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There are so many different types of loyalty platforms on the market that it can become confusing as a business owner when implementing the right program. Everyone is so conditioned to seeing what works for big retailers as well, that it is easy to assume that what works for them will work in the SMB world…wrong. Let’s have a look at some of the misconceptions happening in the SMB loyalty space.

Customers love marketing emails

loyalty-program-misconceptionsNo…they really don’t, do you love receiving hundreds of emails every day? It takes a very special kind of email to blow email open rates out of the water. Mailchimp says, on average SMB email campaigns average an open rate of 21.53% and that’s by creating outstanding email campaigns, but that’s just an open rate.  For a customer to actually take action on this email is far less. Think before you implement a loyalty program that focuses purely on email and email marketing campaigns, as you may not see the return on investment you are looking for.

 

loyalty-program-misconceptionsCustomers will do anything you tell them to do

Wrong again, it’s incredibly hard to get a customer to behave in a certain way, so don’t leave it up to them. There are plenty of loyalty programs that require a customer to take action in signing up to a loyalty program. They may have to go to a website and sign up or keep a paper or plastic card in their wallet or it may even be scanning a QR code when they arrive in-store. Think about the customer and how much of an inconvenience this is for them. The best advice is removing the friction from the sign-up process and doing it for them, that way you stay in control & don’t leave it up to them to decide.

Birthday offers will generate a tonne of revenue

loyalty-program-misconceptionsTotally false again! We’re not saying it’s going to be a total flop but think about what you personally do on your Birthday. You either celebrate with your loved ones maybe have a party at home and in most cases, your friends will take you out for dinner to a place that they think is nice or to your favourite restaurant. In any of these cases, your small business will probably lose out. Now think about it again, is it really worth running Birthday offers in-store?

Reminder: Focus your energies on the things you can control & don’t leave the rest up to chance

SMS marketing works!

This is only half true, it certainly works but remember the saying “too much of a good thing is bad.” SMS campaigns work because they are short, snappy and grab a customer’s attention immediately but if you bug a customer with predictable and constant SMS messages, all you are going to do is make them “opt out.” Make it exciting and keep promotional campaigns between 2 – 4 times a month.

loyalty-program-misconceptions

 

Starbucks has been getting a lot of attention in regards to their newly rolled out loyalty program. Mainly because of the sudden changes that caused an uproar in the Starbucks loving community.  The controversy around their “improvements” is teaching business owners that it’s important to know how to launch a successful loyalty program. It should be strategically planned for growth and revenue building.  Let’s look at Starbucks and take away some pointers from their new program.

Points or stamps?

successful loyalty programStarbucks started out with a stamps based program, awarding one stamp per visit and then switched their program to points based.  Now people are being rewarded for spending more, rather than visiting more. It is a tactical plan to switch from stamps to points, forcing customers to hand over those extra dollars.  If you’re a business with a large variety of products, it’s advisable to start with a points based program. Awarding your customers for spending larger amounts with you, rather than forcing them to head to a competitor for the extras.

 

Let’s get personal

Allowing customers flexibility is one way to make them feel like they are really part of a loyalty program. successful loyalty programStarbucks is now driving personalised offers to customers based on their prior behaviours. This is a complex feature of a loyalty program but can be simulated by offering accumulative rewards. Meaning the more points the customer accumulates, the better the rewards. Consumers can then choose to redeem the smaller offers or keep building more points for something of better value.  Once again pushing customers to spend more with you, which at the end of the day is what you want out of a good loyalty program.

Promotions, promotions, promotions

Don’t fall into the trap of sending marketing emails to your loyal customers. In fact this is the wrong way tosuccessful loyalty program go about signing up customers to your loyalty program. There is a lot of stigma around signing up to a loyalty program and then only receiving uninteresting updates about a business. Give your customers something to get excited about! Plan promotions a couple of times a month and send them out via SMS or push. This will really get your customers going and get them to take action instantaneously. Starbucks do this really well by providing promotions by push notification in their app.

Is Starbucks running a successful loyalty program?

So maybe the critics have it all wrong? After the storm of its new release, Starbucks new loyalty program is still proving to be a hit but it has taught us a valuable lesson. Plan a successful loyalty program and not only will your customers thank you for it but you will be thanking yourself for a nice revenue boost!

Stopping your customers from leaking to your competitors

We’ve all had it happen to us, your business is going well with a steady flow of customers and then boom! A store opens up down the road who offers the same product or service as you but with way cheaper prices. It’s unfair isn’t it? You work so hard, and we all know that your business and staff are much better, but those pesky customers have been swayed by lower prices.  If you’re lucky your customers will have a bad experience with your competitor and come running back to you, but you’re taking a big risk.  What if they don’t come back to you, then what?  What if there was a way to stop them from ever leaving you? 

This is where the magic comes in.  Consumer psychology can sometimes be a mystery to us. Ok sure, we all know that consumers are swayed a lot of the time by cheaper prices, but what if it was much more than that.  Customers are actually heavily focused on the whole package, not just the price. Did you know 44.3% of consumers in the UK admitted that if a retailer annoyed them, they would not hesitate in using another retailer (Webloyalty, 2016).  That’s a pretty big stat! What if a staff member accidentally serves your customer the wrong coffee? Poof! and your customer could be gone down off the road, never to return.  Let’s think about it though, is that really the customer you want as a business owner? Business owners want customers that love them and vice versa. But how do you make a customer feel loved, this is the age old question. Sure you can go out of your way to remember every customer’s name and their favourite product but that’s a lot of effort (and a very good memory).  What about rewarding them for being a regular?

Customer’s come to see you sometimes every day if you’re lucky enough but what do they get in return?  The same latte in the same cup, served by the same person with the same smile. 55.4% of consumers in the UK admitted that they often get bored of using the same stores and brands (Webloyalty, 2016). Well what if once in awhile the customer gets a free muffin with their coffee, or a 10% discount on their next purchase, that might make a difference.  Loyalty cards have been around for a long time, to make this possible and to make customers feel loved. Are cards the right solution though? They always end up getting lost somehow and then the customer just ends up accumulating a stack of cards that eventually ends up in the bin because they don’t fit in the customer’s wallet. Guess what, loyalty programs are now on the rise in a digital format. “Yippee!!” I hear you say, those faithful customers are now going to love you even more. Squash those competitors and start benefitting from moving to digital. You’ll wish you had changed sooner.

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1. Unachievable rewards

Would you attempt a marathon if you only ever run to catch the bus? Set rewards that feel achievable to your customers. A good rule of thumb is to require the equivalent to between 4 and 12 visits/purchases before a reward can be redeemed. How many depends on the cost and type of product you sell. If you sell low-cost, high frequency items such as sandwiches and hot drinks, a higher required number of visits is ok. If you sell more expensive items a shorter redemption path paired with an in-store discount can work really well.

2. Complicated and complex loyalty programs

If your customers struggle to understand the structure of your loyalty program, they are unlikely to get engaged. Make it easy for them. Having a flat and easy structure; e.g. 1 point per pound/dollar spent, which is easy to understand for customers and easy to run for staff. The more complex you make your loyalty program, the less likely it is to become a success.

3. Fraud or mistakes

Mistakes can always happen, and there will always be an element of trust involved with loyalty cards – some people are put off by the risk that it can be abused. If you choose to use a loyalty app (such as our own, Loyalzoo) you have the added benefit of seeing customer data which can be matched with transactions if something looks suspicious. It can even be fully automated and tied to your Point-of-Sale, in which case it is impossible to abuse, as point-allocation is automated. 

4. Not giving your program enough attention

Don’t expect people to automatically join your loyalty program. They need to be informed that it exists, about the benefits they get from it and how they join. Once that’s done – keep reminding them to use it. Chances are they will forget, so make a habit of mentioning it at every transaction. Having some visuals in the till-area also help, a sticker or a tent card work really well in our experience. That’s why we at Loyalzoo send a bunch of each to everyone who signs up, to help them spread the word about their new loyalty program (you can find out more about our app here).

5. Not having the staff onboard

Without the staff being informed and trained, it will be hard to keep it going and get picked up by customers. All members of staff should know how it works, what the rewards are and how people join. If everyone works together, it will be really easy to manage – and much better for customers and staff alike. Think of it as rowing a boat in a team of eight – it would be really hard to move that boat on your own, with the 7 others weighing you down. But if you all work together, it’s incredibly easy.