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Everything you need to know for successful loyalty programs

2021/02/18
By Nadine Hashem

Beside your regular customer service and food or products, loyalty programs bring back customers for more purchases.

 

Following a successful loyalty program helps you in different ways:

 

 

Retain your existing customers

 

It’s followed and trusted way to ensure customer loyalty and repeated orders. It also affects the purchasing behavior of the customer and gets him into spending more in your restaurant or retail to benefit from the offered rewards.

 

Gain new customers to turn them into loyal ones

 

Word of mouth is still powerful and loyalty programs are very likely to create echo from a customer to the other and eventually bring new customers to your door. In addition to the advertising related to your loyalty programs that will reach new customers and turn them into loyal ones.

 

Collecting database of your customers

 

Whenever your customers sign up for a loyalty program, you capture date about your customers that you didn’t have otherwise. Location, age, birth dates are all data you can use to create more effective loyalty programs depending on your customers.

 

“4 Restaurant Loyalty Programs That Really Work”  article highlights the need to collect information that you will need in creating your program or in your operation. Use the information collected towards targeted campaigns and offers.

 

 

For example, don’t collect their birth dates if you are not planning on rewarding them on that day.

 

Don’t collect location information if you’re not going to use it, for example to open a new location later on and you need to have information on your clients’ habitat.

 

 

 

Types of reward programs:

 

Point system

 

The famous points system is followed by many restaurants and retail shops.

The concept is simple and easy to follow by customers.

 

For example, for every $5 customers spend they earn a point.

 

Once they reach a certain number of points, they can redeem them for free drinks, free food or free products.

 

 More points means more free items. For 20 points customers spend they get a free burger or a free coffee or a free soft drink. For 35 points they get a burger with fries or 2 burgers or maybe a free croissant with free coffee or tea.

 

Chipotle mexican grill restaurant's in USA reward system is a great example of points system where customers collect 10 points for every $1 spent. After collecting 1250 points they can start redeeming them for free chipotle.

 

chipotle rewards program, the more you spend the more you earn

 

If you own a supermarket or a retail shop, create the same reward system and let your customers enjoy free products such as kitchen utensils, cleaning products or free groceries.

 

 

 

Cashback

 

Whether you own a retail shop or restaurant, you can create a point system that rewards customers in cashback.

 

The more money customers spend the more points they get. More points means more cashback they can spend in your shop or restaurant.

For every $1 spent, customers get a point. Collect 100 points and have $10 cashback.

 

For every 200 points, they get $25 cashback.

 

Set a realistic expiry date for redeeming the cashback giving them enough time to redeem their points.

 

A paid program

 

 

Give your customers who spend above a certain $ amount, the chance to enroll in a paid program where they pay annual or semi-annual fee in return to special free services.

 

You can call it a VIP program.

 

If your customers for example spend $10,000 annually, offer them a chance to enroll in the VIP program paying an annual $50 fee to get free special services.

 

These services might include free delivery, preparing their orders or groceries free of charge, exclusive offers and discounts on products for the VIP card holder, free car wash while they shop or eat and free wifi.

 

Make sure the offers are exclusive to the VIP card holders or it won’t have any value.

 

Remember that this kind of reward system is for existing customers and frequent buyers.

 

To know which products to discount, collect these customers’ purchases information from the POS.

Make sure to choose products that interest them.

 

Tiers program

 

Unlike the collect and earn reward system, a tier program puts customers into categories depending on how much they spend.

 

Let’s say you divide the program into four levels or tiers, silver, bronze, gold and platinum. The more customers spend, the higher their ranking will be.

 

Each tier comes with special benefits to its members.

Silver and bronze members can double their points when purchasing while gold and platinum can triple them

 

Silver members’ points expire in 6 months, bronze in 1 year, gold in 18 months and platinum in 2 years.

 

Set welcoming points when being part in the tiers.

 

Silver members get 100 points, bronze 150 points, gold 200 points and platinum 300 welcoming points.

 

Offer different tiers members different birthday vouchers.

 

$20, $35, $50 and $75 for silver, bronze, gold and platinum.

 

Offer different tiers different gifts. The higher the tier, the more valuable the gift.

 

Remember that tier program is not for all your customers, rather it’s intended to reward customers who spend the most.

 

Let’s say 40% of your income comes from 10% of your customers, the tier program is to reward these 10% customers.

 

Offer tiers’ members special discounts on certain days like holidays and birthdays.

Starbucks USA is also an example of how tiered program is applied. 

 Starbucks loyalty program puts customers into different tiers depending on their spending

 

Referral program

 

 

Reward your customers for referring you to their friends and families.

 

Get a $20 free coupon for referring a friend or $50 for referring 2.

Offer 20% on their next dinner or purchases when referring a friend.

 

Draw lots for a chance to win

 

 

Reward your frequent customers by enabling them to participate in a draw for a chance to win a valuable prize.

 

Spend $100 on your bill to participate once.

Spend $200 on your bill to participate twice and increase your chances of winning a big prize.

 

 

Birth dates exclusive offers or discounts

 

Send your loyal customers text messages on their birthdays or a day prior to their birthday to reward them with a 20% discount on that day or with a free dessert.

 

Give them a chance to double or triple their points on that day.

 

Urge them to spend a certain amount of money and instantly win a gift voucher.

 

 

Keys for loyalty programs’ success

 

Know your customer purchasing patterns

 

Use data collected from your POS to analyse your customers’ preferences and choices to make sure that you reward them on something they actually like and use.

 

In addition, use this data to know what loyalty program works with your customers.

 

For repeating orders, points system works best.

To increase money spent by each customer, go for a tier program or paid program.

 

You can also have different reward systems like points system and paid program.

 

Promote your loyalty program

 

Use email marketing, text messages, online platforms to announce and promote your reward programs as Angela Prilliman explains in her article “6 Foolproof Ways to Promote Your Customer Loyalty Program“.

 

Make it appealing and valuable to customers so they are encouraged to engage.

 

Remind them constantly with your loyalty programs, send them text messages to remind them to redeem their points or to inform them about special discounts they can get on certain days.

 

 

Collect feedback and measure the outcomes of your programs

 

 

Collect customers’ feedback on different loyalty programs and engage them at the same time.

 

You can schedule staff calls or make short surveys to know your customers’ feedback.

 

At the same time, measure the outcomes by tracking sales from POS and how beneficiary members of loyalty programs are increasing their purchases or repeating their orders or benefiting from the offers.

 

Since loyalty programs are a bit tricky when it comes to calculation needed especially with points that expire, a loyalty program should be digitized and integrated in your POS system because it eventually gets processed through a POS similar to  BIM POS  masterdine POS solutions that offer integrated loyalty programs simplifying the whole process for you.

 

Customers appreciate reward programs. It makes them feel special and creates a bond between you and them.

 

Design the reward program that best suits your objectives and let your customers enjoy their business relationship with you.

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