How to start a loyalty program?
Your existing customers might be more valuable than your potential customers, the customer retention process is crucial for a business. While looking at the successful cases of loyalty programs, you might not have any ideas of how to take your first step in doing loyalty programs. Don’t worry, here are five steps that you may take notes on.
Clarify: Why do you want to start a loyalty program?
There are many reasons for a firm to develop its loyalty campaign, different goals and objectives lead to different features of the programs. Here are some of the possible goals for a firm to start up a loyalty scheme:
- To build a closer relationship with customers
- To generate long-term profit
- To let customers develop a habit
- To gain word-to-mouth promotion.
Of course, it is not enough to just decide what you want in a few words, goals have to be descriptive and follow the SMART principle. (Specific, Measurable, Attainable, Relevant, Timed). The reason why the goals need to be detailed and specific is that we need to measure and compare the performance of the loyalty program, we should also make sure the goals are realistic and time-limited, to make the plan more effective. The following goals will be more rational and useful than the above ones.
- Increase customer retention rate by 10% within a quarter
- Increase 15% of profit compared to last year before the end of this year
- Increase 50% of usage on our newly launched application within half a year
- Obtain 50 shares in the interacting posts before the campaign ends
A clear goal is a foundation for a successful loyalty program. After launching the loyalty program, the objective set in the beginning will be a base for comparison and performance review.
Decide: What rewards will you provide?
Apart from determining your goals, it is also important to conduct market segmentation. It is essential to determine who your target customers are before designing suitable rewards for them. For example, if your target customers are grassroots class housewives, you would not provide discounts on luxury handbags for them; instead, you will provide coupons from the supermarket as a reward to them to suit their needs. If wrong rewards are provided to your target customers, they are less likely to engage with your loyalty program. To learn more about how to conduct market segmentation, click here.
Speaking of rewards, it is also important to decide if you are launching the loyalty program alone, or collaborating with other brands. More rewards options can be provided if there are multi-brand rewards partners. The success of Yuu Rewards Club is a good example of a group loyalty program. If your company scale is large enough and has various sub-brands, you might want to join different brands together in a one-stop application, so that your customers may enjoy rewards and service from all your sub-brands, providing more choices to your members may increase their willingness to keep joining the loyalty program.
For small businesses, the advantage of starting a loyalty program alone would be the high level of flexibility. Since there are only a few, if not none, contract relationships with the other brand, small business owners will have a great level of control over their own loyalty program, let’s say changing the reward types, organizing or canceling events, changing rules, and so on and so forth. Without excessive time for negotiation and communication with different reward partners, single-brand loyalty programs will be more flexible and varied.
Design: Your Loyalty Program Model
There are both offline and online loyalty programs:
Offline Loyalty Program
Stamp punch card is the most traditional and simple loyalty program. All the users need to do is to get a stamp whenever they are spending money. Before smartphones existed, there were already a lot of companies that designed their own punch cards and distributed them to their customers. The advantage of using stamp punch cards is that the rule is simple, no calculation or complicated rules are involved, everyone knows how to use a punch card. The cheap cost is one of the reasons why a lot of businesses consider using punch cards as their loyalty program. There are still some setbacks in choosing physical loyalty programs though. The cards might be easily lost if they are not kept carefully if the card is gone, everything needs to start over. Also, the function of physical punch cards is limited, that is why loyalty programs are starting to be digitized these days.
Online Loyalty Program
Mobile application is a great platform for loyalty programs because of its mobility. Unlike stamp punch cards, you are less likely to lose your phone since it is frequently used, but even if you really lost it, the records of your phone will be automatically saved thanks to the big data technology. Opening an account for a mobile loyalty application is just like opening a bank account, your data and membership status are kept and saved securely, and you can spend your rewards anytime you want.
Beside the security benefit, the functions and features of digitized loyalty programs are lots more than traditional coupon punch cards. Loyalty application allows firms to make loyalty points monetized and make the customers feel like they can keep the loyalty points just like money, such as the earn and burn loyalty scheme, it also allows users to share points with friends and families, just like you may transfer money to another account. Mobile applications also allow you to interact with your customers easily. A lot of gamification works can be done to make your loyalty application engaging, not to mention you can keep in touch with your customers 24/7. Therefore, if you want to attract customers to participate in your loyalty program, mobile applications would be a smart choice.
Plan: How to Promote Your Loyalty Program?
Now that you have set your goals, decided what kinds of rewards you want to offer, and determined your loyalty platform, it is time to plan how to promote it. Undoubtedly, TV, in-store, mobile and online advertisements are ways to promote a business, but they are ordinary and hardly remarkable. Advertising is not about printing ads anymore, there are more possibilities now with different technologies and digital platforms.
Social media became the new promotional platform in this generation. Except for plain advertisements like posts, stories, or photos, using it to communicate with your customers is also important. It is important to create a fandom out of your business if you want your existing customers to pay attention to the movement of your company. After years of development, there are a lot of tools in different social media platforms like Facebook, Instagram, or Twitter that can be used to enhance customer engagement. Letting your customers engage in your social media is helpful to promote your loyalty program among them.
Apart from using external tools, it is a good idea to promote your loyalty program with its own attractiveness. For physical loyalty programs, some free samples or discounts might be provided to the customers after signing up for membership, which also works in digital marketing. Lots of loyalty programs provide welcoming offers to new members, in order to attract more existing customers to sign up, such as additional points or free e-coupons. Take Yuu Rewards Club as an example, a limited offer is provided to the members who successfully redeem points within the first few weeks after the application has launched. Such a limited offer may urge the customers to sign up for your loyalty program before the end of the promotion period. Using incentives to promote your loyalty scheme may help you to attract a wide customer base quickly.
What We Can Help
Having a digital loyalty program is convenient and effective, but there are a lot of considerations that need to be taken when you decide to develop a mobile application. Here are some questions that you may think about before implementation:
- Is my system and hardware (such as POS systems, computers, and so on) capable of supporting the loyalty program application?
- How much is my budget?
- What functions do I want to include in my application?
- How to make the interface more user-friendly?
The list goes on, and it is impossible to answer all the questions all by yourself. Here at Motherapp, we provide one on one UX and UI consultation that may be the beacon light for you to take your first step. Well Begun is half done, if you do not know where to start your loyalty program, it is hoped that this article is helpful, and feel free to book a consultation session with our sales team.
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