3 Proven Customer Loyalty Program Formats

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For businesses, it is important to not only attract new customers, but increase loyalty from existing customers. The cost of acquiring new customers is expensive (five to ten times the cost of retaining an existing one!), making customer retention even more important.

In addition to the cost benefit of retaining customers, companies need to think outside of the box when it comes to vying for their customer’s attention. In a world inundated with promotions, consumers are no longer phased by digital and print ads. Consumers are resistant to the advertising that is around them, making it even more important to stand out from the competition. In fact, HubSpot found that the average banner ad has a 0.1% clickthrough rate (CTR), and the standard 468×60 banner has a 0.04% CTR. For this reason, it is important to find different ways to engage customers.

One way is to set up a customer loyalty program, offering different incentives that will not only help customer retention, but increase referrals and revenue, too. Here are a few customer loyalty programs that have been proven to work for companies:

Set Up a Point System

Americans love loyalty cards. In fact, 75% of households are enrolled in at least one frequent customer account. Americans choose to shop at a store that offers a loyalty program over another store that doesn’t because of the incentive to earn points.

Traditional point system incentives have developed far from those old fashioned punch cards. Big companies like Marriott, Starbucks, and Toys R Us, have spent millions of dollars on their frequent buyers point programs, but now smaller companies have a chance to implement these type of programs, too.

Services like Belly and Perkville enable small businesses to launch customer loyalty programs easily, without paying steep upfront costs. And companies can customize their programs, designating how customers can earn points.

A notable yoga studio chain with 29 nationwide locations, YogaWorks, unveiled a perks and rewards system powered by Perkville in January 2012. The program drives member loyalty by awarding points for taking classes in the studio, new member referrals, and social media engagement. Members can then easily redeem those points for great rewards.

Use of the Perkville program resulted in an increased membership life, higher social media engagement, and an impressive 951% return on investment. YogaWorks notes that Perkville will not only be used as a regular program to increase referrals, engage customers through social media, and retain and reward current customers.

These type of programs will encourage customer engagement and keep your brand name consumer facing and customers will feel valued when they are rewarded for their loyalty.

Launch a Referral Program

By using your existing customer base, you can find new customers. A referral program will make your loyal customers brand ambassadors of your product or service and can be an effective way to turn one client into multiple clients. Additionally, new customers are much more likely to take advice from their friends and family, which is why referral programs are so effective.

For example, Leaf Filter, a national gutter guard company, offers $50 to existing customers when they refer their friends and family to LeafFilter. Existing customers simply have to fill out a form with their friends or family’s information, and LeafFilter will contact them with more information. If the referral produces a sale, the customer gets $50! This has helped the company grow their email campaign, nurture new leads, and increase revenue.

Another way to launch your referral program is to encourage customers to share your product or service through social media. The Dollar Shave Club has also set up a unique referral program. After becoming a Dollar Shave Club customer, individuals can share the site with friends. For everyone that follows those shared links, the referrer receives a $5 credit towards their next purchase. This pushes social engagement, as well as drive sales. In fact, Michael Dublin, CEO of Dollar Shave club, notes that over 50,000 new customers are referred to the company each month.

Direct Mailers

Setting up a direct mail campaign is a great way to get local consumers to your store. You don’t have to be a large, corporate business in order to develop a direct mail campaign, however, it is important to have a strategy.

Brian Wirth, Marketing Manager of pizza franchise Hungry Howie’s, suggests targeting your messaging to a specific customer demographic with a tangible product and message based on an event in the individual’s life. For instance, “you can welcome someone to the neighborhood, wish them a happy birthday, or notice it has been a while in between visits.”

These mailers are a simple way to keep you top of mind with the consumer, while making the customer feel special to build brand loyalty.

It is important to tailor these programs to meet your company’s goals, whether those goals are to gather data, increase revenue, develop your email database, or build brand awareness.

As with any program, it is important to measure your campaign results by keeping thorough customer data records to measure your relationship with customers. Use your results to not only drive leads, but provide better marketing to your customers and they’ll thank you with their business!


Image source: Scott Lewis

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