Rethink Commerce Blog

Development Of Loyalty Programs Is A Win-Win

Posted on July 30th, 2015 by

Here’s a riddle for you. Name a marketing strategy that can boost a company’s growth, help retain customers, increase sales, provide valuable market research, and costs very little to implement? The answer is a loyalty program. An effective loyalty program can help you build a loyal customer base that will keep your company growing for years to come.

But developing an effective customer-loyalty program is easier said than done. In fact, a recent survey found that only 16 percent of organizations think that their loyalty programs are effective. When done right, your loyalty program will turn average customers into loyal brand advocates. Here are some basic guidelines for how to create and implement an effective and valuable loyalty program.

  1. Set a goal.

 Goals will differ depending on the nature of your business. Many loyalty programs revolve around usage: “Get this free when you buy this much.” That may work offline for something like coffee drinks, but in the online world, it’s likely to be not as effective for software companies.

Instead, think of other attainable, and more relevant, goals. For example, a customer-referral program could be one goal within your loyalty program. It encourages customers to promote your product, but doesn’t hinder their usage or make them feel pressured to buy more than they need. It’s a win-win for both you and the customer.

Think of ways to achieve bonus points. For example, customers could receive bonus points for “liking” you on social media. Avoid artificial advancement or giving out points for nothing. This devalues your program.

  1. Take advantage of ego.

 Everyone likes to feel like they are in the elite class. Instead of offering free products as a reward, structure customers into groups such as silver, gold, and platinum. As customers accumulate points, they advance to a new level and receive more perks. Competition is a powerful tool. Customers view their “status” as a tangible benefit, and one they would not want to lose.

Use their advancement as an opportunity to personally congratulate them and provide recognition via social media. The customer will love the added visibility. At the same time, you’ll be encouraging other customers to work hard to achieve the same status. Again, it’s a win-win.

  1. Be flexible.

 Keep your loyalty program fresh and relevant. Leverage usage data and metrics to determine how customers are using your product. Base rewards and levels on this data. One huge perk of a strategic loyalty program is that it provides marketers with information about what’s important to your customers.

Being responsive to your customers’ priorities will help you create an appropriate loyalty toolkit that will provide customers with rewards that they value and will give you access to new leads, additional revenue, and valuable market data. Be willing to shift gears if your loyalty goals are not motivating your customers.

Loyalty programs aren’t just for airlines, credit card companies, and retailers. SaaS companies can use them to build a solid customer base. Matt Hunckler from Verge summed it up well when he touted the benefits of loyalty programs, saying that they “allow you to build detailed customer segments, score customer value and automate actions that will drive true brand loyalty.” Create a program that will help your users develop loyalty to your application. You want them to feel invested in something that they don’t want to abandon. Accomplish this through a dynamic loyalty program.

Avangate powers modern Digital Commerce, solving the complexity of online commerce, subscription billing, and global payments for Software, SaaS and Online Services companies. Backed by a proven cloud platform, unmatched expertise and a depth of digital commerce services, Avangate helps digital business leaders drive the fastest path to revenue, maximize the value of every customer, and expand global reach. Contact us for more information about how our digital commerce services can help you grow your business.

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Raj Badarinath

VP, WW Product Marketing and Alliances

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Comments (2)

  • Lauren says: July 31st, 2015 at 5:08 pm

    I definitely have a greater preference to shopping at places with loyalty programs. Thanks for sharing!

  • Raj Badarinath says: August 10th, 2015 at 4:12 pm

    Glad you enjoyed it, Lauren!