4 Steps for a Win-Win Customer Loyalty Program

Roger Dooley, author of Brainfluence and expert in the field of brain-based marketing strategy, says:

Companies are coming to the conclusion that it’s typically a lot more cost-effective to retain a customer and get more business from that customer than it is to try and find new customers and break them in. Prospecting for new customers is very expensive.

Consider the process of marketing as planting and growing a garden. You plant the seeds by contacting prospective clients. However, if you fail to nurture growth, the resulting harvest will be poor.

Similarly, marketing strategies that simply aim at acquiring new clients will ultimately provide poor results overall. Nurturing existing client relationships is an important part of any comprehensive marketing strategy.

Loyalty programs can:

improve customer engagement,
increase marketing and operational efficiency, and
drive sales growth.

Loyalty programs make the most of every customer interaction and providing insight into the minds of customers. As a result, businesses retain more loyal clients, and clients enjoy better interaction and service from providers.

How can you design a loyalty program that adds value for your clients while keeping an eye on your long-term business goals?

1) Understand your core values.

Before you can begin to communicate your brand effectively through a loyalty program, you must understand the true value of your offering. Think about your brand, and integrate your brand’s message fully into your loyalty program.

Make rewards relevant to your brand, not simply random products or promotions. The customer must be made to understand why being loyal to your brand helps him or her as well.

2) Understand your client’s perception of value.

Tailor your loyalty program to emphasize the things that are important to your clients. Consider the following analytics and tailor your loyalty program to be responsive to your findings:

Measure customer retention rates: How long do your clients stay with you? What prompts them to leave or stay?
Measure negative churn: At what rate do your customers upgrade or purchase new products or services? Why? Do you discern any marked patterns?
Net Promoter Score: On a scale of 1 to 10, what is the degree to which people are willing to recommend your product or service to others? Why? Are you addressing any weaknesses and playing to your strengths?

Measuring these results will help you craft a winning loyalty program that accurately reflects the message you want to send to your clients.

3) Build value.

While many loyalty programs contain a discount as a reward, it is important to think of your loyalty program in terms of adding value for your clients.

True loyalty is based on time, positive experiences, and listening to your clients day after day. So loyalty programs that give more promote loyalty more quickly than do those that simply discount services.

Rather than relying on discounts to motivate your clients, find what they want, make it more attractive, and then make it easy to acquire via a loyalty program offering of some kind.

4) Advertise the program.

For a loyalty program to be truly effective, it must be highly visible. Advertise the advantages of your program at every customer touch-point. Make it simple to claim any rewards. Use social media to get out the word that your loyalty program really provides added value for your clients.

Making It Win

Regarding the type of loyalty program that has been proven to produce results, Roger Dooley notes that loyalty programs are more effective when they give people the ability to move closer to a goal of some kind. He states:

Research shows that people behave like rats in one respect: The closer rats get to a food reward, the faster they run in the maze. People do the same thing—as they get closer to filling up a coffee-shop loyalty card and earning a free coffee, they drink coffee more frequently.

Known as the goal-gradient hypothesis, this theory has been proven time and again. Incorporate this knowledge into your loyalty program strategy by making a reward clearly apparent to your client base. Encourage clients to move toward that goal. In so doing, they will also be moving through the sales tunnel, and you will be moving toward your goal of profitability through customer loyalty initiatives.

If you would welcome more information about small business marketing strategies, please contact us. We will work with you to craft a multi-pronged marketing approach that will put your business on the map in your particular market.

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