Do Customer Loyalty Plans Work?
To new entrepreneurs, customer loyalty plans might seem like a risk. If not implemented properly, they can become a tiresome burden and a huge waste of resources and time. When applied correctly, however, they can result in repeat purchases from customers, and they have the power to convert any business into a customer-centric profit machine.
The secret lies in understanding the different factors that influence the success of these programs. Here are a few points that go a long way toward ensuring the use of loyalty apps and other programs that are advantageous for your business. Keep them in mind as you develop your customer loyalty plans to get the best results for your time and resources.
Make Your Customer Loyalty Plans Work for You
Make Acquiring Data a Priority
Many business owners believe any loyalty program will be effective in attracting and maintaining customers. This is not true. While many businesses are offering these programs today, few are reaping the benefits. Entrepreneurs who are successfully using these programs have prioritized acquiring customer data to learn more about customer shopping habits, preferences, who their least and most profitable shoppers are and the necessary changes, if implemented, that would make customers stick with their brand.
Create Spending Bands
Spending bands reward customers who spend more than a specified amount or threshold. Companies can implement bands by creating spending levels, with each level having more benefits than the last. The idea is to encourage lower-spending customers to scale the segments. Many brands have noticed significant increases in purchases by implementing this method. Once low-tier spenders realize the massive benefits that arise from increasing their average spending, they are more likely to increase their purchase volumes to move to the higher segments.
Make It Simple
When in doubt, keep it simple. Simplicity is one of the key factors that go into making a successful loyalty program. Most businesses use a point system to reward their frequent customers. In the pursuit of a comprehensive plan, however, they make the relationship between the rewards and the points confusing and a bit too complex for the average customer.
The success of a good program depends on the customer’s ability to grasp the ins and outs of the program quickly and effortlessly. With so many options out there, your business might be losing out to your competitors this way. Also, not all systems are appropriate for your business. A point system works best for enterprises with a record of regular short-term customer purchases.
Intelligently Deselect the Least Profitable Customers
In business, there are “good” customers and “bad” customers. “Bad” customers are ‘cherry-pickers.’ They only show up when there’s a sale or discount and nothing else. In the long-run, they cost the business more revenue than they generate.
According to a study conducted by the Syracuse, a supermarket based in New York City, roughly thirty percent of customers generated enough profit to cater to the services offered to them. Assuming this applies to all industries and businesses, it means the remaining seventy percent eat up the profits the others produce.
Designing customer loyalty plans that weed out these unprofitable customers will generate more revenue for any business. Narrow down the program curbing rewards for this segment – you can do this based on the customer data collected.
Build Genuine Customer Relationships with Customer Loyalty Plans
Almost all businesses understand that good relationships with their customers are crucial for their success, and that relationship can include loyalty programs. However, implementing them might not be as straightforward.
The key element to any long-lasting relationship – trust – is created by excelling in problem correction, providing top-notch products, offering excellent customer service and meeting any other unique needs of the customers. Once trust is established it’s easier for any programs the business chooses to implement to be successful – including customer loyalty plans.
Word-of-mouth, which customers tend to believe over advertisements, can lead to tremendous success of these programs. Encourage your satisfied customers to share with others on social media or by leaving reviews online.
Customer loyalty plans work. The trick is figuring out the factors that affect their success in your industry. Here’s a simple tip: strive to make your customers happy. If you can accomplish this, then your current customers will increase your revenue. Additionally, they will convert prospects into loyal customers through word-of-mouth. You’ll also be able to stave off a lot of competition. Remember, customer loyalty is priceless.
Contact Loyaltyworks by calling (800) 844-5000 to learn more about customer loyalty plans. Let our experienced staff help you to create the right customer loyalty program to meet your business goals.