How to Grow Your Customer Loyalty Program

Offering convenience, meaningful rewards and a personal touch can keep more customers active in your loyalty program.
customer-loyalty
Use the customer data collected with POS-based loyalty programs to connect personally with customers. (Photo: Roobcio/Shutterstock)

Just because a customer signed up for your customer loyalty program doesn’t mean he’ll always remember to open the app or pull out the punch card (if he even has it with him) when he makes a purchase.

In fact, while American households are enrolled in an average of 29 loyalty programs, they’re active (earning or redeeming awards at least once a year) in only 12, according to the 2015 COLLOQUY Loyalty Census, a biennial report.

If consumers aren’t active in your rewards program, you could be missing out on an opportunity to develop stronger relationships and gain deeper insight into their shopping habits.

Mike Lewis, a professor of marketing and director of the Marketing Analytics Center at Emory University in Atlanta, shared ways to grow your customer loyalty program.

Shift to a new setup

If a points-based program, which rewards customers for long-term loyalty after they build up a certain number of points, isn’t delivering the results you expected, consider shifting to another format. A tiered program, for example, can offer larger and more lucrative rewards to the most active customers.

Another option is a partnership or coalition program in which points add up as customers spend money at multiple businesses.

Lewis says partnership programs can be attractive to a small business in particular because someone else can run the infrastructure and analyze customer data. But if you give up control of the program, you may lose access to customer data. In that case, you’d squander an opportunity to learn more about loyal customers and deepen those relationships.

If you do change your program, it’s critical to educate and inform the consumer in order to avoid backlash. When Starbucks changed its loyalty program in 2016 to base rewards on the amount spent instead of the number of transactions, customers complained it was not as generous as the previous program.

Go virtual

One trend in loyalty programs is the move away from old-fashioned paper or plastic cards, with stamps, punches or bar codes, to phones and other mobile devices. After all, estimated 77 percent of Americans own a smartphone according to 2016 data from the Pew Research Center.

If you use a point of sale (POS) system that includes loyalty program functionality, customers can get instant discounts — and instant gratification for belonging to the program — at checkout, no loyalty card required.

Offer valuable rewards with little cost to you

The reward to the customer should be attractive enough to entice participation but still affordable for the business, Lewis said.

For example, a fitness center could offer a free month of membership on the member’s annual anniversary, or if members buy a certain number of personal training sessions or post-workout smoothies. In fan-oriented loyalty programs, every time fans check in digitally at a game, they could earn points that can be redeemed for T-shirts and other merchandise.

Offering excess inventory or coupons as rewards can be a mistake if your customers don’t find them desirable, Lewis said.

Get personal with loyal customers

POS-based loyalty programs provide a treasure trove of data on each customer. Using that data, you can create customized promotions a customer can’t resist.

For example, a retailer can see how much a customer spends in a department, such as shoes. The shopping habit data could reveal the customer loves a certain designer. When that designer releases a new shoe collection, the customer could be offered a special promotion to earn more points with a purchase.

The bottom line

By growing your loyalty program, you can make your relationships with a larger group of customers more concrete and longer lasting.

The key: “The retailer has got to design the program so it’s easy and it’s a value to the consumers,” Lewis said. “That’s going to be what’s required to grow the programs.”

Don’t forget to promote your loyalty program on social media and via email marketing, and ask customers to share their experiences on social media.

Lori Johnston is a former Associated Press writer and magazine editor whose work has appeared in publications and websites including the Atlanta Journal-Constitution, Wall Street Journal, People magazine, HGTV.com and Bankrate.com.

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