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Designing Successful Customer Loyalty Programs in 2018

More than 65% of SMBs don’t possess customer loyalty plans. Frequently, these sorts of programs are noted as too costly, too complex, or too labor-intensive to design and manage. Plus, some company owners scruple to build loyalty or reward programs for fear that all these efforts and time may not traverse to higher profits.

It’s true: if not planned well, customer loyalty programs will not have a calculable net positive impact on your bottom line. A McKinsey research assessing companies with rewards programs discovered that those contributing more on loyalty either expand at the same rate as those who do not — or become even more overdue. Rewards programs seemed to be thwarting these companies’ growth, rather than supporting it.

That’s not to assume that no rewards programs accomplish. In fact, creating customer loyalty programs that serve need not be as onerous as one might think. Follow these steps to design a customer loyalty program this year.

Step 1: Figure out what a “loyal” customer seems like.

You may have your ideal regulars, but justly, not all clients are formed equally. In this situation, your loyalty program should be created for clients who make more profit for the business — not significantly the people who appear to be your biggest supporters. Customers who make the profit should avail the most from that value creation.

This is one big trick that various companies fall into. It’s a slip to reward clients either for the wrong reasons or think that all customers should be rewarded equally. For instance, someone who posts an exceptional review about your food on Facebook does not constitute the same value as someone who orders lunch from you every Monday. The latter case is a better investment of your loyalty rewards than the former.

Step 2: Design rewards that won’t put you in the red.

There’s a proper level of reward that must not surpass the value of what your client pays in. You wouldn’t give $100 rewarding a customer who only brings in $75 in the company, would you? Logically, this makes sense, but in practice, it can be difficult to determine how much value a client generates. A social media shout-out, while helpful, doesn’t put cash in your pocket. Be sure that you are creating your rewards structure in a way that isn’t going to confiscate your budget, one loyal customer at a time. Don’t think your budget can manage a penny more for these rewards? That’s where resource plan comes into play — there are infinite ways to scrounge up some spare cash from apparently nowhere with money already being used within the company.

Step 3: Make your loyalty program distinctive.

In a new survey of customer loyalty programs, 44% of customers stated that it would be simple to replace one rewards plan with that of an opponent. In their mind, customer loyalty programs were alike: they all combine in a flurry of commitments, discounts, incentives, and everlasting fine print.

To make your loyalty program thriving, design it around the singular customer. Discounts and rebates are lovely — and even more effective when set to resolve a particular pain point or deliver a personalized experience. Use someone’s shopping history and client data to foretell what they are going to want next. Predicting a person’s next demand makes it easy for them to be a loyal customer. You may design your rewards program to accommodate special life events: birthdays or anniversaries can all be events to reward loyalty with a nice discount.

Step 4: Make your rewards something your clients want.

Just as not all clients are created equally, not all rewards are deemed valuable to customers. Research has proved there are five parts to a customer loyalty plan that make it useful: cash value, redemption choices, aspirational value, relevance, and convenience. By aspirational value, we mean the aim “sexiness” of the reward: a discount on your utility bill doesn’t have the same boost of excitement as a holiday giveaway.

Bear in mind that creating a customer loyalty program that suffices these criteria is very hard — and can be very costly. Your plan does not have to include all of these bases, but it does have to have an edge over the crowd (step 3). Therefore, make sure your customer loyalty program at least measures up to (or, ideally, surpasses) that of your rivals in each of these five areas. You might even automate your rewards program through an email drive or app that syncs with your POS to make rewards easy, fast, and trackable.

Alma Reed is an author and researcher dedicated to enhancing productivity. She is deeply interested in areas such as time management, increasing productivity, and fostering healthy routines. Through her writing, she aims to assist people in boosting their job performance and attaining an ideal balance between work and life.

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