Where do you start?
First of all, make sure you get into a creative mood and see all the business possibilities with a loyalty program! It’s meant to be relevant and valuable for your customers and when you put some love into planning it – that will transfer to your customers.
With that said, these are three tips to follow when you want to upgrade or start a brand new loyalty program:
Get to know your customers
Yes, you’ve heard it before, but it’s more important than ever when you are planning your program. Here are two ways you can do it:
- Transactional data gives you a bunch of great insights on purchase occasions and average receipts that tells you when and what your customers shop.
- Customer surveys can give you a whole new perspective. Use surveys to get an understanding of what makes your customers buy. What is important when a customer is about to make a purchase or use one of your services? Which benefits are relevant to them, and what other services are appreciated?
Work with both of these to get information. It will help you build your loyalty program.
Look at other industries and markets, maybe even in other countries, to get inspiration. What are other brands and retailers doing that is successful? Look at how you can implement a unique version that is based on your companies USP’s and customer values in your loyalty program.
Build a strong business case and present it to the steering group
Let’s be honest – it takes resources, time, and money to set up a loyalty program. You need to take some time to set up a strong business case that includes all the benefits, potential, and how the loyalty program increase sales, as you present it to the management team or steering group.
Concrete tips on setting up different levels
How do you go about setting up different levels? It will be different depending on the industry but here’s some inspiration from Polarn O. Pyret:
– Contact Information – First things first! It’s a must to collect a valid email address from the members who are signing up – since email is one of the most cost effective ways to reach your customers. And once they sign up, you can communicate with them right away. And a customer you can communicate with is a customer you can influence when it comes to purchasing behavior. Email is also the foundation for building marketing automation.
– Set up relevant membership levels in your loyalty program – The different levels in your program will depend on your business model and the products or services you provide. The benefits of each level should contribute to increase the purchasing power, drive sales, and be profitable.
– What needs to be achieved for the membership levels – Make sure you set limits for what it takes to reach a new level that the customer knows about. The customer’s purchase power should be the foundation for your specific levels. The common saying that 20 percent of your customers stand for 80 percent of your sales is often true. Maybe they are your VIP’s?
– To eliminate that a customer jumps in and out of levels – let the member retain their membership level for a couple of months once they’ve reached it.
– Communicate all the benefits to the customer – Tell the members what will be included in the different memberships. Make sure you communicate this on all channels! Do it in a way that makes the customer feel valued, appreciated, and inspired to reach the next level!
– Motivate the customer to reach the next level – Set up automations for customers who are close to the next level and communicate the benefits they will get by entering a higher level. That encourages the customer to make a purchase to reach it.
– Treat your customer – You can do this in many different ways. For example, treat the customer to a gift when they reach a new level or say congratulations on their birthday. But you can also reward the customers when they make good choices, like buying sustainable products for example.
How to increase sales through a loyalty program
When you are in creation mode – make sure you think about how the loyalty program will increase sales, encourage cross sales, and develop the customer’s purchase behavior. Here are some examples of how Polarn O. Pyret has increased sales through its loyalty program:
– Influence the customer purchase behavior – for example by creating relevant email automation triggers based on insights that motivate the customer to buy another product. This will increase both the average receipt and frequency. You can also encourage customers to keep their membership level and all its benefits through automation.
– Encourage a multi-channel behavior – Inspire the customer to shop in all of your channels – this will increase the chances of your customer making a purchase, regardless of where they are and when. A multi-channel behavior usually presents the customer with a larger variety of products and services, which also increases their chance to make a purchase.
– Prolong the customer lifecycle – what does it take for you to keep a customer as long as possible? Your customers purchase behavior changes over time, as new values and needs raise. Different generations also have other needs and driving forces behind a purchase. Make sure you follow the customers in their progress so you can continue to be relevant and be your customer’s first choice.
- Create a waterproof business case that illustrates all the benefits of an improved or new loyalty program. A business case must show the value and strength of the program– for example, the importance of a customer database that secures future sales, customer insights, increased revenue, and profitability of the business. Show them how to increase sales through a loyalty program.
- While planning a loyalty program – learn what your customers will appreciate and want out of a membership. That is what will make them want to become a member and keep climbing to new levels.
- Keep sales opportunities, cross selling, and multi-channel behavior in mind when you set up the benefits.
- Have fun when you set up the loyalty program strategy!
Read the customer case with Voyado here