Do You Value Loyalty? Why you should be spending money rewarding existing customers instead of aquiring new ones.

Are you contemplating adding a Loyalty Program to your toolbox of marketing strategies? Increase your customer retention – keep them happy, loved and wanted – by incentivizing your customers and giving them a reason to keep coming back to visit your store or website often. Who doesn’t love an incentive to return? Whether you are a retailer, a manufacturer or a ski resort there is no reason to not reward your best customers for their loyalty.

Building a long term relationship with your customers is key. Did you know that it’s 3 to 5 times more expensive to acquire a new customer than it is to upsell or keep an existing customer? A customer Loyalty Program is a great way to build on that customer relationship, to expand or lengthen the relationship and as a result increase your profits. Using the CRM data you have on your existing customers will help you to identify, recognize and reward your customers for their behaviors.

A few questions to consider about how to structure your Loyalty Program:

What is the entry point?
Determine whether every customer is automatically enrolled with a purchase or if they must sign up/join to be a member of the program.
Are points rewarded? And if so how many?
(i.e. For every $1 spent, members earn 1 point)
When can you redeem?
Decide how many points/dollars are needed before the customer can redeem them. (i.e. 200 points earned equals a $5 off coupon)
What method will be used to redeem points?
Some ideas would be to award a coupon, gift card/gift certificates, discount, rebate, or cash back.
Are you going to include incentives or freebies for loyalty members?
Will they be eligible for free shipping, birthday surprises, bonus offers, member-only sales or additional benefits for belonging to the loyalty program?
How will customers sign up for the loyalty program and how will they track their status?
How will you advertise and communicate your Loyalty program?
(i.e. A monthly email that includes the customers points to date and a redeemable coupon, an email after a purchase asking them to join)
What metrics will you look at to gauge the success of your program?
Points earned, points redeemed?

There are many factors to think about when setting up a Loyalty Program. A great reference for loyalty best practices is the website CRMTrends which includes a comprehensive loyalty checklist by Michael Szego (Ogilvy & Mather strategist) – definitely worth checking out!

Review Case Studies library for more resources!