Loyalty programs can help you keep your customers coming back and turn into your best PR team.
“Loyalty cards are only for coffee shops and airlines” said noone ever. In fact, as competition is ramping up with new businesses in most fields, using rewards and loyalty programs to keep your customers is more important than ever.
What does a loyalty program do for my business?
There are a few important reasons you might want to start a loyalty program, and you should design one around these principles.
Encourage customers to come back
We all know that it’s cheaper to get customers to return than to always fish for new ones. Loyalty programs are a big part of how you can do that.
Give them extra value when they do
You want your customers to be wowed by you, and so impressed that they stay loyal to you over the years. Loyalty programs are a way to give an extra friendly service to people who have earned it.
Obviously your bottom line is, well, the bottom line. Loyalty programs are a way to increase profits by helping you get new customers, average customer lifetime, as well as average order value.
Gather data on how your customers experience your brand
The information you get from loyalty registrations and behaviour monitoring can be super useful. A good loyalty programs will give you helpful information to stay on top of what your customers are looking for and what’s important to them.
Questions to sort out before launching
If you’re ready to start a loyalty program, think about these questions.
1. What can I offer as part of a loyalty program?
You’ll want to think carefully about your products and services that you’re able to offer. What do your customers really want? What would incentivise them to come back, and what are you able to give away? Do you have any products that can be chunked up into new special gift boxes or promos? Write out a list of what you could offer as a loyalty reward, and what actions your customers should take in order to get those rewards, including the points and monetary value of each.
2. What kind of program is it going to be?
There are quite a few different programs out there, and there isn’t a one-size-fits-all. While airlines might use frequent flyer miles and clothing stores offer VIP tiers, some stores offer easy-to-grab points systems and Amazon uses free and faster shipping as its big incentive. Take a look at the list below to figure out what might be best for you.
3. How is it going to be implemented?
You can consider giving your program a fun and memorable name that makes people feel like they’re part of an exclusive club. But more importantly, you should always add a page to your website with an easy-to-read introduction to your loyalty program. This explainer page is important for informing your customers about the benefits of joining.
*Image via smile.io
A breakdown of the types of rewards programs you can offer
A points system
Every time someone takes an action that you think is helpful to your business, like signing up for a newsletter, writing a review, etc, they get a certain amount of points. These points can be redeemed for goodies.
HelloFresh and Uber are good examples of companies that get their main customer base from referrals. As a customer, you are given a referral code that gives your friends a discount voucher. When your friends sign up and use the service, you get a reward. For example, an Uber user can give their friend a free ride for signing up. When they use that free ride, the user gets a free ride, too.
Discounts for actions
Instead of points, you can give direct discounts for particular actions. For example, you can give 10% off any purchase for new customers, or $5 off your next purchase if you write a review.
You can use VIP memberships to offer a tier of special services, such as exclusive products, early releases, faster shipping, regular discounts, etc. VIP memberships can be used in conjunction with subscriptions or higher ticket items as well.
Use a loyalty program to offer discounts that can be redeemable through other channels. For example, you can use a mobile app to find offers that are redeemable in-store, bringing your customers closer to you on multiple fronts. Learn more about going omni here.
Three principles to keep in mind
1. Incentivise your customers to come back
This is, of course, the big one. Loyalty programfs are a useful tool to get customers to return. You can offer exclusive deals, discounts, free shipping, and personalised experiences based on your customers’ habits to make them feel like they’re part of the team.
2. Use “artificial advancement”
A car wash company, for example, tested out two types of punch cards -- one with ten spots, two of them pre-punched and eight spots left. The other with eight spots total, none of them punched yet. Those that were given the one that seemed like they’d already made progress came back 178% more often. See the study here.
3. Focus your rewards on referrals
Use the power of your existing customer base to do your advertising for you. If you reward referrals to new customers, it’s a similar investment to advertising to a new group of people. But, because we know how important word of mouth is, it’s likely to be more effective. You can set up your referrals program to only give rewards once the new customer actually registers or completes a purchase.
Get started with a little help from your friends
There are several ready-to-use loyalty programs that integrate easily with Shopify. Here are some of the better ones out there.
Smile.io allows points-based, referral-based and VIP loyalty programs. It’s the most popular on the Shopify app store, working with 7,000 Shopify. And, as any good loyalty program should, it integrates with Yotpo, Klaviyo and Mailchimp. You can read more about using Smile with Shopify here.
Loyalty Lion offers a rewards service, including features like points and referrals. It integrates with Shopify and email clients such as MailChimp and Klaviyo.
Collect is one of the cheapest and most robust out there - it offers thirteen ways to reward your customers and is pretty easy to use as a merchant.
S Loyalty has all the regular features PLUS it lets you run double and triple points specials.
Elkfox is here to help! If you’re looking to start a loyalty rewards program for your customers and want to design a strategy that works for your business, talk to us today.