The Shopable Series: Building Brand-Appropriate Loyalty Programs

June 15, 2016         By: Erika Napoletano

As a growing brick-and-mortar retailer, you’re no stranger to customer acquisition statistics. You know that it costs five times more to attract a new customer than it does to retain one.[1] In fact, Invesp Consulting reports that existing customers are 50 percent more likely to try new products and spend 31 percent more than new customers.

Seems like the money is in keeping your existing customers happy.

But that’s the trick, isn’t it? Retaining more customers. Which is why brands of all sizes are turning to loyalty programs to entice customers they’ve already earned to return.

So, if you’re looking to create your very own customer loyalty program, how do you make sure it works to build your business and not break it? And if you’re going to start a loyalty program, how do you make sure that your customers find enough value in it to use it?

Let’s have a look at what it takes to build an on-brand customer loyalty program – one that honors the brand you’ve built and gives your customers the kinds of perks that will keep them coming back.

More than Discounts

When you start thinking about building a loyalty program, discounts are probably the first thing that come to mind. What customer doesn’t love a discount, right? Odds are, however, you don’t want your brand’s customer loyalty program to join the ranks of the plastic tags hanging off your customers’ keychains.

To build a successful loyalty program, you don’t have to sacrifice profits. Instead, think about what your customers are looking for to guide your program. Brick-and-mortar shoppers are looking for a more personalized experience than online shopping or even big box retailers can provide. Tap into their desire for personal attention and use your loyalty program to cater to your customers’ desire to be well taken care of, appreciated, and celebrated.

This is the first step towards ensuring that you’re not just starting a loyalty program, but starting one your customers will love and keep using.

Building it Right

Colloquy, a loyalty consulting firm, reports in its 2015 Loyalty Consensus that while there are over 3.32 million people enrolled in loyalty programs in the U.S. alone, only 43 percent of those members are active users. If the average U.S. household belongs to 29 loyalty programs and is only active in 12, how can your program be one of those 12?

Here are a few tips for building your customer loyalty program to endure and earn high activity rates:

  • Think exclusive in-store experience: What gets customers in-store? Consider offering your loyalty members first crack at new products before the rest of your email or customer list. First access speaks to exclusivity, which rewards customers without necessarily turning to discounts.
  • Think events: Take in-store events to the next level with unique gatherings. Chef’s dinners, trunk shows, book readings, and how-tos are all high perceived value for your customers.
  • Think in tiers: Consider building your program with tiers of rewards (like gold, silver, bronze, etc.). When enrolled, customers have something to aspire to — you can offer incentives designed to get them there.
  • Think more, not less: Think about what you can give your customers in addition to what they’re already getting.

Tracking Use and Effectiveness

Whichever puzzle pieces ultimately come together to make up your loyalty program, there has to be a way to track use, rewards, and customer satisfaction. Turn-key loyalty programs will have built-in tracking, but a handcrafted one might need a bit more personal attention from your staff.

Whichever route you decide to go, make sure you track use, activity, and rewards on a quarterly basis. Reach out to your enrolled customers each quarter with a satisfaction survey and ask them how you could make the program even more enticing. Also, ask for rewards they’d like to see offered in the future to make your program even more valuable.

Additional Resources

As you look to build a meaningful customer loyalty program, there’s no reason to go it alone. Colloquy regularly publishes a series of whitepapers and research reports on the state of customer loyalty programs. HubSpot has also created an 18-page guide on creating customer loyalty programs.

And finally, don’t be afraid to ask your customers for feedback. This goes beyond the survey listed above. Speak to your program participants in-store and have one-on-one conversations. Those interactions will enhance the in-store experience and possibly earn you even more customer loyalty.

This article is brought to you by Discover Network. To read more on the world of commerce, visit Discover Network Perspectives.

[1] Sailthru, March 10, 2016, “Customer Acquisition Vs. Retention”