Creating an Effective Loyalty Program

Most business owners or managers understand the need for repeat business and how important it is to look after existing clients. But research shows that good service may not be enough, so they turn to incentive, loyalty, recognition, or thank you programs to ‘reward’ clients for their business. 

However often they will implement ‘loyalty’ or ‘incentive’ programs for their business or organisation and focus solely on the reward itself but really they need to look first at what performance they are trying to improve and the way they will communicate the incentive before actually looking at the reward or recognition on offer.

In a recent interview on the Marketing Strategy Show with Julian Khursigara from Blackhawk Network, we discussed this and a ‘framework’ for implementing a Successful program as well as changes in Loyalty & Incentive Programs.

1. Performance

  • It’s important to establish this first so you can assess the results
  • What performance levels are you after, what are the activities you need and what are the habits you want to create
  • When thinking of performance through the lens of an incentives program the most important thing to focus on is setting the right goals
  • A lot of businesses face issues when creating their loyalty / incentive programs as they will focus solely on the reward without taking the time to think what performance they are trying to change, what outcomes do they want to achieve with the loyalty program
  • A critical part of improving your performance or increasing customer awareness is planning. Take the time to jot down thoughts on a whiteboard and carefully consider all potential options before taking action on anything.

2. Communication

  • Having the best program in the world won’t help if no-one sees it so how you do this is critical
  • Looking at communication via incentive / loyalty programs you need to think about how you can stand out
  • The data you have on people is also very important for the communication to them
  • A great example of using this data is with Dan Murphy’s loyalty program, where they have years of data on every person who has registered with them, so they can then send them tailored emails with drink specials that the customer would be interested in, for example if a customer always buys vodka whenever they make a purchase sending them specials that are running on vodka is a great way to communicate as the special you send them feels relevant rather than just sending them a whole catalogue
  • You also need to consider your method of communication;
    • Will it be emails
    • Targeted advertising
    • A mailing campaign
    • Videos
    • Communicating via social media
  • This is an area where lots of businesses suffer. They know what performance they want to change or what outcomes they want to achieve as well as what rewards or incentives they want to offer but don’t know how to communicate this to their clients and customers or they haven’t put the effort in to communicate the program features effectively

3. Rewards

  • This is the third piece of the puzzle. What will motivate the particular audience you need?
  • The reward doesn’t necessarily have to be monetary or financial gains. It could be something as simple as recognition for your frequent customers or highest performing staff
  • Soft benefits are rewards like priority service, advance communication, training and “insider tips”and hard benefits are things like tickets, travel, gift cards or merchandise
  • A great example of soft benefits are in the hotels and airlines industries. When you book at a hotel they store the data on the type of room you like and other preferences. Great proof of this for Julian was when he went on a trip to Melbourne a while ago he asked for some green tea bags for his room as there wasn’t any, and when he returned to the same hotel on a separate trip there was 10 green tea bags in his room, along with a coffee machine and a water kettle so it showed that the staff had taken the extra time to provide Julian’s room with added extras that he personally liked
  • When looking at rewards it doesn’t necessarily have to be a very expensive endeavour, but it needs to be be seen as a thank-you by the client.

Changes in how Incentive & Loyalty Programs are run now

  • With the changing technology, the explosion in popularity of social media and the growth of programs and software that save you massive amounts of time, the way companies run loyalty and incentive programs has definitively changed.
  • Software has also caused changes to the way incentive and loyalty programs are run, in the past it would take  a long time to organise mail outs, work out how to contact people and draft emails / design any accompanying material but with the growth of CRM’s automating and building or finding great templates to use has never been simpler.
  • if you are promoting a program with digital marketing  you need to ensure that the final product looks good across all devices including phones, laptops and tablets. Consider the fact that 10-15 years ago not everyone had a mobile phone with internet capabilities and when developing an incentive / loyalty program.
  • Social media has also influenced the way loyalty programs are run as this is the place where many people spend a lot of their time.  So consider how to integrate Social Media into your Customer Loyalty Strategy .

If you need any help with a Customer Loyalty Strategy or ideas on building long term relationships with your clients don’t hesitate to give us a call on (02) 9125 0520 or visit our contact us page and book in an obligation free consultation.

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