Signing people up for loyalty programs is the easy part. It doesn’t guarantee they will become loyal buyers. By loyal, I mean they will always think of you first when they are in the market to buy what you sell.
You still must provide good service to those customers. The “loyalty program” won’t save them if you don’t deliver acceptable service and take care of them like you should. Remember, treating your customers well always has been and always will be the #1 best policy; to create loyalty.
Having said the above, I’ll explain my 8 principles for an effective customer loyalty program mentioned in my previous post.
You can have a loyalty program. You can have a whole bunch of people signed up in that program. But if you don’t administer the program right, you may be wasting a whole lot of time,effort, and money. A loyalty program run the wrong way can even alienate customers. Not exactly what you intended.
If your customers don’t have a clear understanding of what they get for being loyal…..they probably won’t end up being loyal. At least not because of your “loyalty perk”. If you sign people up and it ends in disappointment, the biggest blabbermouth in the world finds out……the “internet”!
Rule #1: Every single customer gets exactly the same deal. You never discriminate! Never treat your big spenders better than you treat the people who spend less. You never know when those small customers will become “big Spenders”. It does happen!
Rule #2: Membership is FREE! The one type of customer loyalty program I will never sign up for are the ones that charge a price to do so. I’ll never pay 1 penny for the “privilege” of spending my money in any business…period! This type of program is not a customer appreciation program. It really traps you into returning to shop just so you can get your money back plus the bonus they promise you. Very insincere. It doesn’t create loyalty, it creates an obligation.
Rule #3: You give customers free merchandise or free service. To most people, the most powerful words in whatever language are 1. their name, 2. free! Free trumps a coupon for an extra discount. Think on this. Whenever we ran a sale where customers could purchase one item and get a second item of equal value for free, the traffic it generated was considerably higher than if we ran a sale giving 50% off. It boggles the mind. The customers were shopping to get the free merchandise. Do the math on this and you’ll understand what I mean.
Rule #4: Absolutely no hoops to jump through when customer meets requirements for the bonus. When you put restrictions on the bonus, you run a huge risk of alienating those “loyal customers” you worked to create. If you make the pay-off complicated or hard to get, you will lose!
Rule #5: Your customers belong to the program forever. Don’t put a time limit on the membership. Don’t inactivate a membership for lack of use. Creating loyal customers does not mean getting them to spend “x” amount of dollars within a certain time period. Creating loyalty is when a customer thinks of you first when they are in the buying mood. Many customers may not shop frequently, but they can be very loyal when they do shop.
Rule #6: Customers can transfer the membership to someone else at no charge. There are many legitimate reasons why a customer may have to stop buying from you. Sometimes they want to offer the benefit of your loyalty program to a friend or relative. Don’t make this impossible or difficult. You’re trading one loyal customer for another loyal customer. In Vegas, it’s called a “push”!
Rule #7: If you end the program, you offer every customer (member) a prorated credit for purchases made. Sometimes disaster strikes and you can’t continue your loyalty program. That’s o.k. To save those loyal customers don’t cut them off at the knees.Many of them became loyal because of your membership club. You’ll save most of them if you give them something for the loyalty they’ve given you.
Rule #8: Customers receive credit based on a certain number of purchases and the retail value of those purchases. This is the most important rule of the eight. It’s very simple and the fairest way to operate a loyalty program. I’ll use my store as an example. My customers purchased 12 pairs of footwear at regular price. We then totaled the purchase prices of the 12 pairs and divided that total by 12. Voila! We come up with an average. Example: 12 pairs @$40 per pair = $40 average. This is the value of the free pair the customer had coming to them. They could pick out a higher price item but had to pay the difference. They could pick out two $20 items. Whatever their heart desired.
See the fairness here? My customers that bought higher priced items (spent more money) had a higher average. My customers that bought middle or lower price items, had a lower average credit to cash in but they received the same deal and here’s why.
When you boil this all down, you’ve given your customers an 8.5% discount on all of their purchases. Regardless of price point. You can adjust the above numbers to give whatever discount you like.
The key to the popularity of this type of buying club is the fact you’re giving the customer FREE merchandise. Free is good. Consumers like free stuff! Also, you’re not FORCING customers to buy. You’re in essence saying “thank-you for shopping with us, we appreciate your business”.
There you have it.The basic rules to set up the only buying club/customer loyalty program I’ve seen that is fair, equitable and truly creates repeat customers. Personally, I don’t even carry most of the cards I’m given for loyalty programs. They aren’t worth my effort or my loyalty!
Set up your program based on the rules I mentioned above and I will make the effort to do business with you and you will gain my loyalty!