Retailers use customer loyalty programs to retain customers over a long period of time, to build a positive rapport with customers, and to reach their revenue goals.
The best way to do this is to create a loyalty program that will be accepted by your customers. However, many times customers are unable to find value in loyalty programs offered by businesses. This leads to failing of expensive loyalty programs set up by businesses.
One way to correct this situation is to know your customers well and to offer them rewards that they value enough to be connected with your business. You can use your loyalty management software to collect and study customer data to understand your customers.
Let’s first establish the objectives that businesses should aim to achieve with their loyalty program.
Main objectives to be aimed with a loyalty program are:
Identify bestsellers to upgrade them
Businesses should aim to increase lifetime value of customers. Retaining existing customers is more cost effective than attracting new customers. Also, existing customers are likely to purchase more than new customers.
You can use a well-planned loyalty program to encourage existing customers to stay with you. Businesses give discounts, free products, loyalty reward points, etc. to their loyal customers, so that they keep returning again and again.
Learn customer buying behaviour
Another objective of loyalty programs is to increase the purchase baskets of customers. One should focus on increasing average basket size of new as well as old customers, so that maximum value can be derived from every walk-in.
A loyalty program can package loyalty rewards in a way that customers are encouraged to purchase complementary products together or to purchase larger baskets of goods to earn higher loyalty benefits.
Attract new customers
Loyalty programs also often attract new customers. Many businesses create such valuable loyalty programs that customers are encouraged to be associated with their businesses. Another way to attract new users using loyalty programs is to give incentives for referrals.
A business can give rewards to existing loyal customers when they refer a new customer to the business. Users are high influenced by their peers, therefore referral programs often turn out to be very fruitful.
Improve brand value
Loyalty programs make customers feel appreciated. You can improve customer relations and builds trust among your customers, if you have a loyalty program that delivers real value to your customers. New users, too, start recognizing brands where value is delivered.
Loyalty programs also help build a community of loyal customers which can be leveraged to spread a good word about the business in the market. It can also be used to market new products and campaigns among existing loyal customers.
Once you have established the objectives of your loyalty program, it’s time to know what your customers value.
Knowing what customers value
Different customers value different kinds of incentives. You can use your Loyalty software to analyze the results delivered by different kinds of campaigns over time. Over time, you can identify the rewards your customers actually value.
Some customers prefer rewards that entail discounted prices to them in the future, some customers like preferential treatment, some like to receive free products, and so on. You can do some market research to understand the general liking and motivations of your target customers and then try a few loyalty programs to begin with. With time, you can zero down on the ultimate loyalty program that will work for your customers.
Studying customer behaviour to incentives
Customers behave differently to different incentives, you can study behaviour of individual and groups of customers to the kind of incentives you create. Certain loyalty rewards may work for some time, but lose their charm over time, as their poor long term value is revealed to customers.
Some customer groups prefer rewards that are instantly redeemable or are valuable in short term, while some customers look at rewards that last a long time. You can study how different profiles of customers behave and the kind of revenue generation they have for your business, and then establish loyalty programs that will help you achieve your business objectives and incentivise your customers, too. Loyalty software collect valuable customer data that can be used for this purpose.
Knowing what customers value
You can also study how customers use their reward points over time. Customers often find innovative ways to get maximum value out of their earned rewards. You can study customer behaviour to identify popular ways in which your loyalty rewards are used.
Market those popular uses of your loyalty program to show value to customers. This will help you attract new customers and retain existing customers for a long time. Customers data always reveals valuable patterns of behaviour, which can be used to the advantage of both businesses and customers over time. You can also improvize the rewards to help customers and businesses derive more value.
Profiling loyal customers
POS and loyalty management software data helps you profile customers. To establish a loyalty program that will be successful, use customer data analysis to profile customers into different segments or tiers. Customize your loyalty program for each of these segments, so that the customers can associate with your program.
This will help you create focussed loyalty program activities that will retain customers of all kinds of profiles. It will also help increase customer basket size, and will help establish a comprehensive program that customers like to associate with. A good loyalty program will always attract new customers, too. Therefore, studying customer data to profile customers over time can be extremely useful for your business.
Profiling satisfied customers
One way to make your loyalty program a success is to use customer data to identify your satisfied customers. These customers return to do business with you often, they share positive feedback about your products and services, and may even agree to spread a good word for you in the market.
In your loyalty program, you can find a way to incentivize such satisfied customers, so that they can help you attract new and referral customers. Satisfied customers are very likely to share your marketing campaigns among their peers, on social media, and through other modes. Therefore, identifying customers who not only purchase with you often, but are also satisfied, can prove to be very fruitful.
Calculating ROI of loyalty programs
Customer data analysis gathered from loyalty and POS software can help you understand the kind of value a loyalty program activity has for your business. Data studied over time enables businesses to learn about the actual ROI of their loyalty programs. This give a clear picture about the future path.
In case a loyalty program is helping you generate a good return on investment, then you can scale up that activity to reach more customers and maximize the return for your business. Similarly, in case the ROI from a loyalty activity isn’t very attractive, then you can tweak your loyalty program, so that it either attracts more users to make it valuable for your business or it improves your return without disturbing that of your users.
Loyera is one of the best customer loyalty software in the market, as it offers you effective data collection and analysis opportunities to understand your customers and take valuable business decisions.