You can’t buy loyalty.

In today’s competitive times, consumers have more choice than ever before, and businesses must work harder to encourage customers to return, whether they’re an e-commerce brand or a multinational fast-food chain. Even if a customer has been shopping with you for years, they won’t stick around if a competitor swoops in with a better price or value proposition.

That’s why, as well as continuously improving your products and services to keep your customers happy and your business competitive, you should introduce a loyalty scheme.

Not only will a loyalty scheme give your customers a reason to come back to you, but those customers might even spend more. Indeed, according to Accenture, members of customer loyalty programs typically spend up to 18% more than other customers, and more than half of customers will join a loyalty program if one is offered.

Just look at the Tesco Clubcard or the Boots Advantage Card – two of the high street’s biggest loyalty scheme success stories.

Though not every loyalty scheme is going to attract hundreds of thousands of customers, we’ve put together some tips and tricks on building a scheme that will reward your valuable patrons, encourage new ones to try you out, and increase average spend per transaction…

 

Bake a scheme into your app

According to the Harvard Business Review, acquiring new customers is between five and 25 times more expensive than retaining a current customer. That’s why it’s so important to keep your existing patrons satisfied, whether you’re selling bread at the market or software online.

One of the best ways to drive engagement and loyalty is to bake a customer reward scheme into your mobile app, allowing you to hand out exclusive discounts, custom functions and limited-time offers. And loyalty apps need not be exclusive to digital businesses – look at KFC and its loyalty scheme, rewarding customers with stamps every time they buy a meal.

KFC customers can collect chicken stamps and exchange them for meals, sides, drinks, and exclusive coupons. For consumers, the app incentivises them to visit KFC for a fast-food treat so they can collect stamps and “save money”.

For KFC, encouraging consumers to download the KFC app allows them to send push notifications and have a constant presence on their customers’ home screens. UK consumers now spend an incredible 24 hours a week on their smartphones, so having your company logo appear every time customers unlock their phone is a huge benefit and will no doubt help to build a long-term positive relationship.

There are lots of ways to integrate a loyalty scheme – the “stamp” system is popular amongst brands like KFC and Greggs, whilst the points-based system employed by Tesco and Boots means customers need to spend more so they can “save up” their points for a future benefit.

If you’re not able to offer customers free products or gift vouchers, you can still introduce a loyalty scheme by offering 10% off every purchase made through your app, or by entering your customers into a monthly prize draw whenever they scan their unique QR code in-store.

 

Reward more than just purchases

According to the Rosetta Consulting study, highly-engaged customers buy 90% more often and spend 60% more per transaction than customers who aren’t engaged, so finding new ways to motivate customers to engage with your brand and spend money is critical to loyalty.

One great way to demonstrate your commitment to customers is to reward them even when they’re not spending money. If you’re introducing a points-based loyalty scheme, then you could give customers points every time they watch one of your product videos, spend time in your mobile app, share your content on social media or leave a comment on your blog.

These may seem like trivial activities, but they’re great indicators of engagement and show other potential customers that your brand is well-liked. What’s more, every time someone shares your brand on social media, they’re exposing your products to thousands of potential customers, and it’ll only cost you some points (which could be equivalent to a penny or two!).

 

Make points make sense

On the subject of points, make sure your loyalty scheme’s user onboarding is engaging and fun. You’re asking customers to hand over their details and ultimately spend more with you, so you must offer them something valuable in return – and make it clear what they’re getting.

Tesco, for example, awards customers one Clubcard point for every pound they spend in-store, and each point is worth a penny in Tesco gift vouchers. However, those points can be exchanged for other services such as cinema trips, theme park tickets, and even holidays through Tesco Clubcard Boost, further incentivizing customers to choose Tesco rather than visit Morrisons or Sainsbury’s for their weekly shop – and that loyalty is very powerful.

According to McKinsey & Company, 25 to 50% of a company’s highest-spending customers also shop with its competitors, which makes loyalty schemes all the more important. Back in 1995, Tesco overtook Sainsbury’s as the UK’s biggest supermarket chain and has stayed there ever since – a year after it released its Clubcard loyalty program. Others have tried and failed to replicate Tesco’s success (Morrisons More card, for example) because they were too late to the game, highlighting the need to launch a loyalty scheme as soon as you can.

If you’re planning to offer cashback or vouchers, make sure you assign a monetary value to your points, otherwise, they’re meaningless. We all understand the value and appeal of 100,000 Airmiles, for example (First Class from London to Singapore) but we might not be as bothered about collecting Juice Points if you need 1,000 of them for £1 off a smoothie.

 

Gamify your loyalty scheme

Gamifying your loyalty scheme is another way to spark interest in your brand and persuade customers to spend more with you.

Boots, for example, hosts regular ‘Points Events’ where customers earn double their usual points in-store and online, encouraging them to spend money during Boots’ quieter sales periods. Tesco Clubcard, on the other hand, runs monthly Clubcard Points competitions, encouraging customers to enter a prize draw to win £1,000 worth of Clubcard vouchers to spend in-store, and they collect customer data in the process.

As a small business, you might not be as flexible as larger chains when offering freebies or gamifying your scheme, but you can still push customers to spend and encourage them to come back.

A Lottery-style program could see customers spend their points on entries into a draw, with the winner receiving a free makeover in your salon. There are so many ways to give back to customers en-mass or individually without breaking the bank, and using digital PR and user-generated content (photos of the winning entrant’s makeover) to spread the word about the benefits of your loyalty scheme will encourage more people to sign up.

 

Let customers refer your business

Finally, bake a referral scheme into your loyalty program to encourage customers to refer friends and family to your business. 70% of consumers say they’d be more likely to recommend a brand if it has a good loyalty program, according to data from HubSpot, so improve customer loyalty and find new customers at the same time by integrating referrals.

You might give referrers 1,000 points, 50% off their next purchase or even a free treatment in your salon as a thank you. You can also award new customers some points as an introduction to your loyalty scheme, too. This can have a ripple effect on your business and quickly introduce you to dozens of new customers, so make sure your business can scale and that you’re able to reward new and existing customers equally.

A common complaint of loyalty schemes is that new customers can earn rewards very quickly, whilst loyal patrons aren’t rewarded and may look elsewhere. Create a level playing field and everyone will be happy with your program.

 

Wrapping up

In today’s digital-first times, introducing a customer loyalty scheme inside of a mobile app or web app is a fantastic way to increase engagement, no matter the size of your business.

Not only can a loyalty program help you win new customers and keep existing ones happy, but it allows you to collect data on what customers are buying and when so you can target them with personalised promotions down the line.

Tesco, for example, reported a 34% increase in activity on its loyalty scheme since it relaunched in 2017, and today sends its customers specialised offers and coupons to encourage them to spend more in their stores.

If you’re looking for help building a customer loyalty program, reach out to the team at Zudu. We specialise in app development and can integrate a loyalty scheme that helps you deliver a return on your investment in no time. Call us on 01382 690080 or drop us a message.

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