Customer Loyalty Programs That Actually Add Value. Did you know it costs a business about 5- 1. X more to acquire a new customer than it does to sell to an existing one? Not only that, but on average, current customers spend 6. In light of statistics like these, businesses must think about what they are doing to keep their customers coming back to their business. A loyalty program may give a customer free merchendise, rewards, coupons, or even advance released products. Is your loyalty program working? According to the 2. Colloquy Customer Loyalty Census, American households hold memberships in an average of 2. Companies lose money on time and effort, and customers get no more value from the businesses to which they are ? How do you convey enough additional value in your programs to keep your customers coming back? It. To get you started, here are some ideas for customer loyalty programs that might work for your business. Customer Loyalty Program Ideas for Your Business. Use a simple point system. This is the most common loyalty program methodology. Frequent customers earn points, which translate into some type of reward. It works best for businesses that encourage frequent, short- term purchases, like Boloco. Case Study: Boloco's Boloco Card. Boloco, an American restaurant chain known for its burritos, is an example of a company who does the points- based loyalty program well. Customers swipe their stylish Boloco Card at every purchase, and the card tracks the amount of money spent. Every $5. 0 spent earns the customer a free item.
It doesn't matter if that free item is a super jumbo burrito or an extra small smoothie: It's free once the customer records $5. Boloco speaks the language of its audience by measuring points in dollars, and rewards in food and drink items. Source: Boloco. 2) Use a tier system to reward initial loyalty and encourage more purchases. Finding a balance between attainable and desirable rewards is a challenge for most companies designing loyalty programs. One way to combat this is to implement a tiered system which rewards initial loyalty and encourages more purchases. Present small rewards as a base offering for being a part of the program, and then encourage repeat customers by increasing the value of the rewards as the customer moves up the loyalty ladder. This helps solve the problem of members forgetting about their points and never redeeming them because the time between purchase and gratification is too long. The biggest difference between the points system and the tiered system is that customers extract short- term versus long- term value from the loyalty program. You may find tiered programs work better for high commitment, higher price- point businesses like airlines, hospitality businesses, or insurance companies. Case Study: Virgin Atlantic Flying Club. In addition to earning miles, Virgin Atlantics' Flying Club allows members to earn tier points. The club inducts members at the Club Red tier, then bumps them up to Club Silver and then Club Gold. Club Red members earn miles on flights and get discounts on rental cars, airport parking, hotels, and holiday flights. Club Silver members earn 5. Loyalty Programs HMC’s Turnkey Loyalty Solutions. HMC provides complete turnkey loyalty solutions for our partner hotels. Your successful program is managed.Club Gold members get double miles, priority boarding, and access to exclusive clubhouses where they can grab a drink or get a massage before their flight. Seem complicated? They created a comprehensive benefits table so customers can easily understand the extra benefits they'll receive as they move from Red to Silver to Gold. The key is to offer benefits in the early stages to hook the customer into coming back. In some circumstances, a one- time (or annual) fee that lets customers bypass common purchase barriers is actually quite beneficial for both business and customer. By identifying the factors that may cause customers to leave, you can customize a fee- based loyalty program to address those specific obstacles. According to a 2. This abandonment is often caused by . Below, we'll take a look at Amazon, the ecommerce giant that's found a way to combat this issue using a loyalty program with an upfront fee. This system is most applicable to businesses that thrive on frequent, repeat purchases. For an upfront fee, your customers are relieved of inconveniences that could impede future purchases. Diane Helbig writes for Small Business Trends about the ups and downs associated with customer loyalty/reward programs. Loyalty or Rewards programs are launched using a card made of PVC plastic that has a magnetic stripe on the back. SwipeIt.com provides custom Gift Card and Loyalty Card Programs. All clients receive free graphic design with every order. We specialize in plastic card production. Ideas for Creating a Customer Loyalty Program. How to structure rewards? Amazon's mastered this for ecommerce, but this model also has potential to work for B2. B businesses that deliver products to businesses on a regular basis. Case Study: Amazon Prime. For $9. 9 a year, Amazon Prime users get free, two- day shipping on millions of products with no minimum purchase, among other benefits. Why is this a great example? Because it provides enough value to frequent shoppers for them to feel like it's really benefitting them. Actually, analysts estimate Amazon loses $1- 2 billion per year on Prime. But the company makes up for it in increased transaction frequency: According to a 2. Consumer Intelligence Research Partners, Prime members spend an average of $1,5. Amazon. com, compared with $6. Amazon customers who aren't Prime members. Source: Amazon Prime. Structure non- monetary programs around your customers' values. Truly understanding your customer means understanding their values and sense of worth. Depending on your industry, your customers may find more value in non- monetary or discounted rewards. While any company can offer promotional coupons and discount codes if they want to, businesses that can provide value to the customer in ways other than dollars and cents have a unique opportunity to connect with their audience. Case Study: Patagonia's Common Threads Initiative. Patagonia, an eco- friendly outdoor apparel company, realized that its customer needed more than just points and discounts from a loyalty program. In conjunction with e. Bay, it implemented the Common Threads Initiative in late 2. Patagonia clothing online via Patagonia's website. The Common Threads program builds on Patagonia's brand of sustainability and creating a high- quality product. Plus, it matches perfectly with the company. Source: Patagonia. Partner with another company to provide all- inclusive offers. Strategic partnerships for customer loyalty (also known as coalition programs) can be super effective for retaining customers and growing your company. Which company would a good fit for a partnership? Again, it boils down to fully understanding your customers' everyday lives and their purchase processes. For example, if you. When you provide your customers with value that's relevant to them but goes beyond what your company alone can offer them, you're showing them you understand and care about their needs. Plus, it'll help you grow your network to reach your partners' customers, too. Case Study: American Express Plenti Program. American Express has a huge partner base with companies across the country. The company's Plenti program, launched in May 2. Macy's, AT& T, Rite Aid, Enterprise Rent- A- Car, Hulu, and more. Plenti members earn points for shopping at these stores and redeem points at these stores by linking their existing store loyalty card to their Plenti account. For example, customers can use Plenti points they've earned from something like renting a car from Enterprise in order to pay their AT& T phone bill. Flexibility is the biggest appeal here for customers, since points can be earned and redeemed at a variety of retailers. According to Fortune Magazine, ? Turn your loyalty program into a game to encourage repeat customers and - - depending on the type of game you choose - - help solidify your brand's image. With any contest or sweepstakes, though, you run the risk of having customers feel like your company is jerking them around to win business. To mitigate this risk, it's important to make customers feel like you. The odds should be no lower than 2. Also, be sure your company's legal department is fully informed and on- board before you make your contest public. When executed properly, this type of program could work for almost any type of company - - even an off- the- beaten- path B2. B company. If your audience enjoys having a little fun and purchases frequently, this type of program can make the buying process both fun and engaging. Case Study: Grub. Hub's Yummy Rummy Sweepstakes. Grub. Hub, an online food ordering and delivery website, has run its successful Yummy Rummy sweepstakes since 2. Once customers place three unique orders through Grub. Hub, regardless of price, they get to play a game for a chance of winning free stuff. Players choose one of four cards and have a 2. Grub. Hub credit, or other cool stuff. Casey Winters, who was part of the Grub. Hub team that launched the sweepstakes in 2. Linked. In post, . This will make your program stay effective for longer as well as give you the flexibility to tweak elements to make it more interesting to you as the business. I have seen many companies stuck with a program they no longer think is effective, but too afraid to shelve it because of potential user backlash.? Read this blog post.)7) Scratch the . Instead, build loyalty by providing first- time users with awesome benefits, hooking them in, and offering those benefits with every purchase. This minimalist approach works best for companies that sell unique products or services. That doesn't necessarily mean that you offer the lowest price, or the best quality, or the most convenience; instead, I. If your company is pioneering a new product or service, a loyalty program may not be necessary. Customers will be loyal because there are few other options as spectacular as you, and you've communicated that value from your first interaction. For example, one of the most innovative companies on the planet implements this strategy: Apple. Case Study: Apple. Even the most loyal Apple customers don. Apple has plenty of supporters, both online and offline, ready and willing to rave about its product. For them, loyalty happens organically. How to Measure the Effectiveness of Your Loyalty Program.
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December 2016
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