Loyalty programs

 

Loyalty program and its goal

One of the strategic goals of large companies is to establish long-term relationships with customers and create a positive attitude towards the brand. This strategy ensures the formation of a loyal community, the nurturing of brand advocates and, as a result, an increase in sales and company profits. Among a loyal audience, it is more productive to spread unique benefits, encourage repeat sales and keep loyal customers from switching to a competitor. This is why companies develop loyalty programs and create a system of rewards for loyal customers.

The loyalty program is a set of rewards for customers, which encourages their activity and promotes the decision to make a repeated purchase.

The main goals of development and implementation of loyalty program:

  • increased shopper engagement;
  • tracking customer progress;
  • creating a pool of regular customers who bring the most profit, and establishing long-term relationships with them;
  • optimizing costs for attracting new customers;
  • saving the budget for advertising campaigns;
  • personalization of promotional offers;
  • collection of a database with the fullest possible information about customers, characteristics of user behavior, interests and preferences (in the future, this data will help to develop trusting relationships with customers and increase their loyalty);
  • building a community of brand advocates;
  • average check increase;
  • forming a focus group of consumers to test new products and offers;
  • increasing brand awareness;
  • employee motivation.
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The most popular loyalty programs

Discount program

The essence of the program is that the company offers the customer a bonus in the form of a discount card with a fixed discount. A discount card can be obtained when making the first purchase, a purchase of a certain amount, or a purchase for money. The application of the program is common in retail chains (supermarkets, chain stores of cosmetics and household chemicals), small stores that sell goods in retail (shoe stores, perfumes), and in businesses that provide services (organization of holidays, delivery of goods, printing services). The reason for such popularity of the program is its simplicity of implementation: it is only necessary to develop and produce the circulation of plastic cards.

Accumulation program

The mechanics of the accumulation system is more complicated. For each purchase the client receives bonuses in the form of points credited to the discount card (most often the points are calculated as a percentage of the purchase). The points can be spent on the next purchase. To increase motivation for repeat purchases, a time limit is used - for example, the bonuses must be spent within 14 days or a month. The main purpose of the savings program is to increase sales.

Cashback program

A relatively new type of loyalty program, which is rapidly gaining popularity among companies and customers themselves. Its essence is the return to the buyer of part of the money spent on the product (most often a percentage of spending), in the form of bonuses or cashback. Bonuses can be accumulated in the user's profile, and funds can be withdrawn to the bank card. Each company organizes the mechanics of bonus sales in its own way, up to the possibility of paying the full cost of goods with them on a repeat purchase.

Closed Club

This type of loyalty accumulation program is used by premium segment companies (automobile manufacturers, alcohol and tobacco brands, luxury hotel chains, restaurants and designer clothes stores). By becoming a member of a private club, a client accumulates bonus points for purchases, and as an additional privilege receives an invitation to exclusive brand activities and events: private screenings, tastings, brand tours, pre-sales of new models.

 

Implementing a loyalty program

For a loyalty program to really work and fulfill its goals, it is necessary to prepare carefully for its development and implementation. According to statistics, most discount and accumulative loyalty programs launched hastily do not bear fruit for the business and are closed after two years.

When developing and launching a company loyalty program, experienced marketers advise adhering to certain guidelines:

  1. The simpler, the better: think of the simplest possible mechanics

    In order to become a member of your loyalty program client does not have to perform complicated operations and complicated conditions. The mechanism of joining the program should be clear and simple, and the system of bonus calculation and usage should be transparent.

  2. Test the program before the mass launch

    Testing the program on a small group of regular customers, of course, will not reveal all the weaknesses or deficiencies, but will help to evaluate the effectiveness of the program and its convenience to customers. Through testing you will be able to understand how interesting the program is to potential customers.

  3. Think of the customer's benefit, not just your own

    Customers always perceive a loyalty program as a company's loyalty to itself - meet expectations: offer valuable bonuses, prepare personalized offers, be attentive to your customers and their interests. If done right, marketers will appreciate the effectiveness of a loyalty program, which they always see as a tool to increase customer loyalty to the company.

  4. Develop a plan to promote the program

    A loyalty program is as much a product as the products you sell or the service you provide. It needs to be advertised and promoted with a clear media plan. Think about online and offline channels that are appropriate to use in the promotion. Prepare and train your employees, give them instructions on how to properly present the loyalty program and its main benefits to the client. Having developed the program, inform the most active part of your clients about it, prepare a special section on the website, describe all the conditions and mechanics of the loyalty program in a clear and understandable way.

  5. Collect and analyze information

    Data on bonus card usage activity should be collected and analyzed. Accumulate information on orders, frequency of purchases, time of transactions in your customer interaction system.

  6. Automate the program

    Automate the bonuses calculation system, notifications and newsletters. Provide the possibility for the participants of the program to independently trace the bonuses charge and write-off, the transition to the next level of the program.