Loyalty Programs – Relationship One

When you think about Loyalty programs, you may think about the little key card that clutters up your keyring or fills up your wallet. Maybe you remember providing your phone number at checkout to receive coupons by mail. No matter how you’re enrolled, they all have a similar intent which is to garner support or allegiance to a brand, help improve customer interactions, and create a stronger relationship with you.

A Loyalty program is simply a give and take scenario. If you are thinking about offering a Loyalty program to your customers, you need to think about what you want to offer and what you expect to get back in return from your customer. Keep in mind how you could potentially use the data you collect for your marketing initiatives such as welcome and nurture programs and in-app promotions. Use purchase history as triggers in your programs and for social media interactions to stay in touch and in front of your customer to continually gather additional profile information. The key is to create the right program that is enticing enough for your customer to want to use and provides good useful information for you.

Are you thinking about getting into loyalty programs? Here are some ideas you may want to consider for both annual-based programs that require a fee and free program memberships.

  • Annual subscription-based:
    • Customer pays an annual fee to subscribe to the program
      • A free gift is given on the first and annual renewal to help offset the cost of the fee and give something back right away to the customer
    • Subscribed Customer receives 20% discount on the first and subsequent orders.
      • Discount is good on specific product types in the store. This is the main product type and the highest volume type in the store
      • Other items are regular price
    • When any item in the store goes on sale, subscribed customers receive an additional 5% off the sale price on any item on sale.
      • This entices the customer to look at sale items not usually included in their discount.
    • After the subscribed customer reach a specific sales volume on their account, they receive a $10 coupon off anything in the store.
      • The makes the subscribed customer look at items in the store that are not included in the specified items discounted with the program.
      • All purchases go to building back your purchase volume so you can reach your goal and get another $10 coupon!
      • This has both a give and take and its really exciting to get your $10 coupon and any other little gifts available for members that help make you feel better about paying that annual fee.
    • Free loyalty program memberships:
      • These are free to join but the freebies are few and far between… but we like free!
      • Customer provides personal information to Company to be used for marketing campaigns
      • Extra savings offered to members
      • Preview notices of upcoming sales offered to members
      • Birthday savings coupons sent during your birthday month
      • Seasonal savings are offered to members. Typically, something useful to the type of product typically purchased.
      • Free shipping on orders over a certain amount
      • Free samples if available for orders over a certain amount.
      • This option still offers a give and take without the fee.

Each of these types of programs are give and take but differ in the following ways.

Annual Subscription Based Program Free Based Subscription Program
Cost paid by customer to join Program Free to customer to join Program
Customer gives email address and phone Customer gives email address and phone
Free gift given to when joining and annual renewal Email confirmation given for joining
20% off your first and subsequent purchases Points add up
$10 coupon after each purchase milestone Member-only offers sent via email
Sale ads appear in your email Sale ads appear in your email
Free shipping offers Free shipping offers

Annual Subscription-based models are effective and show value to the customer if the fee is recoverable within the annual period. It provides your business the value of having a loyal customer. You are also likely to get more consistent purchase history with this method because the customer will want every penny applied to their account. They will be eager to provide their loyalty information on every purchase.

The free-based subscription programs are effective as well if the product is valuable to the customer and if member-only offers are available. These programs provide purchase tracking information if the customer uses their loyalty information when purchasing. You will need to make sure to keep value in the program after the initial sign up or you may not get much additional profile information.

I am a fan of Loyalty programs as long as I can see the value. If there is a fee associated, I have to weigh how often I need the product and what I will get back in return for paying the fee. How long will it take to recoup my fee? How available is the product and is there free shipping if I am not able to pick up? I also love samples as long as they are something I will use.

The Free programs I actually need to think about a bit longer. Both the fee-based, and free programs result in more emails in my inbox and pop-ups on my social media, but the free programs I may not see as much give from the business, so it really needs to be a product I love where I am willing to share my information.

Most of the time it feels like you have to make a quick decision on whether to join or not because you are either in a check-out line with people waiting or you are trying to wrap up an online purchase, so in my opinion, signing up should be fairly quick. However, if there is a fee, and I feel rushed, I will likely not sign up unless the value is easily explained and a nice free gift is included. Keep both options simple upfront, make sure you gather a form of communication at a minimum, and use the opportunity to put these new customers in an email nurture or social media campaign to gather more profile information over time.

If you have a loyalty program, and you’re looking for ways to utilize that data to enhance the customer experience, we would love to help. From touchpoint management to data management, customer journeys to nurturing, we can help turn customer data into actionable messaging.

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