Can a Loyalty Program Really Boost Customer Loyalty?Articles • October 22, 2015
The short answer is yes.
The long answer is: It depends how you do it.
Before we dig into the how to’s, let me share my story.
I’m a bookworm. I mean it—I purchase two to three books every month. I would be the ideal customer for any bookstore. Currently, I have two loyalty cards for two different stores. The recipe is simple: I make a purchase and, after a certain amount of spend, I get a discount. If I want to buy the latest book by my favorite author—Murakami Haruki—I show my card and receive a 3% discount. That’s it.
But the funny thing is, I’m not loyal to either of these stores.
Yes, I use my loyalty cards for discounts, but my purchasing decisions are not always based on price. The store that will win me as a customer is the store that tells me about my favorite book’s release first.
And this is key. I want to shop at a bookstore that really cares about me—a shop that, besides special offers, sends me relevant product information.
Many companies fail to achieve customer loyalty, because they offer the same discounts as everybody else, and nothing else. Boring.
A well-crafted loyalty program that significantly increases customer loyalty needs the right ingredients. Let me sum them up for you. (Some hints have already been planted in my story.)
#1. Find what makes customers happy
To build loyalty, provide value for your customers. Let’s stick with my bookstore example and ask: What can make a bookworm like me happy?
– Pre-read opportunities: It’s exciting to take a little sneak peek into the book (even if it’s a pdf only) before its official release date. It gives an exclusive feeling that only loyalty members can experience.
– Pre-order sales: Customers like me want to be the first to get their hands on a book. A discount is just icing on the cake.
– Involvement in product development: Ask customers to design a book cover for a favourite book or participate in a survey for deciding which book should be released by a particular author.
– Personalized offers: Customers appreciate receiving newsletters or notifications about newly released books they will enjoy.
– Special treatment: Make regular customers happy by giving them preferential treatment. I love accessing benefits unavailable to lower-level customers. I receive an invitation to that book launch party while they do not.
– Merchandise surprises: A bookmark with the store’s logo and the customer’s favorite quote can make them fall in love with you.
The good news is that many of these rewards cost little more than some empathy and attentiveness.
The list above applies equally to any kind of e-Commerce store, regardless of product or targeted audience. And have you noticed a very, very important factor here? All these suggestions create positive feelings. And positive feelings lead to engagement and, therefore, loyalty.
(Of course, to keep customers happy, don’t neglect the quality of your customer service. There is a great collection of tips and tricks for getting it right on Shopify’s blog.)
Take-away: A loyalty program should create positive emotions in customers. (Tweet this)
#2. Showcase your content, and make sure customers understand it
My dream is to find a bookstore blog containing reviews of the latest releases. I want to know which books are a good read and why they deserve to be bestsellers. (I have become almost immune to the “Best-selling products” label. However, “best-selling” is still a powerful marketing word, so it’s worth using it.)
When people are passionate about something—like me, about books—they want to be updated about the latest trends, releases, or related best practices. So, provide content about what you do. The more customers know you and your product, the more they will trust you. The data speaks for itself:
62% of shoppers feel that online content drives their loyalty to a brand (Source: NewsCred).
A digital loyalty program’s unbeatable charm is that it creates a chance for you to showcase your content. Do you have product videos or a company video? Do you have blogposts, infographics or e-books on your site? Ask customers in your loyalty program to check them out for a chance to collect extra points.
Take-away: A loyalty program should break down barriers between customers and your brand. (Tweet this)
#3. Make it look like a game
There was this fun quiz about movies. Have you taken it too?
Entertaining activities and things that don’t look like marketing tools sometimes make perfect marketing tools.
Here are some tools to re-create the fun effect.
– Quizzes: A perfect way to make your customers check your content is to ask them questions about your blog posts or book trailer videos. Correct answers win points.
– Sweepstakes: Customers can enter sweepstakes in exchange for their points to win special opportunities, events, pre-reading, etc. The great benefit is that you need to draw only two or three prizes, and customers can spend their points quickly.
– Leaderboards: If readers can see their ranking, they will be fired up to get to the top.
– Daily bonuses: Generate buzz by letting customers earn points more easily than usual. (If you got excited about Frozen Free Fall’s special events, then you know what I mean.)
– Badges: Create an insider feeling—a sense of belonging—and make your customers smile by letting them claiming fun badges, like “Vigilante Librarian—I’m over my 500th book”.
The key word is gamification—overused, I know, but it still works when it comes to loyalty programs, especially if it’s not forced, comes naturally, and takes approaches like those listed above.
Take-away: A loyalty program can make people to lose their sense of time, because they are doing something fun. (Tweet this.)
#4. Reward customer actions that are not about the money
You can add value if customers spend over a certain basket value or purchase again within a certain timeframe.
Quite basic, right? It helps you to see if your loyalty program really is incentivizing customers to spend more. But don’t get carried away. Remember my story at the beginning?
If the only reward you offer is spending money, then you aren’t showing your human side to your customers. You are building a monetary relationship, instead of an emotional one.
The best loyalty programs reward different kinds of interactions on multiple channels. This is what it looked like in a bookshop:
– reading book recommendations
– watching book trailer videos
– signing up to newsletters
– logging in to the webstore every day
– referring a customer
– writing a book recommendation
– downloading part of a book
– providing personal information
The more you increase customer interaction, the more space you create for engagement.
Take-away: A loyalty program should motivate customer interactions on each channel you own as a brand. (Tweet this)
#5. Balance attainable with desirable rewards
At a bookstore, I had to wait nearly three months to get a 5% discount after receiving my loyalty card—and this was the only reward that I could expect. After three months, I had completely forgotten it. When I finally received my discount, my reaction was “Oh really? Great. Thanks…”
Such a strategy can ruin a digital loyalty program.
To avoid this, let your customers earn small rewards after signing up to your loyalty program to keep them interested for the long haul. Here are some ideas:
– Reward customer opt-ins: Award 50 points as soon as they enter your loyalty program.
– Create feasible tasks: Get them connecting their social profiles, answering profile-related questions, or subscribing to your newsletter list in return for 50 to 75 points.
– Let them earn new customer levels: Nobody wants to remain a beginner for too long. After getting 100–150 points, customers probably expect to move up a level.
– Let them claim smaller rewards: Create inexpensive rewards for as low as 400 points. These can be badges, e-books, branded wallpapers, small accessories, and so on. The point is that earning them is quick and easy.
– Avoid setting points too high for rewards: Customers might feel that they don’t stand a chance of claiming them.
The aim is for customers to feel that something is always happening. If you want to learn more about how to create an irresistible (and effective) reward scheme, here is a free e-book.
Take-away: A loyalty program should offer attainable and desirable rewards as well to motivate customers to stick around. (Tweet this)
A digital loyalty program can achieve its main purpose if it has the right factors to create positive emotions, motivate interactions on all your platforms, offer real value to customers, and keep customers interested in the long term.