According to Inc., 65% of
marketers have implemented a loyalty program, and for good reason. Current
customers spend, on average, 67% more than customers who are buying from your
business for the first time. And acquiring those new customers costs 5 to 10
times more than selling to a current customer.
It’s quite clear just how valuable your loyal returning customers
are to your business now, and in the future. While direct mailing tactics or a seasonal
email campaign can keep your current customers
interested, a loyalty program is the most strategic way to keep them interested
and spending long after the holidays are gone.
Determine Your
Customers’ Needs
The first step in creating a loyalty program is determining
what your customers need. These needs may vary depending on the time of year;
for example, the holiday rush is a lot more stressful and time-consuming than
it is to shop for March birthdays. Figure out what your customers need from
your company to get them through the holidays in one piece.
·
Be sure you’ve researched and developed
an in-depth customer profile for your company. Are your customers young adults,
middle-aged moms, or retirees? Each group will have different needs from a
rewards program, so know which one you’re working with.
·
Know how your customers use your
product or service, and then determine how you can add value to what your
customer is buying. Holiday retail rewards could include free gift wrapping,
free shipping, or extended terms on product returns.
·
In “The
Loyalty Effect,” Fred Reichheld claims that a 5%
increase in customer retention can result in a 25 to 100% increase in
profitability.
Offer Actual Value
In order to turn new customers into returning customers through
a loyalty program, you need to offer them something with
actual value. A points system that creates unattainable goals or a promotional
game they have no chance of winning will frustrate your customers and can cause
them to drop out of your program, which could then potentially drive them away.
·
If you offer a points-based program,
keep it simple: allow customers to earn a free item for every $50 spent, or
give them $10 off for every $100 spent. For a holiday promotion to bring in
more sales, consider doubling your rewards until the end of the holidays.
·
If your products tend to be purchased
less frequently, or your services aren’t conducive to a points-based system,
you can implement a tiered system instead that increases rewards over time or
with more purchases. Offer each tier special holiday rewards, move lower-tier
customers up a level for the holidays, or give new program participants a
special gift for joining during the season.
·
No matter what kind of loyalty program
structure you choose, it needs to provide customers with attainable, valuable
rewards that they can redeem quickly and frequently.
Partner Up
There is a limit to how many rewards and discounts you can
offer your customers on your own. Collaborating with another company can enable
you to offer additional rewards beyond the scope of your own business and
capitalize on the holiday shopping season.
·
Coalition programs are strategic partnerships
formed to increase customer retention and company both for all partners
involved. The coalition can last for the length of the holiday season, or
become a permanent partnership.
·
If you understand your customer’s needs,
you can find other companies that serve your customer and would be valuable
partners in a coalition program.
Customer loyalty programs increase
customer happiness and retention by offering them rewards and extra services
they can use during the holidays. Whether you offer a coalition program, a
points system, or a tiered rewards structure, make sure that it adds value to
your customer relationships during the holidays and all year long.
