Reward Program Strategy

5 Loyalty Program Best Practices for 2015

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A new year is upon us, the new year lets all of us start something new. For many of us this fresh start is used to get in shape, fix our finances, or just give ourselves more “me” time. It can also be used to get a loyalty program and customer retention working for your site.

Just like a new year’s resolution, retention doesn’t happen overnight, it takes time. You have to set goals and evaluate how you are doing. To get customer retention working for you, here are 5 loyalty program best practices to follow in 2015:

 

1. Reward for Customer Account Creation

Loyalty program best practice number one should always be encouraging customers to register for an account. No loyalty program will be effective if no one is enrolled in the program.loyalty program best practices encourage participation

When customers create an account it provides you with a few key benefits. The first is that it allows you to see how individuals with your program are spending points and redeeming. Secondly, it gives you a way of getting in touch with them for future marketing campaigns and notifications.

There are a few ways to encourage your customers to register for an account. Here are some best practices. When a customer is about to checkout, make sure you show them the point balance and rewards they will be missing if they choose to proceed as a guest. No one likes to leave money on the table, which makes this an effective way to encourage sign ups. A Smile.io client saw a 35% increase in account registrations using this tactic.loyalty program best practices show what they're missing

Make sure there is a call to action to signup wherever you mention your rewards. Let your customers know that they will earn points when they register for an account anywhere you are promoting your points / rewards. This could be on the explainer page, the homepage, the rewards page, or the checkout page. Today’s shopper moves quickly so make sure you have multiple CTAs directing them to sign up.

 

2. Give Customers Points Right Away

Loyalty program best practice number two is to make sure that your customers immediately have points to spend. Shoppers won’t see the value in your program if they can’t earn a reward.loyalty program best practices immediate reward

Customers see value when they spend points, not when they earn them! People are positively motivated when they are given a reward for their actions. The powerful motivating properties of a loyalty program come from a customer spending the points they have earned.loyalty program best practices value in spending

You want your customers to be motivated and see value in your loyalty program right away. That is why you need to be giving customers points a soon as possible. You can do this by rewarding points for account signups. This ensures that every new member starts off with points to spend. Also reward points for every purchase, that way shoppers have points after their first experience.

 

3. Reward for Increased Visibility

Once points have been established as a motivator in best practice #2, you can begin to use points to increase the visibility of your site. This is done by using your existing customer’s social network.

A loyalty program has benefits beyond getting customers to become more loyal and profitable. A program can also increase the visibility of your brand and site. You can use points to motivate your customers to share and turn them into powerful customer marketers. The average American has 634 ties that they can share products and purchases with.loyalty program best practices average connections

Each one of your customers has a large social network that is also reachable through them. You can use your program to reach them by rewarding points for sharing a product or purchase on social media. You can also use customer referrals to drive growth and visibility at the same time. Your customers are great marketers, it is a best practice to empower them to market for you.

 

4. Use Your Program to Create Better Orders

Once you have a loyal customer base that is referring friends and sharing on social media, you can start to use loyalty program best practice #4. This practice is motivating for better and more profitable orders.loyalty program best practices bigger better

Most stores have an idea of their average order value or average order size. A loyalty program can help you increase both these metrics. A program can also help your average orders be more profitable as well.

Once you know what your average order value (dollar amount) and your average order size (items in the basket) you can begin to reward customers for making purchases that exceed that average. We find that rewarding bonus points for orders 15% – 20% above your average is an effective way to get customers spending more. If you would like to see this tactic in action, check out Van-Dal's program.loyalty program best practices 15 to 20 times bigger

You can also reward bonus points to your highest margin products. This is most effective when you show your high margin items first and show the bonus points a customer can earn in the catalog. This is a best practice for all loyalty programs but especially for retailers that have house or private label brands, like in the supplement industry.

 

5. Differentiate Your Program

This final best practice is also the most important. Be sure that you find a way to differentiate your program from other loyalty programs in your industry. The best way to do this is by adding creative elements for a better program experience.loyalty program best practices be crative

A creative loyalty program has two main benefits. The first is that it gets shoppers choosing to be a part of your program over the competitions. The second, is that it acts as a form of marketing for your program. When customers see something amazing in your program, they are much more likely to tell their friends about it. It might even get you some media attention.

There are many ways you can differentiate your loyalty program, I will show you a few,  but for a complete look I would recommend reading “Strategies for a Creative Loyalty Program”.loyalty program best practices creative loyalty program CTA

The simplest way to differentiate your program is by giving your program (and points) a creative and catchy name. Rather than me writing out how to do this, I thought you may enjoy a video explanation instead.

Another way to get shoppers interested, and talking about your program is to have an “aspirational reward”. This is a reward that requires a ton of points that customers can strive towards. This could be a vacation, free products for a year (or life) or really anything else. Julep has a Mini-Cooper as a reward in their loyalty program.

No matter what you choose to do as a differentiation tactic, just be sure that it matches your customers, your brand, and is not the same as other programs in your industry.loyalty program best practices match

Follow these loyalty program best practices this year and your program will be on its way to a successful 2015 and beyond. If you do not currently use a customer retention strategy (like a loyalty program) you can also download the “Ultimate Guide to Customer Retention” and get the power of retention working for you!loyalty program best practices is a loyalty program right for you CTA

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