7 Ways to Get Maximum Return from Your Loyalty ProgramHow do you turn the average shopper into a loyal brand devotee who will spend more? Show them the perks.
Shoppers love the discounts and freebies they earn from store loyalty programs. And while offering these perks is an expense for the retailer, effective loyalty programs provide a great return on investment because customers become more profitable.
“It’s not just tempting shoppers to come back and get more points — these programs help customers build a strong identification with your brand,” said consumer psychologist Bruce Sanders, author of “Sell Well: What Really Moves Your Shoppers.”
Here are seven ways to get a better payoff from your store loyalty program.
Use it to know your customers better
Understanding who your customers are and what motivates them to buy is key to boosting sales. When customers sign up for your loyalty program, seize the opportunity to learn as much about them as possible.
“At the time of enrollment, you can gather information like the person’s address, family size and self-expressed objectives in shopping with you,” said Sanders. “You can track each participant’s shopping frequency and what items are purchased. The low costs of database management make it realistic for almost any retailer to collect and analyze the information.”
Funnel that data into your marketing efforts. Sanders said that matching promotions to your members’ specific shopping habits will help you offer what they want, when they want it.
Give members special recognition
The members of your loyalty program are probably your best customers, so give them a little extra attention, which can encourage repeat sales, said Sanders.
“The often unrecognized benefit that’s attractive to customers is the status that comes with being a member. They have a perception that they will get additional recognition at the store and a feeling of increased identity with the staff.”
At the checkout line, your staff should acknowledge a shoppers’ membership in a loyalty program and thank them for participating. “We want to refer to people on loyalty program as ‘members’; it makes them feel more special,” said Sanders.
Your staff should also let members know if they’re close to earning a reward to motivate future purchases.
“If a customer is at less than 50 percent of the way toward the next reward at the time you take their payment, praise them for how far they’ve come. When they reach 50 percent, start praising them for how little they have to go. And when they qualify for a reward, congratulate them, doing it in earshot of other shoppers if possible,” said Sanders.
Tier your program
Adding hierarchy to your loyalty program will increase shoppers’ desire to buy their way to higher status and can increase participation in your loyalty program.
“Set different levels in your loyalty programs so that your especially profitable customers gain recognition and additional rewards, providing motivation to shop,” said Sanders.
Some store owners worry they’ll irritate frequent shoppers if they add new elite levels to the top of the loyalty program. “But research shows that loyalty program participants like having the retailer offer elite loyalty program tiers, even when those people believe they would be unlikely to qualify,” said Sanders.
Make sure that when you introduce higher status levels you don’t disadvantage current members.
“In adding levels above, don’t increase the requirements and rewards for those immediately below or they might feel cheated. While consumers dislike a feeling that you’re forcing them to buy what you’re selling, they generally don’t object at all to being tempted, coaxed or even challenged by thresholds they feel they can achieve and that they’ve earned.”
Vary the ways to earn points
Giving customers a variety of ways to earn points gives retailers benefits that go beyond sales. For instance, incentivizing customers to share their positive experience with others could earn you new customers, said Sanders.
“Provide lots of ways to earn credits for movement to the next level,” he said. “Referring a friend earns points. Facebook ‘likes’ earn credits.”
You could also increase engagement with members who haven’t shopped in a while by offering them opportunities to earn points, no purchase necessary.
“If you haven’t seen a member for a long time, email or call to offer a loyalty program credit just for coming in to look at the new merchandise and hear about the latest services. They may not buy something right then, but you’ve exposed them to a larger variety of things you offer,” said Sanders.
“The objective is to maintain momentum and a sense of achievability in your store loyalty program.”
Design an over-the-top reward
“Elite levels should include a few reward choices that allow your customer to show off and you to show them off,” said Sanders.
A highly visible reward will bring your store additional attention and keep shoppers fantasizing about achieving it themselves. “It’s a princess phenomenon — members think, ‘Maybe I can earn one of those one day.’”
Get creative with your top rewards. You don’t have to lose a ton of money on them to thrill a shopper and reap the benefits. “A five-minute shopping spree in front of other customers where a customer gets 50 percent off anything in their cart, or an extravagant event at the customer’s home with media coverage, would bring attention to your program,” said Sanders.
Offer points instead of discounts
When you want to move product without discounting the price, leverage your loyalty program.
“Consider incorporating item-based loyalty programs, in which bonus points are earned for purchases on specific items,” said Sanders. “Research shows that consumers overall are more responsive to products with reward point promotions than price discounts of the same monetary value.”
Consider expiration dates
Putting an expiration date on points is an effective technique for driving sales.
“The retailers I’m experienced with often miss this,” said Sanders. “They’ll allow these points to just accumulate forever, and what you want to do is to get the member to continue to come in and buy. Placing an expiration date on points might pay off,” said Sanders.
As you create your reward system, motivate customers to earn the maximum number of points possible in a given period of time.
“Set thresholds on the basis of continuing activity, not lifetime activity with you,” Sanders said. “You maintain purchasing motivation by requiring ongoing actions in order to receive the elite benefits.”