Customer Loyalty Programs Done Right: How To Hook New Customers and Strengthen Relationships

By: on July 15, 2020

Did you know that July 16 is “Get to Know Your Customers Day”?

While it may seem like there is a “Day” for everything—from Bubble Wrap Appreciation Day to National Spaghetti Day—this is one that it actually pays to pay attention to.

It may sound trite, but without your customers, you don’t have your business and your livelihood.

One great way to celebrate “Get to Know Your Customers Day” is by flexing your customer loyalty program.

If you don’t have a customer loyalty program, or the one you do have needs some work, you’re in the right place. In this article we’ll look at why customer loyalty programs are so important and some basic tips for implementation.

The importance of customer loyalty during the COVID-19 era

Several years ago, you might have been able to lean on foot traffic and volume to help make up for some customer churn.

But in 2020, your customers are shopping from home more than ever before, and you can expect them to continue doing so even after this pandemic has eventually passed.

This summer, Software Advice surveyed more than 550 U.S. consumers to gain insight into how COVID-19 has affected their priorities and preferences (you can find our methodology here).

That survey revealed that 60% of consumers have been online shopping more or significantly more since COVID-19, and among those online shoppers, 73% plan to continue to shop online at that increased frequency even after the pandemic has passed.

A chart showing that 73% of consumers who are shopping online more since COVID-19 plan to continue doing so even after the pandemic has passed.

This means that a significant percentage of your potential customer base is shopping from home instead of at the mall, or main street, or other retail location where they might stumble upon your business. This makes online advertising and social media marketing even more important than it already was. It also makes capturing the attention of new customers and retaining the customers that you already have even more important, and a customer loyalty program is a great way to do that.

Customer loyalty programs can also supercharge your customers to make them advocates for your business.

According to The Loyalty Report 2019 from Bond, 79% of consumers are more likely to continue buying from businesses with loyalty programs, and 73% are more likely to recommend businesses with good loyalty programs.

How to set up a customer loyalty program

Now that we’ve seen how effective customer loyalty programs are at cultivating reliable, enthusiastic customers, let’s look at the best way to set one up for your business.

A good customer loyalty program requires two key ingredients:

  1. Customer data, so that you can track and reward their activity
  2. A reward system, so that customers know what their purchases are building toward

Once you have this information, it’s just a matter of keeping track of customers purchases from your business, and rewarding those purchases with cashback, free products, discounts, or something else. It’s highly recommended that you use software to keep track of all this, which we’ll look into more below.

For more details on launching your customer loyalty program, check out this guide from HubSpot.

Unless you want to use primitive punch cards, any customer loyalty program requires your customers to turn over some form of personal contact information, whether that’s their phone number, email address, or social media profile. The easiest way to do this is to offer a digital receipt along with an opt-in for future communication. But an even more effective method is to offer something in return, which is essentially a sample of your customer loyalty program as a whole.

So what should you offer to get the most customers to sign up?

A Gartner Consumer Privacy Survey from 2019 reveals that consumers are most willing to share their personal information in exchange for cash rewards, free products or services, discounts or coupons, and loyalty points which can be exchanged for something else.

A bar chart showing what consumers are willing to exchange their personal information for

While still effective, things like exclusive access, donations to charity on their behalf, and personalized recommendations have a much lower success rate as carrots.

Talking to your customers and requesting their feedback through surveys is a great way to hone in on what kind of rewards they’re looking for.

Once it’s set up, don’t forget to promote your customer loyalty program so that your customers can actually take advantage of it.

Prompting customers to enroll after they make a purchase is a must, and Gartner suggests these approaches as well (full article available to clients):

  • Promote the program on your website and mobile app
  • Promote the program in your email marketing campaigns
  • Promote the program in your social media marketing
  • Partner with other businesses to offer cross-promotional rewards

How software can help with your customer loyalty program

Now that we’ve looked at why it’s critical to have a customer loyalty program, and what you should offer as a reward, let’s look at how you can use software to make running your customer loyalty program feasible.

You have enough on your hands as it is without trying to keep track of customer reward points on a giant spreadsheet. Customer loyalty program software optimizes and automates this process with the following common features:

  • Rewards management allows you to control your rewards structure (how points are earned, when thresholds are met, how rewards are redeemed).
  • Customer loyalty relationship management allows you to organize and track customer information, including their contact info and how many points they have and rewards they’ve earned. This can help you with targeted campaigns, allowing you to communicate directly with your most loyal customers.
  • Member portal allows your customers to securely access information about the points they’ve accrued and rewards they are eligible for.

Customer loyalty program software is available as a standalone application or as an integrated feature with your point of sale system or CRM.

It can be overwhelming to try to figure out which customer loyalty program software is the best fit for your business, but Software Advice advisors are here to help.

In about 15 minutes, you can get a short list of solutions for your business, saving you weeks of research. And it’s completely free. Click here to get started.


Methodology

The Software Advice COVID-19 Consumer & Employee Impact Survey was conducted in June 2020 to understand how the priorities and preferences of people—as consumers, employees, and patients—have shifted due to COVID-19. We surveyed 564 consumers making up a representative sample (by age and gender) of the U.S. population.

We worded the questions to ensure that each respondent fully understood the meaning and the topic at hand.

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