How to build a loyalty program for your business

customer-loyalty

Trust and loyalty are two of the biggest factors in capturing and maintaining customers—and that’s because trust and loyalty go hand in hand.

Building trust with your customers gives them the confidence to engage with your site, loyalty is what keeps them coming back for more.

We’ve spent a lot of time talking about what you can do to earn customer trust, things like:

If you’ve checked these things off your list, then you’ve most likely gained your customers’ trust. Now it’s time to earn their loyalty.

By building a loyalty program (a.k.a. a rewards program), you can create a set of loyal customers who will continue to drive the success of your business.

Why should you have a rewards program? It’s simple, really.

Rewards programs create loyal customers. And loyal customers — well, there’s a reason you get a warm and fuzzy feeling when you hear that phrase.  It’s because…

Repeat customers are super valuable.

How valuable?

Well, consider three facts.

  • According to Collect, which provides marketing tools to retailers, repeat customers tend to make up only 20% of a typical business’s base, but amount to 70% of revenue!
  • If you’re worried about the cost of these programs, Inc. found that it costs anywhere from 5 to 10 times more to acquire a new customer than it does to sell to a repeat one.
  • Bain & Company found that retaining just 5% more of your customers can yield more than 25% higher profits — sometimes as high as 95%!

With that in mind, let’s talk about what you need to know to set up a successful rewards program.

1. Choose what actions you’re going to reward

In the old days, rewards programs were pretty much all in the same game: spend enough money here — either through a number of visits or “points” collected — and you’ll get something free (or at the very least, a discount).

And just because this is old-school doesn’t mean you shouldn’t consider it. After all, there’s a reason it’s stuck around this long: people love getting free stuff.

But in our brave new digital world, there’s so much more to reward. And though this may seem hard to believe, some of it could be more valuable to your business than simply getting people to buy 10 times.

So what are we talking about?

Honestly, it can be anything that will benefit your business.

A. Looking to improve your email marketing (smart — email marketing is still the most personal way to reach customers)? You can reward email registrations.

How? Add a pop-up window to your homepage and offer a special discount to those who sign up for your email list. Try out the Pop-Up Window app on Shopify. See the below example.

B. Eager to show off your beautiful products? Incentivize people to follow your social media accounts (especially Instagram).

How? Offer a deal to those who follow and share your social media pages. Try the Social Coupon Popup app on Shopify.

C. Want to get the word out about your business? Many companies reward referrals, because new customers are so hard to find.

How? Encourage people to share your business with their connections. The Swell app helps you create a number of reward options for customer referrals.

2. Choose what your reward is going to be

The most common way of doing this is simply assigning a value to a given action — the classic example being the sandwich store where you buy 10, get your 11th free. Essentially, that sandwich store has decided that giving you a ~9% discount on every sandwich is worth your continued loyalty.

In a more complex example, website owners will provide points to certain actions, and then redeem those points for certain rewards. This is more complicated than the sandwich store because it requires you to place value on things that you’re going to have to guesstimate the value of. How much is a referral worth? What about an email registration?

Another example is to reward your customers immediately after they make a purchase. With McAfee SECURE’s Identity Protection service, businesses can reward

These are all highly specific to each business, so it’s a choice you have to make for yourself.

Pro tip

Your reward doesn’t have to be a free product (although people love free stuff). Instead, whatever action you’re rewarding can be used to redeem smaller, “bonus” things — like expedited shipping, or early access to sales. You can even reward your customer by giving them access to a special service, like Identity Protection, which builds ongoing trust and loyalty.  The possibilities are endless, it all depends on how you want to play it.

Whatever the offer may be, make sure it’s easy to redeem. Offers that are near impossible to use can cause a customer to lose trust in your business.

3. Make it feel like a game

Take a look at that screenshot below, from Dropbox’s ‘get more space’ page. While it’s not a traditional rewards program (there are no points to be earned), you do earn storage space—their core product—by completing various tasks that benefit both you and the company.

Get More Space
(Source: 9 to 5 Mac)

The best part about this is that it feels like a set of tasks to complete. A game if you will. 

Here’s what their 250MB “Get started” tour looks like (after completion):

Dropbox more space

Again, it’s a list of simple tasks for you to complete, and like any good game, there’s a reward at the end.

Part of what makes gamification work is that your customers will know what they’re getting at the end, and they know what steps they’ll have to take to get there. This creates an honest and trustworthy experience for the user.

And, like any good rewards program, what makes it work for you is knowing how much you’re willing to pay for each of these actions. For Dropbox, giving someone 250MB of free space is worth it if they invite another person to Dropbox that can be potentially upsold to. The trick of the business is determining what that number is.

Conclusion

By building a loyalty program that is straightforward and trustworthy, you are making your customers feel valued and giving them added confidence in doing business with you. Having earned their trust will allow them to feel more comfortable in participating in your loyalty program.

It may seem like a lot of work, especially if you have to do it all on your own. But don’t worry! You likely already have a number of the trust factors in place, and you don’t need your dev to do tons of work to set up a loyalty program.

Many common website and ecommerce platforms, like Shopify and Weebly have highly customizable apps that let you reward exactly the behaviors you want — from purchases to email registrations to Facebook likes.

Some of our favorites include Sweet Tooth and Swell, but there are many great ones out there, so poke around and find one that fits your needs.

[ts_activate_ip]