If you were to walk down your street and pick a house at random, how many loyalty programs do you think the household members would be signed up to?
You probably didn’t guess nine. But that’s the average.
If your brand is considering a loyalty program, familiarise yourself wit these pros and cons first.
Reward your customers for purchasing from you and you’re giving them a reason to buy again. Pavlov proved this theory effective a long time ago. But don’t forget the obvious: the incentive needs to be good enough to encourage repeat purchases.
Data is precious, particularly now marketing automation is allowing brands to be more personal. Loyalty programs can give your brand valuable insight into customer behaviour, buying habits and preferences. What your brand does with these insights is crucial. Our partner Mark Cameron of W3 Digital spoke on this at a DPR&Co C-suite event last year.
Consumers are overwhelmed by choice. Why should they choose your brand? The answer should be immediate if you know your unique selling points. A loyalty program could be the thing that sets your brand apart from the rest.
Balancing the bottom line is the most crucial factor when introducing a loyalty program. A discount as small as 5% can have a major impact on profits. The key is to maximise perceived value while minimising cost. There’s an art to this. Creative input into customer incentives and seamless communication between the CMO and CFO will help here.
Just because a customer holds a “loyalty” card, it doesn’t mean they’re loyal. Customers who only use their loyalty cards to reap discounts or earn bonuses can cost more than they’re worth. Address this by combining your advocate marketing tactics with your loyalty program. For example, reward customers for referring friends or writing a review. This will help you reward the loyalists and ditch the leeches.
A loyalty program means more labour and expense for your brand. Avoid financial loss by putting a robust maintenance program in place and running through it quarterly.