When done right, a customer loyalty program can turn new visitors into loyal and habitual visitors. However, decisions made when setting up the program will affect whether or not customers use and enjoy the program.
A customer loyalty program will only be successful if:
- The program is simple to use and easy to remember
- The rewards you offer are items customers actually want
The first way to ensure customers use your loyalty program and turn visiting your business into a habit is to make sure that it’s as simple as possible to use. At Sparkage, we’re confident that the best way to do this is by making your loyalty program mobile.
You’ve likely seen (or had) a loyalty “punch card” that promised a free sub sandwich after you purchase five. This method seems simple enough, but punchards have their downside and there’s a better way to do it. Take a moment to think about the contents of your wallet. Could you name every credit card, gift card, business card, and random piece of paper in your wallet right now? Chances are you can’t, which means neither can your customers. A punch card is likely to be lost and forgotten or left behind in an old wallet, while mobile rewards are with customers no matter where they go.
Mobile loyalty programs that use a point system to track a person’s progress toward rewards are the foundation of a great customer loyalty program. Below we’ll cover how to choose rewards in a few easy steps that encourage engagement.
How to Choose Rewards for Your Customer Loyalty Program
It’s important to remember that rewards need to be set up in a way that motivates a long-term relationship between the customer and your business. To do that, establish your rewards in a way that promotes customer engagement both now and later.
Determine point values
In a mobile customer loyalty program, customers earn points by buying from a business and in turn redeem those points for rewards. When it comes to a points system you should aim to keep it simple. This means that complex mental math shouldn’t be required for customers (or your employees) to figure out point value.
A simple way to set up your point system is to use a 1:1 ratio for dollars spent to points earned—one dollar spent equals one point earned. When determining the number of points required to redeem a reward, stick to around a 1:10 ratio between dollar value to point value. Here’s basic example:
- A customer that spends $5 would earn 5 points for their purchase
- A reward that would normally sell for $10 can be redeemed for 100 points
Start with an instant reward
There’s nothing like a little instant gratification. Offering a “low hanging” reward for signing up to the loyalty program or completing a small purchase gives customers a quick win. When customers feel what it’s like to win, and that it’s possible with your program, they’ll be motivated to keep working towards more substantial rewards.
An example of an instant reward for a cafe would be a pastry. When a customer earns 20 points through the mobile customer loyalty program, they’ll be rewarded with a free treat from the display case. The investment from the cafe is small, but it’s enough to set the stage for an engaging relationship with the customer.
After the initial reward, you want to incentivize customers to come back frequently. To do so, you can set up a mid-range reward. In the case of the cafe, a free soup and sandwich combo meal can be rewarded at 100 points.
Prizes can also be offered on a recurring basis. For example, Panera Bread occasionally offers rewards members a free bagel every day in a given month. While that may feel like a lot of free product to give away, Panera is working under the assumptions that customers won’t come in every single day and, if they do, they’ll likely want a coffee or another side item to go along with their bagel. To do this on a smaller scale, offer one free small product a week over the course of a month to rewards members. The possibility of a freebie will lure them in, and chances are they’ll be tempted to spend a little extra while they’re there.
Set a big goal to reach for
Your loyalty program should also include a bigger ticket item or a larger prize that is enticing enough that customers will want to work for it. Using the cafe as an example, a customer could win a catered lunch for their office when they reach 500 points.
Reaching the big goal may take time for the customers to achieve. Therefore, you'll want to be sure there’s an opportunity for intermediate rewards or a progress bar to keep them motivated.
Simple Ways to Keep Loyalty Rewards Exciting
Once you’ve set up a mobile customer loyalty program and added enticing rewards, there are different ways to keep customers engaged. Here are a few quick methods to keep rewards exciting and top of mind.
Show off prize winners
If a loyal customer reached the top prize level, why not show it off to your customers? With the customer's permission, post about the massive prize winner on your social media channels or within your store to encourage customers to keep working towards the goal. After all, would you want to work towards a goal that seemed impossible or rarely achieved?
Promote a little competition
A little friendly competition between customers can keep loyalty programs exciting and increase customer engagement. In fact, one business using Sparkage was able to increase points earned (read: money spent in their store) by 430% among their top three customers over the course of a month-long competition. Sound too good to be true? Read the case study here.
At the end of the day, customer loyalty programs and the rewards associated with them can be as simple or complex as you’d like. As long as you start with the basics, the sky's the limit.
Want to set up simple rewards that have a big impact on your bottom line? Request a demo to see how Sparkage can make your customer engagement efforts simple yet addicting.