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Winning Retail: Customer Loyalty will likely fall when you….

  1. Don’t reward repeat business with loyalty
  2. Reward the wrong behavior
  3. Offer loyalty rewards no one wants
  4. Have an overly complicated rewards program
  5. Reward your customers equally, regardless of their behavior

1)     Don’t reward repeat business with loyalty

Customers know how many choices they have in terms of where they spend their money. If you aren’t rewarding existing customers for their repeat purchases, you can be sure that your competitors are. When it comes to marketing strategies, make sure a well thought out employee and consumer rewards program is the cornerstone of your customer retention program. Remember that every purchase presents an opportunity to win back that customer.

2)     Reward the wrong customer behavior

Consider what customer behaviors make the biggest difference to your brand.  Are more visits the most important metric to growing your business? Spending more money on each individual transaction? Do you just need consumers to try your brand once and you know they’ll be hooked?

Whatever the case may be, make sure your consumer and brand loyalty program is aligned to reward the behavior you actually want to see. There’s no point in investing in a retail loyalty platform that rewards customers for repeat visits when what you really want to do is move higher dollar inventory items.

Makes sure the loyalty platform you’re using offers robust enough customer loyalty analytics to help you evaluate whether you’re rewarding the correct customer behavior. We recommend watching your loyalty program for 30 days, 60 days, and 90 days to see how customer behavior has changed. If their behaviors aren’t changing in the way you intended, consider what tweaks you can make to get it there. Remember to not change your program too often, of you’ll risk upsetting existing customers and loyalty rewards participants.

3)     Offer loyalty rewards no one wants

We’ve all seen it before, customer loyalty programs in retail can feel like a retailer or brand checked off the loyalty box on their to-do list. By offering rewards that customers don’t want to bother working for, you can quickly turn loyal customers into inactive customers.  In a consumer’s mind, a loyalty program with rewards no one wants is the same as no loyalty program at all.

A common pitfall most retailers don’t see that falls into this category is offering rewards that their competitors give away for free.  For example, most retailers offer free shipping for purchases above a certain dollar value. Offering free shipping as a potential reward that customers will have to spend their hard earned loyalty points to get is an unattractive proposition when they know they can get it for free elsewhere.  Make sure you include researching your competitors’ business and loyalty rewards models when putting together your own.

So before you put your logo on a pen and put a redemption value of 100 points on it, make sure that your customers actually want that pen. No customer, even your brand loyal customers, are going to work to redeem points for something they don’t want.

4)     Have an overly complicated rewards program

The reason the “make 9 purchases and the 10th one is on us” physical punch card was so popular was because it worked. Most coffee shops around the country used it because it was simple, straightforward, and anyone could explain in 5 seconds how to get their free latte.

Your loyalty and rewards program should be just as clear and concise as that coffee punch card.  Some popular easy to remember programs are:

  • 10 points earned for every visit
  • Earn 1 point for every dollar you spend
  • Buy 4 of x items and get the 5th one free
  • Spend more than $500 in one calendar year and join the VIP club

A digital loyalty program exists to simplify the need for physical gift cards, punch cards, and the like. And while you can use technology to create a complex program that handles all sorts of customer scenarios, remember that the key to a successful loyalty program lies in its simplicity. Keep it complex behind the scenes to drive maximum value, but make sure your customers can explain it to each other in 2 sentences or less.

5)     Reward your customers equally, regardless of their behavior

Imagine giving every single one of your customers 20 points for waking up tomorrow morning. We’re sure it would win your brand some goodwill, but will it do anything to change your consumers’ behavior and purchasing habits?

Once you put together what behaviors you want to see in your customers, make sure that you’re rewarding the ones that exhibit it. If you want to drive growth in the size of each customer transaction, consider offering double points for transactions over a certain dollar size. Or offer to put any customer making a transaction above that dollar value in a monthly raffle to earn special VIP prizes.

Sometimes it’s the customer group you want to target, customers that fade away are often the biggest source of anxiety because you know these are customers that used to love you, but for some reason they haven’t bought from you recently.

Creating a win-back campaign to winback customers that are fading away is a great idea. Remember that with targeted text message marketing you don’t have to offer every customer group the same point structure or enticements. As long as you don’t advertise what another group is getting, you can split your customers into as many segments as you need to.

Let’s set you up for success.

Not all employee + consumer rewards programs are created equal. Is your rewards program focusing on growing your customer base? The list above has some of the most common pitfalls we’ve seen in retail loyalty programs.  If you’re looking to turn this ship around, check out how Retailers can Foster loyalty in our next post in our Winning Retail series.

And if you’ve read enough and are ready to see how Stemless can help you turn your customer frowns upside down, schedule an introductory call with a member of our customer success team.