Loyalty should be rewarded

Loyalty should be rewarded

It’s written in business ‘lore’ that it is much more expensive to win new customers than it is to generate more or repeat business from your existing customers (or ones that have lapsed).  The question is, many companies have a customer acquisition strategy but how many have a customer retention strategy?

Loyalty abounds during this pandemic period, whether it’s loyalty and new-found love for the NHS, the dustbin men, or the food giants, there’s plenty of it around and businesses should capitalise on this.  You want your loyal customers to stick with you and you need to be showing your appreciation.

Any form of loyalty scheme comes at a cost, particularly as it’s channelled to a customer that you’ve already ‘won’ so it needs assessing to ensure it has the potential to bring in a good return on investment.  It helps to know your database (or your customers) in this respect.  Each idea is wholly dependent on the nature and cost of your product, so the merits of each will differ

Loyalty program ideas

Here are some ideas, many of them classic:

#1 Use a simple points-based system (the classic)

The simplest way to action this is by a loyalty card – collect the stamps and get one for free after 6 are purchased.  Promotional codes and discount coupons are other examples which don’t necessarily need investment in rewards-based software to run it.

#2 Use a tier system to reward initial loyalty and encourage more purchases or reward based on action

So you may reward a customer for a referral or for taking part in a poll, completing a survey or purchasing a complementary product in the range. You decide the reward structure.  This type of loyalty program is typically run by loyalty programme software.

#3 VIP benefits

The first so many to sign up or an upfront fee for VIP benefits.  First Direct spring to mind when it comes to a range of VIP benefits typically on health and leisure products and services, all in keeping with the image they want to convey or the type of audience they want to attract. Amazon Prime is an example of upfront payment for a bundle of benefits.

#4 Structure non-monetary programs around your customers’ values

Offering value in ways not connected with money or which has very small monetary value is an attractive thought for many smaller businesses.    A simple example is unlimited free tea at a garden centre for example (a cup of tea costs nothing and people can only drink so much) or a free cupcake.  A b2b could think in terms of a free training session (cost of time rather than monetary, unless you charge for training). This is worth a brainstorm because what works will be unique to your company.  See also #9 below.

#5 Partner with another company to provide all-inclusive offers.

This, effectively, is sharing the cost with another partner and sometimes termed ‘strategic partnerships’

#6 Make a game out of it – a contest or a sweepstake

This can be fun and engaging as long as the odds of winning are reasonable.  Hubspot suggests a 25% chance.

#7 Be as generous as your customers. 

This is an interesting one; make the loyalty program ‘impressive’, to match the investment (and continued investment) made by the customer.  There is nothing worse than a cheap giveaway, too small discounts and samples, which are miles away from your brand and values.

#8 Ditch the program completely.

Another interesting one – just make the product so desirable or with so much perceived value that it doesn’t need potentially defacing with a loyalty program.  If you’re already running a loyalty program, either half-heartedly or worse, at a net loss, then take time now to exit plan and either build on your brand or move customers onto something better.  A change can make a difference in itself and breathe new life into customers.

#9 Build a useful community for your customers.

This is a non-monetary example, but it’s demanding of your time.  However, it may also meet other marketing objectives – content and SEO objectives, for example, thereby making it cost-effective.  Community building includes such things as a knowledge base or a forum.

Loyalty schemes or programs probably work best for retail businesses but with a bit of imagination, ideas could be adapted for b2b – why wouldn’t you?

If you decide that point 8 – scratch or don’t start the program – applies to your business, then I can think of examples where words and social communications alone work to keep loyalty.  Local businesses with local communities are one such example, using the social hashtag #StayLoyalStayLocal.  The key here is to keep talking, keep communicating the brand because once you stop, another company with an attractive loyalty offering could just steal the business.  People are, after all, fickle.

Further reading:

This is a good list of retail examples provided by Emarsys.com, albeit with a US focus.  Emarsys also provide useful loyalty considerations like making the loyalty card (if that’s the route your taking) mobile friendly.

The initial list of ideas was gained from Hubspot, who offer lots of useful information on the subject of customer loyalty.