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What are loyalty programs?

What are loyalty programs?

They are a marketing strategy that recognises and rewards customers who purchase or engage with a business on a recurring basis. In most cases, members of the loyalty program/scheme earn some sort of points and gets membership perks to generate a sense of loyalty. For the business providing the program or scheme they typically grow and retain revenue.

It’s a simple proposition. We (the business) give you (our customer) something in return for choosing us above our competition. The more you choose us, the more you get out of the loyalty program.

They are simple in their objective, but can be complex in their construction and they can provide a huge amount of value outside of just generating sales.

Why can Loyalty Programs be important?

The first and most obvious benefit is you can help keep your customers coming back to you. These days people make purchasing decisions that aren’t always based only on price, but on shared values, engagement, their overall experience of your brand and the value that can be had from their relationship with you. A loyalty program is one way for you to offer customers more value.

Another one is that they can create a mechanic for data collection, which in turn can be used for everything from targeted promotions to new product design to growth strategy. Data collection doesn’t just mean grabbing someone’s email address so you can flog them more and more. In this context it can also mean being able to link several transactions to a single person (who could remain anonymous), which starts to tell you about buying habits, product and brand preferences.

The key to a successful loyalty program is to create one that provides your end user with more value and gives your business something other than a new cost, it gives you a tool to understand your customers and your market to a much greater extent.

What do I need to create one?

After reading this you might well be thinking “I have to have one, but what do I need to do next?”

Here are a few things you need to think about:

What are your goals for the program?

o Do you want to increase repeat purchases? Is the focus on cross sell to grow average basket size? Is it simply about stopping a customer choosing the competition?

What customers will you target?

o Is this open to everyone or special invite? Are you going to use it as a way of creating a new customer base? How might your existing customer base respond to it?

What can you offer to encourage loyalty?

o Is it something tangible? Maybe a premium service? What can you afford? Do you need additional perks?

Once you have had a think about those, get in touch with us and we can all have a think together and see if a loyalty program is what you need, or is it a rewards campaign, or is it something completely different (because loyalty programs aren’t right for everyone)?


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