How to choose the best loyalty program for your business
In the not-so-distant past, the question for businesses of all shapes and sizes used to be ‘Should I start a loyalty program, or not?’.
On the positive side, there was the chance to reward loyal customers, grow metrics like LifeTime Value (LTV) and collect customer data.
While the negatives of creating a loyalty program included the cost, the time - and the risk. No business wants to invest in a program that then requires years of future investments just to keep it going - while producing ever-decreasing returns.
Today, however, things have changed. Now it’s possible for companies to start their own loyalty programs - or join an existing loyalty platform - relatively quickly and easily. Existing software allows for easy data collection, and even ways to transform this data into sophisticated marketing programs.
Some loyalty programs even offer companies the opportunity to earn loyalty through their webshop, or even an omni-channel approach.
So, now the question has become ‘Which loyalty program is going to be best for my business?’
What’s your budget?
While it might be tempting to design a bespoke loyalty program for your company, complete with a cutting-edge customer app - these can often be prohibitively expensive.
To do it right, you should start by conducting research among your existing customers to find out what sort of loyalty program they want and, most importantly, would be willing to engage with.
You also need to make sure it will work within your company structure, especially if you have multiple locations and a webshop. Then you have to account for the creation of the app itself, which will almost certainly require commissioning some digital specialists.
Finally, there’s the ongoing maintenance costs, including customer service, to ensure your customers understand the program and make it part of their customer journey.
Pro tip - It might be possible to skip most of these components entirely by joining an existing loyalty platform, who can provide most of these services, as well as a base of potential new customers - all for a monthly fee.
What sort of customers do you have?
Every business has different customers, who expect different things from their relationships. Some businesses apply large mark-ups, and make fewer, bigger sales. Others operate on lower margins, and make their profit through volume.
Then you have to consider what sort of incentives your customers will respond to the best. It could be discounts, or offering free products? It could be free delivery, or the chance to become members of a VIP club?
Some customers might respond best to a really involved loyalty program that offers variations on all of the above. While others will prefer a low-involvement approach, where they don’t have to plan anything.
While it’s generally impossible to please all of the people all of the time, it’s important that you establish a program that not only works for your company, but also pleases your customers.
Pro tip - The best approach in the beginning is to make sure your loyalty program, or loyalty platform, allows you to easily change rewards, and has a comprehensive system management function, that allows for some flexibility. That way you can test different approaches and see what returns the ebay results.
What types of data will you be collecting? And how will you use it?
One of the most important aspects of a loyalty program, from a business point of view, is the ability to collect customer data. Not just emails and demographics, but also the opportunity to see spending patterns and identify exactly who your best customers are.
Ideally, you will have access to a digital dashboard, which shows you all sorts of handy information, visualised in the form of different graphs. This allows you to easily see what’s working, what’s not - and which areas you need to be focusing on.
You will also need to have the ability to use the data you’ve been collecting. Usually this will be in the form of newsletters or one-off emails. This is important, as optimising the direct communication channel you have within your customers is one of the key elements in creating growth.
Pro tip - Some of the best loyalty platforms allow you to easily apply the data collected to create a sophisticated marketing program. It might cost a little bit extra, but in the long-run it’s going to save you a lot of time, and increase profits.
The best loyalty program is an open-loop digital loyalty platform
Given the huge number of variables involved, only you can know what sort of loyalty program will help you achieve your business objectives. It may be that, despite the extraordinary costs, a tailored loyalty program that focuses on your business and your customers will be best?
On the other hand, it might make more sense to join an established loyalty platform that provides you with everything you need, for a reasonable monthly fee? If so, you should definitely have a look at how open-loop loyalty programs work.
If you’re interested in learning more about how a loyalty platform can provide more customer loyalty, while also guaranteeing participation, talk to one of loyalty experts by clicking here.