Customer Loyalty and the Humble Yo-Yo, Part 1: How Loyalty Programs and a Yo-Yo Are One and the Same
If you think back to your childhood – regardless of how long ago it was – you will likely recall playing with a yo-yo toy at some point. The humble yo-yo is a simple toy that can be used to perform incredible tricks if one commits themselves to learning how to best use it. Perhaps you picked one up and tried to get good with it only to quit for something more exciting a short while later, or maybe you got good enough to perform a number of tricks such as "Around the World", "Walk the Dog", or "The Sleeper". Whatever the case, it's likely that you gained some enjoyment out of the time you spent playing with a yo-yo.
Here at Retail Hero we believe that the humble yo-yo makes for a useful analogy to explain the many facets of a great customer loyalty program. This post is the first in a four-part series in which we'll explore how a yo-yo toy is representative of a how a loyalty program operates. In part one we'll provide an overview of the analogy and how it applies to your customer loyalty program, and in parts two through four we'll dive in to the structure of your program, how it is marketed, how to tweak your incentives and finally how to improve through testing and innovating. We hope you enjoy reading through this series and invite you to share your thoughts and feedback with us at any time by email or by phone at 1-888-RTL-HERO.
A Yo-Yo Has a String Attached – and So Does Your Loyalty Program
As you can well imagine, one of the most important parts of the yo-yo is its string. The string is required in everything from basic swinging of the yo-yo to the vast majority of advanced tricks that you'll see a trick master perform. Your customer loyalty program also has a string attached in that you're offering some sort of reward or incentive in exchange for a customer's repeat business. However, many businesses make the mistake of marketing their loyalty program as something that has "no strings attached". Your customers are smart enough to know why they're signing up for your loyalty program, so there's no sense using language or marketing that suggests otherwise. Instead, it's better to find a way to embrace the contract that you and your customer are joining in and leverage that into better brand engagement.
For more about this topic, be sure to check out Customer Loyalty and the Humble Yo-Yo, Part 2: Doing Away with 'No Strings Attached' here: LINK
A Yo-Yo's Incentive to Move is Its "Spin"
As you've likely observed, the amount of spin placed on a yo-yo determines whether or not it will return back up to your hand after you've released it. Similarly, the incentives or rewards built into your customer loyalty program will help to determine whether or not your customer returns to make use of them and provide you with repeat business. One of the key considerations in any loyalty program is how significant an incentive should be in order to ensure it is well-used; if it's too low customers won't bother returning and your loyalty program will be largely ineffective. If your average margin on a customer's purchase is around 30 or 40 percent (or more) then rewarding your loyal customers with a 10 or 20 percent discount still provides you with a healthy return to your bottom line.
For some deeper insight into your rewards and incentives, be sure to read Customer Loyalty and the Humble Yo-Yo, Part 3: Adding 'Spin' to Your Loyalty Program here: LINK
Testing and Developing New "Tricks" Leads to Mastery
As any yo-yo "trick master" knows, developing their skills requires careful analysis of their approach to using the yo-yo and trying out new tricks to see if and how they might work. Similarly, a healthy customer loyalty program is one that is consistently being tested and optimized in order to provide the best results. You might find that your customers respond much better to a multiplier instead of a handful of extra points when shopping on a slow day, or perhaps you'll discover that a certain discount percentage is the key to overcoming a sales slump during your slow season. You can also ask your best customers what they would like to see in your loyalty program and test out suggestions to see if they have any sticking power. Investing in a customer loyalty program shows your clients that you're serious about engaging with them and retaining their business. Further tweaking and optimizing it ensures that your loyal customers will stick around and will be excited to discover what you might be offering them next.
Learn more about testing and innovating your customer loyalty program in Customer Loyalty and the Humble Yo-Yo, Part 4: Trying out New 'Tricks' to Build Insanely Loyal Customers here: LINK
Are You Ready to Start Offering a Customer Loyalty Program?
If you're ready to learn how having your own loyalty program can increase customer engagement and provide a significant increase in sales, or if you have questions about how a customer loyalty program might work in your business, contact us. The team here at Retail Hero is happy to share our expertise and to show you why an investment in a loyalty program is one that has a significant ROI.
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