What can you learn from corporate loyalty programs?
As a local entrepreneur, what can you learn from the Hema or Albert Heijn loyalty programs? Here are three wise lessons:
Whether you look at the telecom sector, supermarket chains or the insurance industry: large companies are constantly trying to form stronger connections with their customers through loyalty programs. With this they hope to prevent switching behaviour (Known as ‘churn’), increase brand preference and ensure that customers stay with them.
For example, Albert Heijn offers no fewer than four loyalty programs at the same time: as a customer you can save with the bonus card, for Air Miles, for a set of cookware and for the Efteling.
Does a local entrepreneur have a chance with his own loyalty program? And what lessons can we learn from large companies? De zin en onzin van loyaliteitsprogramma's
The sense and nonsense of loyalty programs
Companies like Albert Heijn and KLM spend huge amounts every year on setting up and maintaining loyalty programs. But does this really lead to more customer loyalty and higher turnover in practice?
The short answer is: yes.
For example, Hema's acclaimed loyalty program has boosted annual sales by an increase of 11%. However, research has shown that smaller, local companies - who don’t have the same budget that Hema does - can also see turnover increases in up to 90% of cases, where they develop their own rewards or loyalty program
The simple fact is that collecting points for something (even unconsciously) can influence our purchasing behaviour. 67% of consumers will spend more if they are rewarded for doing so. For example, if a product costs €2, but you need to spend €3 to collect points, then people are far more likely to spend a little bit more in order to get a reward.
Not only is the purchasing behavior influenced, but it also helps to build a loyal attitude, because customers feel valued - and when they do, they usually develop a more positive feeling towards your business and even recommend your company to others.
3 wise lessons from successful loyalty programs
While loyalty programs have been proven to work, not every program is an immediate success. Not even with the big players. If you're considering setting up a loyalty program, keep these three lessons in mind.
Lesson 1. Make participation accessible
No matter what your industry, whether you sell bread or cosmetics: even with only 30% of your customers participating in a loyalty program, you’ll see an enormous impact on turnover. The more people participate, the greater the impact. Therefore, it’s important you make it easy to participate and make sure that customers know about your program.
For example, look at the Albert Heijn Bonus Card - with every purchase, the cashier asks "Do you also have a bonus card?". This way everyone knows about its existence and customers are actively invited to start using the card. To make things even easier, the card is easy to get in any store and scanning is also easy at any AH branch.
Do you really want to lower the threshold? Then make sure that your customers do not only participate with a loyalty card, but also via a loyalty app and via the webshop.
Bonus tip: if you immediately reward customers for participating in the program, you increase the incentive to save.
Lesson 2. Respond to the need
Imagine being the owner of a luxury eyewear store or top-class restaurant. Would you expect to win the loyalty of your customers with cash discounts? Or would you perhaps attempt to appeal to their emotions, by making your customers feel part of an exclusive community? Where you reward them with special, money-can’t-buy experiences?
This is a great example of ensuring your rewards are in line with your target audience. Is your clientele more sensitive to discounts or do they want to be more involved with your products or company?
Matching the reward perfectly can be done in three ways:
Common sense. You know your customers like no other and probably instinctively know what works well.
Purchase data. Dive into the purchase history and view your most popular products.
Freedom of choice. Let customers choose what they want to save for. With the right loyalty software, you can see exactly which rewards are claimed the most. This way you can further optimize the program.
Lesson 3. Progress and communication
It may come as a shock to some business owners, but your loyalty program isn't the only thing your customer thinks about all day.
No matter how enthusiastic your customers are at the beginning, after a while they will forget the rewards they can earn - and maybe even forget about your company.
So make sure you keep customers engaged by continuing to communicate progress. One way to do this is to show loyalty points in an app. Another technique is using emails and text messages, that explicitly communicate how far a customer is from earning a reward. The great thing about programs like this is that you also immediately collect valuable customer data. Examples include the customer's birthday or when they last visited - all dates that can lead to effective communication.
With the right loyalty software, you don't have to manually email customers and mess around with large spreadsheets. Instead you can automate communication across every channel by setting triggered campaigns.
This way you give customers that last push to keep visiting, collecting points and earning rewards.
Start your own loyalty program by joining a loyalty platform
Do you want to be assured of success? Make participation accessible, research the right rewards, build a digital database and automatically keep customers informed of their progress across all channels.
With Piggy's loyalty software, you receive all of this functionality for an affordable, flexible monthly fee. It's quick to set up. In a single day, you can create your loyalty program - and link your cash register, webshop and payment systems. And your customers can start collecting points immediately.
What makes Piggy really special is that your customers will be able to use the free app, or their swipe card, to collect points and earn rewards at thousands of other stores and webshops too. This revolutionary system has already attracted over 2 million active customers. It's a smart way to ensure your program gets off to a flying start.
There are a number of different companies who can help you with this - but the best place to start is by talking to one of loyalty experts by clicking here.