Creating a successful loyalty program is difficult to do. You are competing not only with competitors in your space, but also for attention against every other program your customers belong to. According to Forrester, about 90% of online adults belong to at least one kind of loyalty program, and they belong to an average of 3.7 programs. It’s a crowded space and for good reason. Successful loyalty programs are simply invaluable; they obtain key first-party data, enable the delivery of relevant experiences and motivate customers to purchase from you instead of the competition.
Break through the clutter, and deliver a program your customers want to be a part of. This blog post maps out the path to success from growing your member base to reactivating lapsed customers.
Step #1: Acquire
The first step to setting up a successful program is motivating new members to enroll. Focus on educating potential members about the program value proposition and persuade them to create an account. Ensure your loyalty program is aligned with the marketing vision and strategy of your entire company. Look down at your Starbucks cup, there’s probably some signage advertising the rewards program, and they already have over 16 million members! Every customer touchpoint provides an opportunity to educate and persuade customers to enroll. Your branding, signage, website, app and more all provide space and opportunities to increase acquisition rates. This step should be laser-focused on what your program provides, but don’t paint with too broad a brush. Give your customers a simple reason for using your program time and time again. For example, Chipotle focused their value proposition on “the more you purchase Chipotle, the more you get from Chipotle”. Simple, clear, effective.
Step #2: Activate
Now that you have customers enrolled in your program, you need to find ways to get them activated. Customers are more likely to engage with a new loyalty program within the first 30 days of signing up, especially in-app. Provide them with some sort of incentive to kick off their member journey. Maybe it’s bonus points for completing their first purchase, or an exclusive 10% discount. Chipotle offered customers free chips and guac when they signed up, and their program skyrocketed. Additionally, when activating new members it’s imperative that you take the time to educate them on your program offerings. What can they expect, what unique value proposition do you offer, and what are the special benefits that your program has to offer? This period of time should revolve around educating members about the program, and building a habit of purchasing through the program.
Step #3: Engage & Retain
Once you’ve successfully activated new members the focus must turn to engaging and retaining them. With acquisition costs soaring, retention is crucial for business growth. At this point it’s crucial that strategies are in place to motivate customers to consistently use the program while also incrementally increasing the frequency and size of their purchases. Utilize gamification, experiential rewards and other strategies that play to the unique value proposition your loyalty program offers. There are a number of different paths you can take to drive customer behavior, make sure to iteratively test each one to see what works best for your brand.
If you’re looking for a golden example, check out the Starbucks Rewards program. Their happy hour campaigns encourage off-hour traffic with small incentives; double star days send customers into a frenzy, and gamified experiences such as Hopscotch, Bingo and Star Dash motivate more frequent purchases. Employ other types of promotions such as product pairings to increase basket size by incentivizing add-ons, or spend hurdles to encourage larger or additional purchases. Utilize tactics that work for your brand, but ultimately ensure they map to key performance indicators and drive loyal behaviors.
Step #4: Reactivate
At a certain point customer activity will likely fall off. Luckily loyalty and rewards programs provide the perfect tool for persuading members who are in danger of lapsing or have already lapsed to return and make a purchase. Send members who haven’t made a purchase during a specified time period a win-back message. Use the message as an opportunity to highlight new menu items, new locations or featured benefits. Additionally, continually test what types of incentives inspire customers to make a new purchase. Perhaps it’s a free item for making a purchase, or a percentage off the total check, or maybe it’s just a simple “We Miss You” message. Successful approaches will cycle customers back into the “Engage & Retain” stage, which is the ideal spot for all of your members.
Loyalty programs are a popular marketing tactic for a good reason; they provide an incentive for customers to provide valuable information about themselves in exchange for rewards and exclusive experiences. To separate your program from every other one out there make sure to constantly tend to it and concentrate on the best your brand has to offer. The successful programs out there, such as Starbucks, create engaging experiences that resonate with customer expectations, emotions and behaviors. There’s no magic bullet for your loyalty strategy. What works for your competitor or another company may not have the same impact for your brand. Focus on your brand and utilize your business model, reputation, product differentiators, location, culture and more to blend strategy with the uniqueness of your brand.
If you’re looking for a flexible loyalty platform and knowledgeable partner to build out your vision make sure to give us a call!