15,000 retailers manage and grow their businesses. She’s the author of “Retail Survival of the Fittest: 7 Ways to Future-Proof Your Retail Store,” a practical guide to modern-day retail success.


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