Whether you’re launching a new loyalty rewards program or have an existing program you haven’t overhauled in a while, it’s worth putting the time and effort into choosing meaningful rewards that make sense for your business. In particular, you want to make sure your rewards are not only enticing, but also creative and reflective of your business’s personality. After all, the whole point of a loyalty program is to build genuine loyalty among your customers and keep them coming back on a regular basis. Do that successfully, and you’ll see a clear benefit to your bottom line. As you can see in this loyalty infographic, a meager 5% increase in customer retention can elevate profits by anywhere from 25% – 95%. With that in mind, here are 4 tips to selecting loyalty rewards that work.
What Not to Do
First, let’s talk about what types of loyalty rewards to stay away from. First on the list is cash rewards. While cash might sound like an enticing reward to offer customers, the perceived value of your products or services is actually higher than their actual cash value. Offering something as simple as a free soda, for example, can be a cool little incentive for visiting, whereas rewarding a customer with $1.25 in cash sounds almost silly—cheap even.
Likewise, stay away from in-store credit, which requires customers to perform conversions. If a customer has to do math to convert loyalty points to monetary value and then figure out which products or services of yours they can purchase with that store credit, you’re going to lose them. Keep the rewards structure simple: X number of points = Y reward.
Last on our list of what not to offer is products or services that comprise your main source of revenue. In other words, don’t be giving away something that’s already selling well and making you money. Your customers are already coming in to buy whatever that might be. Your rewards should be something to add on top of that and make their experience even better.
Take a Tiered Approach
The rewards you’ll want to offer will vary based on what type of business you run. As a general rule-of-thumb, if you have high average ticket price, you’ll want to offer reward points based on how much your customers spend. Otherwise, it probably makes more sense to offer reward points based on how often your customers visit.
Whichever point system you go with, one strategy remains the same: you want to offer different tiers of rewards. Specifically, you want to offer an easily attainable reward that customers can earn with only a few visits, then a reward that will require a bit more dedication and loyalty as a customer, and lastly a top-tier reward that only a handful of your VIP customers will earn.
Taking this tiered approach ensures that your program will appeal to customers across the spectrum, from casual visitors to your die-hard regulars.
Offer an Enrollment Reward
One of the biggest challenges with any loyalty program is getting customers to sign up in the first place. A great way to do this is offer an enrollment reward. Really, it’s just an extension of the tiered approach where you’re basically telling your customers, “all you have to do get your first reward is sign up!” This should be something small and enticing, perhaps a free add-on or a small 5% or 10% discount to their order.
The key to building true loyalty through your loyalty rewards program is to offer unique rewards that embody your business. Our example above of offering a free soda fails badly in that regard. That’s a boring reward that a million other businesses offer. However, if your business creates hand-mixed Italian sodas, then offering that as a reward makes a lot of sense because it ties into your identity. That’s the strategy you want to take with getting creative. Look long and hard at what you offer customers and look for opportunities to showcase products or services that are meaningful without requiring a huge monetary or time investment.
To help you get creative and identify creative rewards that might make sense for your business, here are some reward ideas you can use as a starting point.
- Free, low-cost, product, service, or upgrade that is unique to your business
- Free swag such as a t-shirt, hat, or bumper sticker—if it has your logo or business name on it, it doubles as free advertising!
- Exclusive access to a limited-supply product or service that conveys a sense of exclusivity to your best customers
- Getting to name name a product or menu item
- Getting their picture on a wall of fame, or otherwise giving your VIPs some sort of recognition
- Invitation to a VIP special event, such as an after-hour party, or an early opening for seasonal items
These ideas are just a general framework to play around with. You’ll want to make sure to offer multiple rewards using a tiered approach and then, of course, put your unique stamp on them. If you’re running your loyalty program through SpotOn, please also know that we’re here to help. We have a dedicated Customer Engagement Team that is here to help you brainstorm ideas for your program and implement it to perfection, at no extra cost to you.