Customer Rewards & Loyalty Guide

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Customer Rewards & Loyalty!

We all want our customers to return to us. When they’re making a choice, we hope they would choose our business again over a competitor. In short, that they’ll be loyal to us.

To offer incentive for customers to return, many brands launch reward and loyalty programs. While programs may create interaction and/or gather information – programs alone don’t drive loyalty.

Building loyalty is a way of doing business. Providing a high-quality experience in all the places customers come in contact with your business.

Reward programs are typically based on games, points, and providing incentives to drive customers return and meet purchase thresholds. For example, “buy 10 get one free.” If customers behave as we wish – visit more frequently, increase how much they spend – we’ll reward them.

Loyalty programs are systems, tools, and applications that allow you to gather information about your customers and use that to enhance their experience.

Search Google and you’ll discover thousands of ideas for both reward and loyalty programs. You’ll find the terms Reward and Loyalty used interchangeably. This can be confusing. Especially since reward programs don’t drive loyalty. And, if we’re calling our reward program a “loyalty” program thinking we’re building loyalty – we’re doing the wrong things.

Important Note: Before we move on… LSMGuide has no affiliation with any of the products we mention. We share them with you because we find them to be good examples. Please explore different options for yourself (reading the fine print) before making selections for your business.

Okay, [MM_Member_Data name=”firstName”] let’s take a closer look…

Reward Programs

As we mentioned in the introduction, rewards are typically games, points, and incentives designed to make customers behave like we want: visit more frequently, increase average ticket. When they do, we reward them.

Reward programs are a good way to offer a bonus to those who already visit you frequently. Your heavy-user customers have probably asked about some sort of bonus or reward for coming in all the time. Punchcards

Most Customer Reward Programs offer one or a combination of:

• Card (or app) to scan at purchases to track points (or other spending habits),
• Freebies or discounts, or
• Emails or other notifications about specials.

Let’s start with a fairly well-known reward program…

The Starbucks Card

At its core, the Starbucks Card is simply a form of currency. You give Starbucks money in advance, and they hold it for you until you swipe your card to spend it.

Once you register your Starbucks card, you begin to earn “stars” for each transaction. Earn enough and you are rewarded with discounts, free drinks and free food.

This is a digital punch-card program. It rewards heavy users and creates a bit of status for regulars. In fact, the most frequent customers get the status of being given a gold card.

Join the email list and you’ll be alerted to new product launches, events, and specials.

Customers feel appreciated for giving business to Starbucks. Their star system encourages frequency and a bit of urgency – like airline miles – if you don’t earn enough you lose your status and rewards drop.

And, you get treats on your birthday!

Consumer Reports Rates Rewards Programs

Consumer Reports rated the most ‘rewarding’ programs in this article calling out the following brands. (Note they do call these programs ‘loyalty.’)

• Target REDcard
• JCPenney’s JCP Rewards
• Gilt Insider
• Gap Rewards Program
• Best Buy Reward Zone
• Macy’s Star Rewards
• DSW Rewards
• Amazon Rewards Visa card
• Nordstrom Fashion Rewards

They also rated Rewards Apps (Applications) they love…

• Belly,
• Front Flip, and
• Key Ring Rewards Cards (Not a reward program for a business, per se, but rather allows customers to store all of their plastic reward cards on their phone.)

Rewards Apps are pre-designed programs businesses can subscribe to and implement, making them accessible to smaller businesses.

Let’s take a look at the three above and a few others.

Reward Apps (Applications)

Here we highlight four programs we’ve found.

• Belly,
• SpotOn,
• Perka, and
• Front Flip

Belly

• Customers earn points and get rewards for being a loyal customer – i.e. tapping their phone or customer card to the iPad at checkout.
• Rewards are customized to the business.
• Allows email marketing / management to those loyal customers – targeted emails.
• Your business appears in a list of nearby Belly locations on the phones of customers who have Belly.
• After customers check in a number of times, they are prompted to review you on Yelp, so your most loyal customers are reviewing you.
• You can view / search through Belly Member visits in real-time. Name, email, time of visit, total visits, etc.

You get:

• a tablet running the Belly app
• Loyalty cards for your customer
• An account manager
• Email marketing / social media integration
• 41% belly email open rate (19% industry average)
• 15% clicks/unique opens (5% industry average)

Cost:

• $79/month = Nexus 7 tablet, 300 loyalty cards, account manager via email, and 1 email marketing campaign.
• $99/month = iPad Mini, Unlimited loyalty cards, account manager via email and phone, and 2 email marketing campaigns. Plus, you get access to customer’s email addresses, have Facebook and Twitter integration, marketing materials and detailed analytics.
• $149/month = all of the above + customer demographics and a quarterly consultation

SpotOn

• Same principle / set up as Belly: customized rewards, analytic tracking / organization of customers, integration with social media /email.
• Customers are encouraged to spread the word on Facebook (vs. Yelp in Belly) to earn extra rewards.

Perka

• Identifies each customer by name, photo and status (i.e. “was here yesterday”) so your staff can make people feel at home.
• A private customer feedback “line” via the app lets you address complaints before they become public.
• Check-ins and perks are posted to your customers’ Facebook feeds, spreading the word about your business.

You get:

• Every program is made to order. When you sign up, a Perka specialist will design a program tailored to your business needs and goal.
• Works seamlessly on every phone (not just smart phones). They use SMS texting to keep non-smartphone guests in the loop.

Cost:

• Pricing starts at $35/month for a Perka Punchcard (customers earn perks for purchasing a certain number of items) – best for coffee shops or counter service spots. You can also do Perka Flexpoints for $50/month. This program rewards customers by how much they spend (best for retail shops, sit down restaurants, etc.)

Front Flip

• Different from Belly, SpotOn and Perka in that this is more of a customer engagement platform.
• Customers with the Front Flip app scan a QR code at your location for a chance to win a prize (instantly).
• Encourages people to scan.
  • When they scan, you get access to their information so you can contact them.
  • Then, you can send targeted mobile gifts to these people. Reward best customers, reach out to people you haven’t seen in a while.
  • The prizes link with Facebook / Twitter so customers can boast about their freebies right away.

Reward Program Tips

Now, if you’re ready to create a Rewards Program for your business, we’ve put together a few quick tips to help.

5 Quick Tips for Creating a Valuable Rewards Program

Here are the basics for running a successful customer rewards program!

1. Offer an incentive to join.

It doesn’t have to be something huge. A free product sample, a discount on their purchase that day or a voucher for free lunch the next time they come in should do the trick!

2. Stick with a simple points system.

No need to get fancy – most rewards programs work this way (miles for airlines, points for credit cards). Assign a point value for each dollar spent, and keep track of your customer’s spending that way.

3. Next, add tiers.

What happens when someone reaches 100 points? What about 500? What about 10,000? Set attainable reward tiers so that all of your customers are able to get a treat now and again.

4. Make it fun!

Figure out a way to make a game out of redeeming points. Maybe every third time they shop, they can enter a raffle to win something fun. Or, if they are due for a reward, let them choose a reward at face value, or select a “mystery” reward that could be worth more.

5. Offer VIP promotions.

Exclusivity is attractive. If you offer certain promotions only to reward program members (like special events in-store or free shipping) you’ll be surprised how quickly you attract other members!

The bottom line is, you want your rewards program to stand out and be fun and easy for your customers to be a part of.

Earn Loyalty By Giving It

Loyalty is defined as faithfulness or a devotion to a person, country, group, or cause. A strong feeling of support or allegiance. We all want this from our customers, but are we offering it to them?

Are we faithful to them? Devoted? Do we support them and pledge our allegiance?

The secret to shift from rewarding customers to making them loyal is… to be loyal to your customers first.

Loyalty Programs

Loyalty, done properly, involves the full customer experience and understanding our customers by collecting information to use to personalize their experience.

Customer Loyalty Program serves the customer by:

• Providing superb, personal customer service
• Being empathetic towards a customer’s problems
• Serving the emotional needs of customers
• Tailoring special offerings based on each customer’s preference
• and yes, Rewarding their behavior too.

Loyalty is perceived as expensive, hard to implement and not easy to track, so we settle for rewards only. But it doesn’t have to be. Let’s talk about how your business can create a loyalty program that drives customer loyalty.

When you think about companies with loyal customers… a few names come to mind:

Apple – Highly trained professionals ready to help you with any inquiry or issue, no matter your level of expertise with unique and innovative products.

Nordstrom – They offer personal shopping services, and accept returns with no questions asked.

Southwest – They consistently respond to customers inquires or issues on social media, and do their best to right any wrong.

Zappos – Free shipping, free returns and super friendly, personal service.

Like A Good Friend

A good friend is loyal. They remember your birthday. They know your favorite color, your ring size, your shirt size. They buy you great Christmas presents that are a perfect fit for you – because they know you.

The Starbucks Card could be easily turned into a Loyalty Card if Starbucks used data to better understand customer likes and preferences at Starbucks.

For example, let’s say you typically buy a mocha or caramel flavored latte at Starbucks. Starbucks would know this from your purchase habits. The holiday season arrives and they send a personalized message to you announcing the Gingerbread Latte is coming soon! Or perhaps they provide you a cardholder-only taste preview of the new flavors Cherry Jubilee Mocha or Chestnut Praline Latte based on your preferences, not just what their promotion is.

Starbucks sees you purchased a Verismo brewer this past summer. Knowing this, they could email and offer for a trial pack of the holiday blend pods. Starbucks benefits in creating a sampling opportunity of these coffee flavors, and may drive an incremental visit. But, the real reward is being highly relevant to customers.

Like that loyal friend, they would understand customers enough to know what they like and prefer.

You first identify what you have in common (they like ice cream, you sell ice cream), then you show interest in them (how can I make you happy?), and continue to nurture the relationship by building a bond over time (if you value the relationship don’t be afraid to show it!).

Loyalty: The Experience

It is important to be clear about what you offer – and not just the product but the feeling of your business. Are you a spa that offers “heavenly bliss” (ahh, I can visualize relaxing already) or a gelato shop offering “hand-crafted, authentic and creative floral flavors”? (I have got to try it!). Your message needs to tell the potential shopper what to expect. When you used to love to call Aveda Spa and hear them answer “It’s a beautiful day at Aveda” – it made you want a beautiful day too – so there was a match! Shopper and Buyer – on the same wave length!

But communicating what you offer is more than words – it has to be part of the DNA of the experience a client has with you. Do a quick test when you walk in a shop – stop in the doorway and just feel the vibe. It really does start here. Does the atmosphere feel welcoming and positive? Or is it exciting and high energy? Clients are looking not just for products, but places that feel the way they see themselves. If you are on the same wavelength with your potential customers, you are off to a good start!

When browsing a shop you are usually (hopefully) asked “is there something you are looking for?” Even if a consumer has a specific need, you can impress them by fulfilling a desire for something new; by entertaining them with an experience; or by introducing them to a product that will make their life better (even if they didn’t know they needed it yet).

Most of us have a place we go to “check out what is new”- even if buying is not the immediate goal. Be interesting to your clients! Be inspiring! Be engaging! Be irresistible!

And let’s not forget the human element in all of this. You know you have to match the product – the customer- and the vibe, so don’t forget about the team you put out there to serve your clients. Their presence should enhance the atmosphere – they need to fit right in! Selecting employees that have a naturally inquisitive nature is a good start. Find people who are interested in other people, curious about products, and who will want to share their discovery. Their energy will make all the difference! When you find them they will become your biggest asset – they are the individual who will quickly build an inventory of repeat clients, know their names, their tastes and interests. When they are engaging, your customers will come back just to see them and share a moment that feels more like having fun with a friend than the daunting task of shopping.

Loyalty: The Communication

All relationships need tending. We live busy lives, so staying in touch is important. A gentle reminder to come back and visit is usually well received. Train your sales team to call personally, text or send a personal, individual note when appropriate – “the workout pants you wanted have arrived”; “we just took markdowns on the tableware you were eyeing”; or simply “we miss seeing you – please drop by our wine and cheese night this week!” Let the client know you value them and that they add to your business with their presence!

And celebrate special occasions. Don’t you love getting Birthday emails and offers from those businesses that know your birthday?! This little act of generosity can go a long way to build loyalty.

Companies Doing Loyalty Right

You’ll see the brands pay attention to the entire experience, and on top of that, gather information about their customers and apply that knowledge to further enhance the experience.

Ritz-Carlton hotel staff take notes about guests preferences – likes and dislikes – from choice of wine to how many pillows preferred, and they tailor the guest experience accordingly.

Starwood’s W Hotels have systems to document customer preferences. For example, if a guest expresses a love for a certain sports team, the Welcome Desk staff from property to property will provide a game schedule and list of local channels so the guest may watch the games.

And then there’s the Gold Standard in Loyalty Programs, the one everyone looks to as best in class…Harrah’s.

Between 2000 and 2010, several luxury casinos were built in Las Vegas, most notably the Bellagio (cost: $1.6 billion) and the Wynn (cost: $2.7 billion). These properties had the resources to create a luxury experience for every guest, and to bring in big name chefs for their restaurants. Harrah’s (which only cost a paltry $315 million to build back in 1973) simply could not compete with the amenities of these new luxury casinos.

Amenities aside, the games at every casino are the same. So what causes customers to spend more money at one place versus another? Customers must be loyal to one casino or another for reasons outside of the gaming.

So, what was Harrah’s to do? They couldn’t start from scratch to renovate their building or add fancy restaurants. They had to work with what they had.

So, they began measuring the overall Harrah’s customer experience to figure out the key drivers of customer loyalty. They rewarded property management and staff for creating exemplary customer experiences, and began tracking the spending of their customers. Then, they identified and ranked their most profitable customers and learned about their likes and dislikes. They made sure these top spenders never had to wait for service. They gave them free tickets to shows, special reservations at hot restaurants, and they even comped their rooms once in awhile.

Soon, Harrah’s had become the Gold Standard for customer loyalty programs in the casino industry. Today, the Total Rewards Program earns Caesars Entertainment $6.4 billion per year from over 10 million members across 40 properties.

This creates a fantastic loyalty program across the largest network of resorts and casinos – there is seamless integration for rewards across these properties, so rewards members never have to worry about being taken care of.

While these are more elaborate examples, there are ways for small businesses to do it too from Low Tech options to a great new digital option, Swipely.

Low Tech Loyalty Program

You could launch a system tomorrow for the price of a stack of index cards and file box.

A coffee shop we used to frequent in Jacksonville, Florida would store customer buy-5-get-one-free punch cards in a 3″ x 5″ index card file box. They would also make notes about customers on 3″ x 5″ cards. While this manual system sounds archaic… it was cheap, quick, and allowed any employee to access information in moments. Organized by first name, they also learned our names much faster, making it a more personal experience.

At Talbots in Alexandria, Virginia, one of the store’s keys to success is a low tech system of connecting with key clients. The Manager and each person on her team have a key client list they call on a regular basis to update them on things they know will be important to the client, not what’s important to Talbots’ latest sale.

They also have a Birthday Binder. Another personal phone call is made to each client in advance of their birthday to say Happy Birthday and to invite them in for shopping, and to take advantage of their birthday discount.

Did you hear that? Phone calls! Not emails. Good old fashion one on one connecting.

Let’s check out Swipely.

Swipely

We feature Swipely because it is the only program on the market we can find that works this way. As more enter the market, we’ll update this guide!

Swipely

Swipely is a service (compatible with every major POS system) that transforms your cash register into a “marketing machine.” They “simplify what used to be a very complicated process.”

Swipely takes info from credit cards that are processed to identify customers and organize their analytics. Who are your top customers? What do they usually buy? What time of day do they usually come in?

All for the cost of about the same as standard credit card processing / month.

For a restaurant, Swipely will integrate information about server / staff sales, popular items (menu or otherwise), what times are busiest, what items are the best selling, etc.

In addition to other analytics (similar to the other reward program apps), the daily Marketing Journal gives you a snapshot of your business to see things like, sales, repeat business, online reviews, social media activity, weather, etc. to get a better understanding of your day.

This is a more advanced way for small businesses to start to track the behavior of your customers and drive loyalty.

In Conclusion…

If you want to drive long term loyalty from your customers, consider the programs you now have in place, and what needs to be added to first be loyal to them!

More than simply rewarding frequency or ticket, whether you use high- or low-tech tools, loyalty comes from understanding and being loyal to your customers.