Customer loyalty programs are designed to maintain the repeat purchases from the same customers over and over again. Today it is not just about acquiring new customers but also making sure that the existing customers return for purchases. This is how the businesses boom. If you are able to generate loyalty, you will be able to generate recurring purchases and also more word of mouth which will help you make new customers as well. But customer loyalty programs may not always come as a blessing. They may turn out to be a bad investment too for your business.
If done in the right manner and if it gets great feedback from the customers, you can expect a lot of benefit for your business. But if it fails, you may end up losing a lot of money, time and customers as well. Despite the risks, customer loyalty programs have been around and some have been very successful too.
Give your customers a head start
Your customers need to see the incentives even before they actually get it. Create a loyalty program where they get a part of their task already completed before they have to start it. For example, if you are running a home delivery food joint you can give a coupon with every order and once the customers have collected 5 coupons they can get a free meal worth some amount. But there is another way to do it which will be more effective. With the first order you can give three coupons and the customers will need to have total of 8 coupons to get the same free meal. In both the cases you will have the customer make five orders before he gets a free meal. But in the second case, you gave the customer a head start which will psychologically make a huge difference.
Customers should be able to see the clear goal
Customers should know exactly what they will get as the customer loyalty reward. As in the free meal example, customers would know exactly that they will get a free meal worth some amount. Many customer loyalty programs fail because the clear cut goals are not set. You cannot be abstract about what you are offering. You cannot say, “Make five orders and you will get something exciting.”
Customer should be clear about what they need to do
Taking the free meal example again, customers will know clearly that they will have to purchase 5 more times from you before they get the free meal. You cannot tell the customer that, “keep ordering and we will offer something someday.” You can give the customers referral rewards too, such as, “Get two friends to order from our joint and get a meal free.“ Personal referrals and word of mouth can generate more business than traditional way of promotion.
Customer loyalty programs can prove rewarding to the business owners when carried out in the right manner. However, they can result in losses when executed in the wrong way.