How to Create a Customer Loyalty Program that will Increase Sales

The following post is a guest post from our friends at BellyCard. Their mission is to help small businesses use loyalty programs to drive sales and a strong customer base.

Customer loyalty programs have increasingly become a staple of any business’s marketing mix. They’re a great way to engage with your customers and, when implemented correctly, can have a significant impact on your bottom line. However, getting started can be overwhelming. What kind of program is right for your business? How do you enroll customers? How do you know if it’s working? These are all important questions small businesses should be asking themselves and we have some guidelines to help you navigate the customer loyalty landscape. But first thing’s first…

Why Does Customer Loyalty Matter?

Did you know that increasing your customer retention rate by just 5% can, in turn, increase your revenue by 25-100%? That’s a pretty astounding statistic that shows the true power of loyalty. When consumers are faced with as many options as they are today, standing out from the crowd is difficult. Fortunately, humans are inherently emotional, so creating a great customer experience can convince them to choose your business over another.

While many think that loyalty programs are only meant to benefit your most lovingly loyal customers, that’s not where businesses will find the most success. Of course, rewarding your best customers is important in maintaining a positive relationship, but most of your success is in getting those middle-of-the-road customers to become loyal. They’re the ones who are maybe visiting your business sporadically, or typically have a smaller basket size. Getting those customers to visit more frequently and purchase more from your business (a.k.a. making them loyal customers) is what will drive your profits exponentially.

Features You Need vs. Features You Want: Choosing a Provider

Before choosing a customer loyalty program provider, decide what kinds of features are most important to your business. Do you want to be able to email the customers in your program? Do you want marketing automation so you can “set it and forget it?” Or do you want something more advanced and hands-on with a mobile app for your business? Regardless of what your main asks are, focus on 2-3 things that are most salient, and make a decision on a program that way.

This can be a great time to assess the effectiveness of the different tools you’re currently using at your business. Some loyalty providers give you access to more than just loyalty. They may provide email marketing, automation, reviews, the list goes on. Therefore, a loyalty program may give you the opportunity to consolidate some of your marketing services, alleviating both operational and financial commitments.

How It All Works: Program Design

After identifying the correct loyalty provider for your business’s needs, shift your focus to program design. Luckily, most small business loyalty providers have done a lot of the heavy lifting for you with programs that are spend-based or visit-based, utilize email or SMS communication, etc. The customer endpoints your program provides are an opportunity to showcase your business’s personality, creating a unique experience for your customers.

Let’s start with your reward suite. Mix it up with both monetary and experiential rewards. Customers enjoy discounts and free items, but they also love experiences such as “Create and Name Your Own Menu Item!” Experiential rewards such as this one are engaging for your customers, will get them talking about your business, and are at a low cost to you.

The most successful programs will extend the customer experience beyond in-person interactions with email or text messaging. Email campaigns provide your business greater flexibility in terms of content, design, and deployment when compared with text messaging. Businesses can leverage their email lists, acquired through their loyalty program or otherwise, to bring lapsed customers back into their business, announce sales and specials, etc.

Getting Your Customers Interested

You can have the most engaging and unique loyalty program in the world, but if nothing is done to drum up customer interest and excitement, it won’t be successful. This part of implementation will come from within your business. If you already have a customer email list, be sure to import that information into your loyalty program for a seamless transition.

Get your employees excited about the program, and train them on how to get customers enrolled. Provide perks for signing up such as double or extra points the first time they use your loyalty program. Additionally, have rewards at each level so that first-time customers will have enough points to redeem a reward the next time they come into your business. This way, you’ll not only get customers signed up for your program, but you’ll get them back into your business sooner.

Measuring Program Success

Loyalty is an abstract concept rooted in relationships, so measuring it can be difficult to navigate. However, there are behaviors that can give a business an accurate representation of their loyalty program’s success. First, understand how many of your total customers are part of your loyalty program, and how many new customers you’re enrolling on a monthly basis.

Ideally, your loyalty provider can give you analytics on a number of customers, customer visits, reward redemptions, and any campaign performance (whether that’s email or SMS). Adding new customers to your loyalty program is always important, but it’s also important to understand if customers that are enrolled have changed their behavior. Maybe a customer who typically comes in for coffee once per week, now visits twice per week because there’s a really great reward they’re working toward.

Are there rewards that are working really well? Are there some that have few redemptions and maybe need to be re-worked? How many customers who opened your most recent email campaign ended up actually visiting your business? These are all important questions to keep in mind as you choose a loyalty provider and as you continue to run a successful program.

A loyalty program is a great way to drive value for both your customers and your business. The first step is understanding the business problems you’re trying to solve and choosing a loyalty provider that can help you meet those needs. Be sure you’re marketing your program through employee advocacy, engaging rewards, and email campaigns. Lastly, have fun with your program! This is a great way to create relationships with your customers that will keep them coming back.

Learn more about how loyalty programs can boost profits for your business at www.bellycard.com.