Loyalty programs work; even the most cynical among us appreciates a discount or freebie now and then. But what’s the value for businesses? How does giving stuff away boost loyalty and actually result in greater customer value? And where to next? Once I’ve been hooked by your BOGOF chocolate offer, how are you going to reel me in and keep me coming back? Because there’s only so many chocolate bars I can eat. Is there a better way to do it? (Hint: Yes. Yes there is.)
Free things have value
If I don’t know enough about you – what you do, what you sell, why I should care (or give you my hard-earned dollars) then a taster won’t go amiss. Freebies are an excellent way to attract the newbies, the undecided and the frugal. No, you’re not going to hook everyone, but the chance at a free donut with the morning coffee is guaranteed to appeal to a certain demographic and isn’t a huge outlay if a lifetime customer is the potential prize. And because you know very little about me at the beginning of our relationship, a free donut is probably about as personal as I want things to be.
For a given value of ‘value’
I might hate donuts. I may not care that I can earn bonus reward points; I might never remember to spend my points anyway. I might be heartily disinterested in the idea of one free coffee after buying nine because I only drink coffee once in a blue moon. It’s obviously easier to personalize rewards to individuals once you’ve collected enough data to know what they like, but you can still offer a range of options before you’re at that stage. Change it up: gifts with purchase, discounts, points, exclusive access to shiny new things, VIP events – whatever works best to win you the type of customer you want. And you already know which customers are most valuable to you, because you have a CRM full of that data.
A brief psychological interlude
Give those customers surprises - customers love surprises
We all know that intrinsic rewards motivate actions better than extrinsic. Maybe I shop with you because I know I can pick up seven summer shirts for $45; I’m a money-saving demon bent on beating my budget, and I like feeling a bit smug about my thrift. You can throw me double reward points for shopping with you and I’ll accept them, but I won’t be buying stuff JUST to get those rewards.
We also know that unexpected rewards – surprise and delight – work wonders when it comes to motivating the jaded. While I might now be immune to your never-changing reward point offer, a random free item might make me sit up and take notice. How exciting to walk into the store and discover I can get seven winter shirts for the price of six! And free socks! Surprising, appropriate (you know I love my bulk clothing, so you’ve given me the perfect reward) and delightful – I am now even thriftier than before, so generally feeling pretty good about myself. Not to mention a wee bit amped at the prospect of future surprises.
And perhaps the simplest way to mix in a little S&D – don’t tell people when they’re due a reward. Don’t count stamps, don’t fill up progress bars in your app or update points in real time. Just reward people. If you want to get really wacky, don’t even tell them what they’re getting for their patronage. It’s a little bit like Christmas, and it totally works.
Make it useful, it’ll get used. Also make it easy. And convenient. Heck, just make it mobile.
One of the criticisms leveled at loyalty programs is that they don’t get used. Which is probably a fair call when we’re talking about the several single-stamped coffee cards you’ve got hidden in your desk drawer. But mobile loyalty is a whole different ballgame. People usually have their phones on them, and one phone can hold all the loyalty you care to throw at it.
On the business end, going mobile means you can collect a lot more live data than you can with a piece of card. You can personalize offers and rewards based on day, time, location, weather, past purchases – you know the deal – and a personalized reward is going to appeal more to me because it’s something I want, now.
Mobile is also super handy for those people who usually forget to get things stamped, or never remember to spend points before they expire. Now you can remind them to check in when they walk in the door, scan the app when they get to the checkout, or suggest products they can spend their points on when they’re in the appropriate aisle.
Bottom line: mobile's just a better way to manage loyalty. Personalized rewards - with a little surprised delight thrown in - is simply way more effective than throwing free chocolate at me (and everyone else) regardless of where I am or what diet I’m on today.
For a wee taster of how personalized mobile loyalty works in the real world, see how Plexure's helping Loyalty NZ master mobile loyalty with its Fly Buys app (Fly Buys is one of the most-subscribed loyalty programs in the world, with over 70% of NZ households on board). We think it's kind of a big deal - keep an eye out for the case study!