5 essentials you must know about loyalty programs

The most successful small businesses get over 60 to 70% of their customers coming back on a monthly basis. So it’s easy to understand why a growing number of businesses are adopting loyalty marketing. A significant movement is taking place where all businesses — small or large are shifting their focus to engaging with existing customers and successfully increasing repeat sales rather than burning money on acquiring new customers.

A Deloitte survey shows that businesses who “take meaningful steps to customer loyalty are 88% more profitable than their competitors who do not.” So take control of your loyalty programs, and maximize your repeat sales.

Here are the 5 essentials you must know about loyalty programs:

1. What’s the right kind of loyalty program for your business?

There are several types of loyalty programs and initiatives that can be run for varying costs. Today everyone from small to large box retailers are adopting different types of customer loyalty programs.
You have basic paper punch cards or cashback that can be implemented at minimal costs but with low impact versus a more robust loyalty program that is more costly but far more effective.

A robust loyalty platform extends into a complete marketing suite that is:
- An easy way to collect and build a database of your customers
- Run targeted promotions (via email, text or mobile app notifications)
- Understand customer behavior on the basis of their spend and visit history
- Flexibility to create tiered reward programs that drive up visits and sales
- An app or communication layer to easily inform your customers about rewards and points that they have available

At Hashtag Loyalty, we help businesses increase repeat sales by up to 70%, increase average spend per visits and win back lost customers. All of this with an easy to use and affordable enterprise-grade loyalty platform.

These results can be gradual, business owners using our program get an average customer to visit 2 additional times per year. This may not seem like much especially over a year but if you do the math: Taking average customer spend at about 600 rupees per visit that equals to 1200 rupees extra for each customer. An average small business owner with us has 500 loyalty members — that equals to Rs. 6,00,000 rupees per year because of a loyalty program.

A business owner needs to determine what is the right kind of a program for him: a loyalty program that is a low upfront investment but with less or negligible returns or whether they are willing to invest more upfront for a program that will benefit in the long-term.

2. What are the benefits of a loyalty program?

There are many benefits to a loyalty program, the primary amongst them are: increase visit frequency of your customers — loyalty programs help you bring customers back to your store more often. With a smart tiered rewards structure, you can also increase spend per visit.
Another important benefit is the collection of first-party customer data. This collection of customer data helps you learn about their behavior, likes — dislikes and spend habits. Businesses can then target communication to customers according to their profile — this helps grab a customers attention and push them back into the store.
This customer profiling can drive business strategies and marketing efforts. Instead of a punt in the dark, all customer engagement and acquisition strategies can be based on actual data hence optimizing marketing spend and returns.

3. What is the right time to start a loyalty program?

Often new businesses wait for operations to settle before kickstarting a loyalty program. Yet there are advantages of setting up a program before launching your brand. A launch creates a lot of foot traffic, people throng to try out the new establishment on the block — this makes it the perfect opportunity to sign up customers and hook them on to your platform. This also helps businesses capture essential customer data which can be used once the buzz dies down or during lean periods to bring these customers back in again.
Nonetheless, there are plentiful businesses that have implemented loyalty programs after having been in business for years.

4. Freebies — does it really help?

Business owners are always skeptical about giving things away for free. If it’s for free — how are you ever going to make money? But remember — you control what you’re giving away as a reward or promotion. Rewards don’t necessarily need to hamper your bottom line, you can offer a minimum purchase offer instead of flat discounts or cashbacks. The rewards can be tailor-made keeping in mind your high gross margin items as well. Remember a customer doesn’t dive into details of what’s a high margin item — by offering a freebie, you have enticed a customer to come in again. And usually, once the customer is back in — they always end up buying more than just redeeming their reward. Hence not only are you bringing back customers into your outlet but also driving additional spend. By offering customers a freebie, you’ve enticed a customer to come back to your store. Odds are, they’ll not only redeem their reward, but they’ll pick up a few other things while they’re shopping. Statistically, businesses that offer a reward or promotion see an increase in store visits by 70% — these promotions further drive additional visits in the future.

Rewards or promotions play their part in building trust with your loyal customers and they are more likely to become your brand advocates. In today’s market scenario — customers are so distracted with the number of options available online or offline — most likely the rewards or promotions just act as a catalyst or reminder for them that you exist! Thus helping driving further full priced visits rather than redemption visits.

5. Why do loyalty programs fail?

The most common misconception for loyalty programs failing is a lack of customer interest. Wrong. Loyalty programs fail because of a lack of interest from business owners.

Loyalty marketing cannot be expected to perform on its own. Once setup — you need to train your employees, sign up new customers to your program, analyse your data and send targeted promotions. This doesn’t mean you need to spend every evening on running your loyalty program. Hashtag Loyalty helps you automate your targeted communication to your customers, provide you with weekly updates, and quick analysis via your personal dashboards — while you focus on running your business. Yet — it’s an activity that requires a firm commitment — a loyalty program is only as good as a business owner that implements it.

You can reach out to me at karanc@hashtagloyalty.com.
Know more about what Hashtag Loyalty does for local businesses at hashtagloyalty.com.
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