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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!

regulars vs customers

regulars vs customers

The big brands have deep pockets and domineering presence, and pair this with free parking and low prices it is hardly surprising that customer choose them.

But for the very reasons that make the big shops attractive, they also make themselves vulnerable to shopper-savviness. The big brands are clones of each other, meaning shoppers have little reason to choose one over the other. Brand loyalty at this scale is rare and this is why the big brands are constantly working to drive their shoppers back to them. Here is a quick look at some of the strategies employed:

Free parking – Hardly a groundbreaking strategy, but nevertheless important. The point is to make the choice as easy and effortless as possible for the customer. Looking for parking and paying for it adds friction.

Brand comparison – Price wars are raging and supermarkets spend almost as much time talking about their competitors as themselves, in a bid to show the customer that they are cheaper than so and so. Some will even print their competitor’s name on the receipt!

Time-limited discounts – Some of the big supermarkets will give you a voucher along with your receipt, often with a neat little saving on your next shop. But have you ever looked at this in detail? Notice the expiry date. This has not been chosen at random, but is carefully calculated by marketeers and analysts, and is usually set to just before a customer would ‘naturally’ do their next shop. The purpose is, of course, to drive the shopper back in sooner – increasing the frequency of their visits and therefore increasing their spend.

Complex loyalty cards – The big brands all have some sort of loyalty program where customers earn points for their spend. But have you noticed the rewards? A store voucher or discount, which is what you might expect, is sidelined by rewards at other, non-competitive businesses such as restaurant vouchers, cinema tickets and online shopping vouchers. All very tempting to consumers – who feel like they are getting a special treat just for doing their everyday shopping.

Together these strategies all work towards one goal; make the customer come back more often and spending more, each time. But you don’t have to be a big brand with deep pockets to take advantage. If you can’t offer free parking, can you be flexible with your opening hours? Be the easier option for customers. Once a customer has chosen you once, you have the opportunity to turn them into regulars by offering a competitive, enjoyable experience in store.

Almost any business in any sector can run a loyalty program and elaborate on repeat business. The benefits and rewards from focusing on your existing customers as opposed to only focusing on gaining new business are many – and it’s an area you should not ignore. Did you know, on average, customers who have bought from you before, are more than twice as likely to buy a second time than someone who has never bought from you? This means – your existing customers are low hanging fruit and relatively easy to sell to. So what type of loyalty program can your business run?

There are as many types as there are customers. Choose how you want to reward customers first. An instore-voucher is always a good idea. This can be a percentage discount or a cash discount. These are great because they make it highly likely the person returns to you. If you make them transferable they can also be a great way of getting new business – the recipient can give it to a friend recommending you. What’s more, an in-store voucher is very rarely used at its value. A person with a £10 voucher is unlikely to limit his or her purchase to the value of the voucher, rather they are likely to use the voucher as part of a purchase bigger than they would normally make. Or, forget to use it completely.

Another popular approach is to give away a freebie. We all know the free coffee/hot drink tactic. For low-cost, high frequency items this can work a treat. And as with the in-store voucher, is the user likely to include the value of the voucher in a bigger purchase. Psychologically, we are prone to treating ourselves to something extra when we are getting something for free. That muffin seems very cheap when your coffee is free, doesn’t it?

A cumulative approach is another option. Let your customers earn points based on their spend, and set up rewards at varying levels. The psychological effect her is tremendous – the rewards do not have to be high value; what’s more is people are usually tempted to up their overall spend if there’s a freebie included.

If you already run a loyalty program, but it feels stale and old – sit down and have a think. How can you make it more exciting for customers? What rewards can you offer that will make customers eager to earn their points? Each approach has its strong points – choose the one that suits your business and your customers.

There are two main things you can expect if you run a well-functioning loyalty program; customers come more often and they spend more each time they come. Overall, this can mean an interesting increase in sales. Figures vary depending on your sector – but a sales increase between 8-33% is highly probable Read more