Research shows that more than half of the American customers who join new loyalty programs every year spend more after joining than before they did.
Customers are continually looking for new loyalty programs and tend to spend more once they enroll in one. But the key is in creating a loyalty program that increases engagement and earns maximum revenue.
Loyalty programs started with cardboard punch cards and have come a long way since then. Today, loyalty programs are mostly web or app-based.
They are more flexible and let the user choose what rewards they want to redeem. Loyalty programs can be set up quickly, whatever vertical you may be from.
Once you decide on setting up a Loyalty Program, there are a few steps we recommend you’d need to follow:
1. What do I want to achieve?
The advantage of having a web/app based rewards program is that they are more flexible and adaptable. You can change the number of points you would want to allocate for every purchase.
Here at NextBee, we create customizable loyalty programs that let you reward customers for different actions they take, vs. only a purchase-based loyalty program.
For example, you might want to reward them for social media interaction, or you might want to encourage them to fill out a form.
The first step is to list out what actions you want the customer to take. What do you want to achieve – gain new customers or make your old customers come back for more?
2. What kind of program do I want to set up?
Swipe cards, web-based, or loyalty apps? Which program are you most inclined to?
Which program suits your business needs the most? You need to decide what channel you want to use to start your program.
Here’s a list of the various types of programs.
a. App-based: In this type of program, the customer would download an app and join the program. To add points, they complete several activities, including purchases. And then, integrate the app with your POS.
We help you create a white-labeled customized app that you can use to send push notifications and increase engagement levels.
b. Web-based: This program is very similar to the app-based program; the only difference being that the customer would not need to download an app but log in to a web-interface. The advantage with NextBee is that all our web-based programs are mobile responsive, and hence it’s a hassle-free experience for the user.
c. Swipe cards: Swipe cards can be scanned/swiped to gain points. The advantage is that they are effortless to use. However, they only encourage one type of user-activity, i.e., purchase. It is easy to promote engagement with this kind of customer loyalty program.
d. Email-based/Mobile Number based: Here it’s an entirely hands-free program. You have to save the customer’s email id or mobile number in your POS and you can add points for every purchase made.
The downside is you cannot offer tiered-awards or have users engage with you on social media and that customers tend to be less engaged.
What is recommended?
At NextBee, we create a unique loyalty program for you that gives you the option of having both a web-based and an app-based platform. Our programs are designed so that your customers are actively monitoring their progress and are motivated to keep coming back.
Our programs can create a community-feel for the users. You can also create engagement through leaderboards or maybe store updates or push notifications for new discounts or sales.
3. How much should I reward, and what should my rewards be?
Once you select the kind of loyalty program you want, you need to jot down details. Is it going to be a points-based program?
How many points per action? Which action should link with several points? Do you want to create tiers? These are some of the questions you need to answer.
It is the step where you will also ascertain the purchase to points ratio. The advantage of creating a customized program with NextBee is that you change the points per action anytime you want.
For instance, you may want to double the points per purchase. You can also create a program with a particular group of customers to earn points differently from the rest.
You might want to reward your power customers with 10 points for every $100 while your casual customers only earn 2 points for $100.
Now that you have the points sorted, it’s time to decide what rewards you want to offer. We have a wide range of options, right from physical goods to store credit. You would need to determine how much you want to give away.
We recommend using about 5% of the amount to be given back to the customer. However, a lot would depend on your competition and your profit margins.
Another excellent option for you is to create tiered rewards, enabling the customer to earn more rewards, higher they go. For instance, while a customer can redeem 100 points for 10$, he might redeem 25$ for 200 points.
The program motivates the customer to purchase and engage more. It is a win-win situation for you – if a customer redeems the 10$, you spend less, and if a customer waits to reach 200 points, he spends extra that he might not have done so otherwise.
The main takeaway is to maximize the appeal of the program at minimum losses. You need to encourage spending and engagement by offering a variety of rewards. Here at NextBee, you can provide various reward options, whether it’s merchandise, store credit, or physical goods.
Deciding on a loyalty program that will engage customers to the optimum without incurring a loss to your business is the key. We at NextBee work with you to overcome this challenge.