How to Make the Most Effective Loyalty Programs For Your Business

Loyalty programs when done right are one of the most powerful incentives for returning customers. On average, consumers spend 46% more with businesses that have a loyalty program. The statistic makes sense. Why buy your shampoo and body wash from one store when you’re just 300 points away from earning $10 on your Shoppers Drug Mart Optimum card? Plus many retailers and businesses are now using mobile apps to alert users directly for special promotions on specific product purchases or on minimum dollar transactions.

For example, Shoppers Drug Mart’s app will notify users about their “20x the points if you spend over $50”. The latter is a perfect example of a rewards program that has effectively earned one of the largest customer loyalty databases in Canada. Loyalty programs incentivize shopping habits and increase the ability to target segmented customers.

In fact, Canadians are one of the largest consumer groups that love their loyalty programs. According to market researcher Brandspark International, “Canadian consumer engagement remains strong across the board. More than 9 out of 10 Canadian consumers participate in at least one loyalty program.” Some of the most successful loyalty programs are the ones that effectively target audiences based on their behaviour and lifetime value. Simple loyalty programs with easy-to-use programs and point redemption are the ones customers will trust in the long run.

Are you considering starting a loyalty program for your small business?

Before you get started with mapping out a points structure and potential rewards for your loyalty program – take the time to learn from your larger competitors. Educate and immerse yourself about successful loyalty programs, like Shoppers Drug Mart’s Optimum Points or Loblaws PC Plus Program, which had earned them the type of loyalty every small businesses strive to attain.

However, large loyalty programs may not function in the same way for small businesses. So, here are some things to consider when creating your loyalty program:

1. Think long-term

As exciting it is to introduce new elements to your business, don’t rush into the launch of your loyalty program. You only have one shot to make a first impression — and customers can be very unforgiving if it goes awry. To prevent backlash or negative sentiment, take the time to establish a loyalty program that works for your business. Take into consideration, your customers, expenses and sales. Make sure it’s something you can afford and easily manage in the long term.

2. Determine what type of loyalty program you want to offer

Do you want to offer a points structure that gives customers the ability to earn money back to spend in the store or towards a free added product? We see these type of programs everywhere. For example, buy 5 and get the 6th product free. A point structure such as the Shoppers Drug Mart points system to earn money to spend on future purchases in the store is more complex and would require a significant system to track and issue points. Including a process for customers to turn to if they have any disputes or issues with their points.

3. The program should be aligned with your customers’ needs

Consider why your customers visit your place of business and what they are purchasing regularly.  Look at demographics, geographics and shopping behaviour trends to cater to their needs. Make this the highlight of your program. Attract customers with special promotions aimed at their preferences to increase their lifetime value.

4. Make it easy

People making purchases are typically out on the go. There may be a line up behind them or they have too many cards already.  Keep your program simple, user-friendly, and the signup process short and sweet.

In addition to giving back to your customers, a loyalty program is an excellent way to market your brand and obtain customer contact information for future marketing campaigns. These simple steps can help ensure that your loyalty program is a win-win for both your business and your customers.