Customer Loyalty and the Humble Yo-Yo, Part 3: Adding 'Spin' to Your Loyalty Program
If you're in business, there's a good chance that at some point you've decided to offer a discount or incentive in order to attract new revenue or to encourage your past clients to make a repeat visit. Like the level of spin on a yo-yo, the amount you reward your loyal customers has a major impact on the success of the program and how valuable it is to your business.
In part three of our series Customer Loyalty and the Humble Yo-Yo we'll discuss why you need to ensure the loyalty rewards that you offer are rich enough to reward your best customers without being so high that they have a significant impact on your bottom line.
Ensuring Your Loyalty Reward Level is Rewarding Enough
Have you played with a yo-yo before? If so, you've likely noticed that the amount of spin added to the yo-yo is vital to ensuring that it returns up the string instead of falling flat. The reward levels on your customer loyalty program are similar, in that they must be enticing to your loyal customers in order for them to be taken seriously. For example, compare the difference between discounts of 5 and 10 percent. The 10 percent discount is not just double the 5 percent figure, but it also makes the discount a two-digit number which creates the perception of a much higher discount in a customer's mind. Take some time to look around at other shops or businesses in your industry to see what kind of discounts they are offering their customers. You'll likely find single-digit percentage discounts to be very rare.
The Better the Customer, the Better the Reward
If you currently have a customer loyalty program, check to see if you are offering the best rewards to your most loyal customers. Many businesses make the mistake of offering rich discounts to attract new clients while leaving their loyal customers – their biggest spenders and supporters – suffering with a lower discount. Neglecting your loyal customers is an excellent first step in driving them into the arms of a competitor who may be offering a more compelling program.
To see this in action, look no further than the airline or hotel industries. Airlines large and small know that courting better travelers with ever-increasing rewards programs means capturing their thousands of dollars a year in travel spending. Spend some time looking at your rewards program to ensure you're saving the richest rewards for your most loyal clients.
Increasing the 'Spin' Based on Your Seasonal Highs and Lows
In today's data-driven world, marketers and business owners who pay close attention to trends can react quickly and boost revenues in periods that otherwise might see a slump. If you have an established customer loyalty program, spend some time analyzing the data for the past few years to see when your customers are taking advantage of their loyalty rewards and how those busy redemption periods line up with your regular sales cycles. If you're in a business like retail clothing that has traditional high and low periods, you can increase your rewards in your slower periods to encourage your loyal customers to come in to your stores and shop.
For example, if you know that you are set to have a slow period between the back-to-school and Christmas shopping periods, you may decide to bump your loyalty rewards if redeemed in the month of October. As you know this ahead of time you can time your marketing campaigns to start on the day that your sales start to decline, and you can step things up as you get deeper in to your slow season. Using your data effectively can improve the quality of your customer loyalty program and encourage greater spending.
Keeping a Close Eye on Your Competitors' Tactics
Competition for every dollar is fierce, and it pays to have as much intelligence about what your competitors are doing as possible. Ask yourself: are you signed up to all of your competitors' loyalty programs? If not, you're missing out on a treasure trove of information about the quality of their discounts and rewards and when they're offering them. Pay close attention to how they handle their email and snail-mail marketing to loyal customers as you may find some best practices that you can adopt into your own programs in the future. You may also want to get a calendar going which maps out when your competitors run their major outreach campaigns as you can identify trends which might highlight an area that you're missing.
Your customer loyalty program will need consistent innovation and refinement if you want it to stand out amongst the other offerings in your industry. Paying attention to what the other brands in your niche are doing to reward their loyal customers and factoring these discoveries into your own programs will help ensure that your loyal clients are enjoying a best-in-class experience.
Remember: Make Customer Loyalty About More Than Discounts
Finally, it's worth noting that a great customer loyalty program consists of more than just discounts that get a bit better as the customer spends more. Your best customers want to engage with your brand and feel like they are part of your family. For example, luxury goods maker Gucci regularly invites loyal, high-spending customers to exclusive fashion shows, equestrian events and even to private experience at the Cannes Film Festival. Regardless of the industry that you're in, your customers are looking for more than just goods and services – they're looking for an exciting, satisfying experience.
If you are interested in learning more about establishing a customer loyalty program for your business, contact Retail Hero today at 1-888-RTL-HERO. We're happy to share our experience and assist with developing a loyalty strategy that will strengthen your brand and deliver additional revenue. Thanks for visiting and we look forward to working with you.
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