Loyalty programs business plan

Definition Customer loyalty is both an attitudinal and behavioral tendency to favor one brand over all others, whether due to satisfaction with the product or service, its convenience or performance, or simply familiarity and comfort with the brand. Customer loyalty encourages consumers to shop more consistently, spend a greater share of wallet, and feel positive about a shopping experience, helping attract consumers to familiar brands in the face of a competitive environment. Types of Loyalty To understand customer loyalty one must recognize there are different types and degrees of loyalty.

Loyalty programs business plan

Establishing Some Customer Loyalty In Your Business

However, discounting products for members is expensive and it is difficult to exit such a program once it is launched. An example of a successful discount program is Canada's oldest, best known, best loved reward program - Canadian Tire Money - often suggested as a replacement for the nation's weak currency.

Points Programs To avoid the negative connotations of discounting, many loyalty programs us a points "currency" to allow participants to keep track of their earned benefits. Typically, consumers earn additional points by buying goods and services from the issuing retailer and can include bonus products, bonus thresholds and partner opportunities Pros - The basic premise is simple for consumers to understand - Can be difficult to match because earning and reward thresholds can be easily adjusted - therefore can offer greater competitive advantage - Can allow more targeted, flexible and imaginative promotions loyalty programs business plan.

Well, they are alive and well and there are a number of lessons we can take away from these programs. The first being that the "one product fits all" approach is no longer effective.

loyalty programs business plan

This may be shocking news to some, and it doesn't matter what business you are in or the demographic of your customer; you do NOT need to treat all customers the same. Loyalty programs need to be designed with more targeted rewards; they need to communicate differently with different groups of members based on their value; and they need to provide greater value at higher customer value tiers, by rewarding best customers to encourage higher spending levels.

Both have multiple tiers of earning, with earning accelerators built into each graduated tier. Same true for the Neiman Marcus program, with the added benefit of catalogs differing by redemption level. You don't have to recreate the Neiman Marcus catalog to be successful, but we would suggest that you start discriminating among your customers.

Customer Recognition Inherent in the loyalty level tiers of private label programs is the idea of recognition - "I'm a Gold customer.

loyalty programs business plan

After all, it says that "I am important. How many brag about the fact that they are a Global Services member United Airlines' top loyalty tier or a "1K" flyer? The fact that you flew one hundred thousand miles in a calendar year, to us, is a badge of shame. But how many United Mileage Plus members wear that badge with honor?

With each loyalty tier comes increased recognition. That recognition can be very tangible e. For the frequent flyer, being able to board an airplane and hog-up all of the overhead storage space before any of the common travelers board, is nirvana.

Or being able to go through an expedited airport security line is heavenly. Don't underestimate customer recognition. And here we are talking about the intangible. What are you doing to address your customer's craving for recognition?

Remember, when airline Marketing folks said that they wanted to create a special line at the airport for their best customers, the airline Operations folks balked and said they were crazy. Don't take "no" for an answer.

Introduction:

Program Perceived Value Your gross margin is going to dictate how much you have available for investment into your loyalty program for both hard and soft benefits. One item to consider with your program design and execution is whether you want to, as a matter of principle, encourage redemption or pray for breakage.

A lot of programs cannot support redemption. Now, how's that building loyalty? Many Marketers don't ask the question. A survey commissioned by Maritz Loyalty Marketing reported that an overwhelming percentage of customers leave loyalty rewards programs because they grow tired of waiting for the points to accumulate.

According to Maritz, 70 percent of those polled cite the length of time it takes to accrue points. In the 18 to 24 age group, the percentage is even higher, 79 percent. It takes six to nine months of spending on average to accumulate enough points to redeem them for merchandise or to receive a gift certificate.

The survey focused on all loyalty rewards programs, but it leaned heavily on ones managed for card issuers. Customer Penetration In developing any program, set goals as to what you want each loyalty tier to do e.

By having clear cut goals, that will ensure that you are marching toward success. And in coming up with your penetration goal, keep in mind, not everyone wants to join a loyalty program. The balance of the population's interest ranges from very passive interest to active interest what we call the "junkies".

IF your program is introducing a credit card component to the program, use a penetration pyramid as a great tool to benchmark success in enrolling members into the card program. Set goals for program performance penetration, spend etc overall, and by loyalty tier.

The Case for Loyalty Programs

Experiential Awards For loyalty programs, the communications used to focus on tangible benefits e. These are the table stakes. Consumers are demanding more. Consumers have shifted from where we were leading up to the Internet boom; away from a desire for possessions to a desire for experiences or services that enhance their experiences.The Case for Loyalty Programs.

According to Hubspot, customer acquisition costs are up to 10x higher than marketing to existing ones. Loyalty programs can keep your current customers engaged and earn repeat business for your store or restaurant.

There are many types of loyalty marketing programs you can use in your small business. Here are 10 ideas that will help you give loyalty marketing a try.

Here are 10 ideas that will help you give loyalty . Hybrid Loyalty Programs The various types of loyalty programs we’ve already mentioned here, are just a broad categorization of what some companies have done. Businesses can feel free to pick and choose the aspects they think will benefit their sales and brand reputation.

Customer loyalty programs can be a gift and a curse. When done well, they can keep customers coming back for repeat purchases, potentially turning a passerby customer into a loyal brand advocate.

Gift Card & Customer Loyalty Program | BlueDog Business Services

When done wrong, however, they can be a huge waste of time and resources, becoming a tiresome burden for. The best eCommerce loyalty programs in supplements Run Everything Lab's Rewards Country of origin: United States Best part of program: Gamified VIP tiers Knowing that their customers are top tier athletes, Run Everything Labs designed their rewards program to make the whole experience exciting and competitive as well.

Loyalty programs abound, but most of them don’t accomplish much. If you want yours to perform, here are the five mistakes to avoid.

8 Reasons Why Loyalty Programs Are Imperative For Marketers - Marketing Land