10 questions to ask when choosing a loyalty program for your business
As any business owner will tell you, ‘choosing the right anything for your business’ is always a challenge.
Loyalty programs are no different. There are hundreds of options out there, all offering a slightly different take on the idea of loyalty.
We’ve put together the following 10 tips to help give you some confidence in making a decision.
1. What are you trying to achieve with a loyalty program?
Chances are you’re trying to grow your business, which is what most companies are aiming for.
However, it’s often easier to break this big goal up into smaller, more achievable goals. That way you can focus on taking one step-at-a-time, rather than a giant leap into the unknown.
Essentially, a loyalty program is an exercise in problem solving.
Here are some of the most common problems we see merchants running into:
- Having trouble retaining customers, and attracting return visits.
- Email marketing becoming less effective over time
- Not being able to collect or use data
- Seeing fewer and fewer new customers walking through the door.
Finding solutions to these problems isn't easy - and it will depend greatly on your budget.
2. Realistically, how much do you have to spend on a loyalty program?
When it comes to running a business, there are a lot of people out there who claim to be experts. There are also a lot of experts who will try to sell you a loyalty system - that they promise you will bring in huge amounts of new revenue.
What’s just as important, however, is that you take a good look at how much your business is willing to spend on a new loyalty program.
The key metric here is not how much it costs, or how much it might bring in - but ROI - Return On Investment.
Let’s say Option A requires €2,000 a month, and brings in €3,000 extra revenue. That’s not great, but not a complete disaster.
Option B, on the other hand, costs €200 a month and brings in €1,500 a month. Well, that’s less revenue, but a substantially bigger profit, and a much smaller outlay to begin with.
Ideally, you only want to spend what you have to in order to reach your annual targets.
3. What are your company values? And how do they compare?
Every company needs to have a set of values.
For big corporates, these values are decided by committees and written down proudly in brand guidelines and identity booklets, spelling out how employees should act when they are representing the company.
In smaller companies, the brand values usually mirror the owners personal values. They’re also rarely written down anywhere, but are instead communicated by how the company operates on a day-to-day business. Things like how the store is decorated, and how customers are treated.
Brand values let your customers know how they should expect you to act while you’re doing business together.
Loyalty programs also have value systems, and it’s important that there is a middle ground between you both.
Some loyalty platforms are innovative, always coming out with new features. Others move more slowly, aiming to use consistency and familiarity to increase ROI. Some are very strict with data security, others play it fast and loose. To avoid regrets later on, make sure early on that your values are compatible.
4. Will your customers be able to use it quickly and easily?
It’s one thing for you to sit through a training session where you learn how everything works and can ask lots of questions.
However your customers won’t get that opportunity. They need to be able to use the system, and access its features intuitively.
If they can’t, you’re going to end up frustrating them and that’s never good for business.
So while you’re exploring your options, and even when you’re discussing pros and cons with a representative, always keep your customers in the back of your mind.
Is the process going to give them a richer customer experience? Or is it going to leave them frustrated and annoyed?
5. Is this a system that will collect data for you?
These days, collecting data is incredibly important, especially for physical locations. After all, websites record all sorts of useful information about visitors, but it’s more difficult to discover more about the people who walk in-and-out of a physical store.
To make sure you're getting a system that’s going to add real value to your business you need to ensure that data collection is not just possible - but automatic.
This way you will be able to know who is buying what, and when. You’ll know your most valuable customers are, and what product-lines you should be focusing on.
And this is all vitally important when it comes to your marketing…
6. Do you also expect your loyalty program to help with your marketing?
No matter which sort of industry you’re in, marketing is something that always takes a lot of time and money. And the smaller your business, the more valuable your time is, because often you have to take care of everything yourself.
That’s why choosing a loyalty program that also offers extensive marketing options is vitally important.
Not only will it reduce the time and money you spend on your marketing activities, in some cases you can set-up automated systems, which are triggered by customer actions.
When this occurs, the customer can receive a marketing message, and often act on it, without you lifting a finger.
Now that’s the smart way to grow your business.
7. Will your loyalty program offer relevant rewards to all of your customers?
Every business has a range of different customers. Some might shop often and spend a small amount each time - while others might only visit once or twice a year, and purchase a lot when they do.
It’s very difficult to say which customers are more important than others, and it’s also very difficult to keep track when you’re a busy business owner.
Therefore you need to make sure your loyalty program has been designed so that it rewards all of your different customers equally - based on the amount of money spend with your business
It should also identify and reward infrequent customers - because they have the most potential, when it comes to building loyalty and increasing Lifetime Value to your business.
8. How will you ensure ongoing participation?
Ongoing participation is the single biggest problem that most loyalty programs face.
Once the program has been launched, and the initial enthusiasm and excitement has begun to fade, you’ll find people tend to begin using your loyalty less and less.
Sure, you can run a couple of promotions to bring people back and convert new members - but these promotions cost money themselves - and the inevitable discounts and giveaways will eat even further into your profits.
One of the biggest issues here is that your loyalty program is competing with all of the other loyalty programs out there, for space in the card-section of your customer’s wallet - not to mention the battle to keep your loyalty program top-of-mind.
This isn’t such a big problem if you’re a national supermarket chain, or a international airline - but for businesses that aren’t such a major part of their customer’s lives, ensuring ongoing participation is both costly and time consuming.
Perhaps, instead of trying to create your own stand-alone loyalty program, it might make more sense to join an existing loyalty platform?
9. Are you comparing apples with oranges?
When it comes to loyalty programs or platforms, like most things in life, you get what you pay for.
So while it may be tempting to go with a platform that costs less than the others, if it also offers a lot less, then what you’re really considering is buying the worst option, which is never a good idea.
A better strategy is to actively look for value. To judge each platform on what it offers, rather than what it costs.
Also consider each platform's commitment to customer support. Hopefully you won't need it, but if you need a helping hand you want to make sure it will be available.
This is the way you’re going to maximise your ROI, retain your customers, increase your revenue and ultimately grow your business.
10. Are you in a position to make the most out of whatever platform you choose?
Even with the most modern, user-friendly platforms, it takes time to build a successful loyalty program.
However if you do the hard-work at the beginning, you’ll soon find your hard work paying off.
Most loyalty platforms have thorough onboarding processes these days, which will definitely help you feel more comfortable getting to know the system - and introducing it to your customers.
So, with it, we wish you good luck finding the loyalty program that fits your business best.
There are plenty of options online, but if you want to speak to a real person, speak to a Piggy loyalty expert today.