The difference between a good loyalty program and a stellar one is taking some time to understand your shoppers. Each business caters their experience to a specific type of shopper, and you can create that same tailored experience with your own rewards program!
Stellar programs use information from their shoppers to:
- Construct a meaningful program
- Add captivating ways to earn rewards
- Offer rewards that are relevant
Let’s see what each of these looks like in your own program.
Add Ways to Earn That Improve Your Customer Averages
You already know A LOT about your shoppers, including where they engage with your brand, what products they like to buy, and how many of them will become a repeat customer.
All of this information is incredibly useful when it comes to setting up the ways your customers can earn rewards.
If Your Shoppers Are Active on Social, Get Them Active for Your Brand
Many reward programs use points as an incentive for micro actions. These are actions that you would not be willing to give more than a few cents for, but when done by many can have a big impact.
Social media engagement is a perfect example. If your shoppers are already actively mentioning your brand on social or engaging with your Instagram and Facebook ads, you can give them points for doing specific actions like sharing pages or following your accounts.
Social media is also a fantastic way to build a greater sense of community in your social shoppers. By giving them points for sharing a specific blog page that changes weekly, you can use your content to teach shoppers what you stand for, increasing brand exposure and their relationship with your brand all at once. Reward programs and social media are great when used together!
Reward for Account Creations to Gather More Information
Whenever a shopper registers for a store account you gain a ton of valuable information about them. You can get their address (both physical and email), birthday, and lots more. This information is key to truly understanding your shoppers, which means you should be incentivizing every person who visits your site to create an account.
A general rule of thumb is to reward customers with enough points to claim your lowest reward right away. This is because customers see value in a program when they get a reward, not when they earn points, so get each customer seeing the value of your program right away!
Motivate Customers to Be the Best with VIP Tiers
One of the reasons to run a loyalty program is to thank your best customers for their business. However, while rewarding your best customers is great, your program should also be creating more customers who behave like your best.
One way to do this is with a VIP program. The premise behind a VIP program is that you move up through tiers by crossing milestones. These milestones are often set based on total points earned or dollars spent. Each time a customer passes a milestone, they are rewarded with elevated status and increasing rewards.
In e.l.f.'s Beauty Squad program, a member's perceived status is elevated at each tier.
This means you need to set your milestones to encourage your average shoppers to be more like the best. For example, if your average order value is $50 make your first tier milestone $100 spent, and your third tier $500. This will encourage all of your shoppers to be more than average.
If you are using Shopify Plus, you can also use our integration with Shopify Flow to reward bonus points when your customers exceed store averages like number of orders placed in a year. If your average customer places 3 orders in a year, use Flow + Smile to award bonus points when that customer places their 4th order this year.
You could also use the AOV example above and give bonus points when an order is more than $50 dollars. No matter which average you choose to use, Smile + Shopify Flow are the perfect complement to any VIP program and can help you turn every customer into your best customer.
Rewards Should Be Captivating to Your Members
What motivates you is much different than what motivates your mother, neighbor, coworker, or mailman. That is why we recommend having a variety of rewards in your program.
However, simply adding as many new rewards as possible is not a good strategy. You should be introducing rewards based on who your typical customers are, and introducing more complexity over time.
Discounts: Universally Understood, But Need to Be Tailored
The best place to start when offering rewards is with discounts. A discount is universally understood - you don’t need to explain it or convince people it is valuable.
"You do not need to convince people that a discount is valuable."
The problem is that a discount on its own is not tailored to your shoppers. You need to look at what you sell and your shoppers’ expectations in order to create a reward that is valuable.
To create that meaningful reward, you need to ask yourself 2 questions.
1. How much are the items you sell?
The rewards you issue should be a reflection of what you sell. There is no blanket discount amount that will be captivating for every store. If you sell $20 items, a $5 off reward will be plenty motivating, but if your items are $300 that reward won’t be very motivating.
Your customers will find discounts motivating if they can see it making a significant dent in the price of your most popular items.
2. Do your shoppers expect a certain sale price?
The next thing to consider when offering discounts as a reward is what sale price shoppers expect. When you continually run sales and promotions you are conditioning customers to expect it, which ultimately leads to the death spiral of discounting. But don’t worry - by simply investigating a retention strategy, you are priming your business to avoid this trap.
"If shoppers are already conditioned to expect discounts, you need to make sure you are giving them more value for their loyalty than your ongoing sales."
If shoppers are already conditioned to expect your 20% off sales, you will need to give them a higher incentive to engage in your program. Why would they make 5 purchases and share your content for a 10% off reward if your next monthly sale is going to give them 20% off? Be sure to understand what your customers already expect and offer additional value on top of that. You will never break the cycle of perpetually discounting if you don't.
Status-Based Rewards for Competitive Groups
Do you like to win? Of course you do, who doesn't? The desire to win or be the best is what fuels status-based rewards in a VIP program.
While many programs offer increasing rewards for VIPs, often the most motivating is the elevated status customers achieve. Just look at how many people rave about spending $1,000 at Sephora in order to join the ranks of fellow VIB Rouge members.
Striving to be better than others around us is a familiar concept to millennial shoppers and is also super effective. Millennials have grown up in a world of video games and competition which means we thrive on it. As a millennial myself it is very motivating to beat others, even if it is just by shopping.
Showing customers where they stand relative to others is an awesome way to motivate behavior through gamification. If you are running a VIP program as part of your rewards program, be sure to think through what you will call your tiers. The perceived status it creates can be the most motivating reward of all!
Understand Your Shoppers to Build the Best Experience
Even though that title sounds so cliche, it is so true that I had to leave it in. If you want your loyalty program to be a success, you need to build it with the user in mind. The program is built to create a two way exchange of value, so if you don't consider your customer … they won’t care.
A loyalty program is like any other marketing initiative: you need to establish empathy with your shoppers. Put yourself in their shoes to build something that you would love, and they’ll love it in return.
If you’re ready to build the best rewards program possible, book a demo with us and we can show you how!