Loyalty Program? 5 Questions to think about
There are many questions that surface when you start looking at whether you should create a customer loyalty program, the first one being to understand your motive behind wanting to. Have a listen to our podcast where Julia and Andrea talked about this in great detail. Then consider Mark’s five questions below.
So Do You Need A Loyalty Programme ?
If you already have loyal customers who love your work because of the value you give them, you may not need to invest your time, energy and money in creating one for them. However, if you have others that may be moved to stick with you because of a loyalty program, then it may be a good thing.
This is when it becomes important to segment your database of customers, separating the ‘raving fans’ from the ‘also rans.’ The ‘raving fans’ always come back to you and are often referring your services or products to others.
The ‘also rans’ are people who sometimes come to you but are unlikely to refer you and are not loyal to your brand. This category may be enticed by a loyalty program of sorts but be careful. Your well-intended gift could be something that doesn’t interest them or even turns them away from your door.
What should it look like?
For your special something to create the biggest impact with your customer, it must be something that they want in their life and not just some random object that you decided they may like. You must demonstrate that you have put thought and ingenuity into this. It needs to be something a little more novel than a fridge magnet or the promise to plant a tree for them. These gifts are not new and won’t be especially memorable. You want to stand out by giving something more unique and individual.
It also needs to be something that the customer would find really useful. If you sell IT equipment, find out how that customer intends to use the kit that they’ve just bought from you. A quick conversation may spark some ideas for a little gift at some point. If you sell hiking boots, find out where they intend walking and how much they walk. Perhaps a walking guide of that area may interest them in a few months’ time.
When someone buys from you, whatever that something is, spend a little time being curious about them, to understand how a little gift would attract their attention.
How much should I spend?
Understanding how much that customer means to you in monetary terms is pretty important here. Knowing that ‘Lifetime Value’ will help you decide how much you want to be spending on the loyalty program for them. It also has an effect on the customer. Deciding on a percentage of the revenue they will bring into your business is a good place to start, to know how much to spend.
Here’s a question to make you think. If they are likely to be spending thousands with you, several times a year and you know they love travelling, would you pay for a weekend break away for them? If that works out to be less than 10% of the revenue they give you, do you think that would create some love toward your business?
Spend time thinking about what would make the biggest impact to that customer, whilst keeping within the budget you’ve decided you will spend on them.
What about cards and presents for their special occasions?
Sending cards on birthdays and other special occasions can be a good idea but comes with a warning. Be careful not to make it appear like you’ve been stalking them. Be aware of where you found that information and whether they would be happy for you to be sending them cards or gifts. Some people love it, but some may feel uncomfortable about it.
Also be aware of religion and ethnicity. Do they celebrate birthdays or Christmas? The religions that don’t recognise Christmas are Islam, Hinduism, Buddhism and Judaism and Jehovah’s Witnesses don’t celebrate birthdays, so be aware about causing offense and turning those possible customers away.
How do you know which customers to include?
Unless you use an effective system to collect all your customer data, you probably don’t. You can segregate your customers into the amount they spend with you, how many times they purchase from you, and what they buy from you.
Customer communication is key here. In many cases, you will get the customers email address, especially now as many companies offer to email receipts for purchases. This means you can keep in touch with your customers regularly. However, make sure that each message gives them some value in some form and is not juts spammy.
You can collect data on them, their likes and dislikes but always make sure that you have their permission for that, otherwise trying to figure out a loyalty program will be the last thing on your mind as the GDPR police jump on your case.
So hopefully, we’ve given you some things to think about before you start believing that you must create your customer loyalty program. Done well, it can help raise your reputation and revenue, if not your profits but executed badly, that poor course of action could lead to a different form of execution.
Mark February 2023