Rethink Commerce Blog

Making the Most of 2018 with a Digital Loyalty Program

Posted on January 19th, 2018 by

You don’t have to be Starbucks to have a killer loyalty program that customers love, even if it doesn’t feel like that.

Digital goods and services often feel like they get a bad wrap and miss out on big marketing options because, well, there is only so much you can do or sell to someone at once. We tend to pigeonhole ourselves in a core offer with a few add-ons and then leave things be.

If that’s how you feel, then it’s time for a 2018 resolution that says things are going to change!

Digital services and goods are poised to do just as well as anyone else with a loyalty program because they’re all about making customers feel appreciated. If you can tell someone “thank you” in an honest way, then you’ve got everything you need. So, let’s get started on opening your mind to digital loyalty.

Are You the Right Fit?

The first place to start in all of this is figuring out if your company would truly benefit from a loyalty program. There are a few key things to consider that can help you answer this question:

  1. Are your margins as thin as you can go?
  2. Do you sell a niche or a one-off, high-value product?
  3. Are you so new you don’t have any customer tracking software already?

If you’ve answered “yes” to any of those questions, you might want to avoid a loyalty program.

These programs work well when you need repeat customers and can track who they are. Plus, you’ll need to offer some incentives along the way, so your margins can’t be too thin to reduce (unless you’re willing to take a loss for the potential of a repeat customer).

And don’t worry if some of your business is bulky items or a single, core digital product as long as you have the potential for repeat sales with items your product uses or additional services that naturally fade over time.

Over at HP, they market their printer division much more like an ink and toner division because it’s their best way to establish recurring revenue. Try considering alternate views of your company to see if you have similar opportunities.

loyalty program

It’s a Long-Term Play

When you’re thinking about loyalty programs, you must remember that this is a method of gaining more sales over the long haul, not just an immediate uptick and then another drop-off. We all know that it’s less expensive to keep existing customers than find new ones and your existing customers tend to buy more, but there’s also research showing they’re more willing to try your next new product.

So, your efforts are best put into programs that make people want to stay around for a long time. That’s why you see many loyalty programs with multiple tiers and rewards that grow over time. Every new milestone and bigger coupon gives them a reason to keep coming back.

The two elements you need for success in this are simplicity and useful rewards.

Long-term interest requires everything remaining easy to understand with a clear benefit. Customers need to know and see what you’re offering them and why they should stick around. One of the easiest ways to do this is to include their benefits in your interactions. Then, on your site, clearly label the added benefits — like “Members save 10% and get free shipping!” — on pages throughout your e-store. For digital goods and services that don’t require shipping, find another benefit, such as free installation support, or discounts on on-going maintenance or customizations.

Usefulness is the other requirement. If rewards aren’t on what customers want or they have to put in a lot of effort, then they’re not going to see the loyalty program as a benefit.

Your local pharmacy or convenience store probably focuses their rewards efforts on being useful. With a card, you get deals on common items like toilet paper and milk, plus many offer coupons you get in the store that are tailored specifically to what you buy.

They reward you with what you’re already spending on in order to get you back in the store and add more things to your cart.

Digital Loyalty Program

The Secret Social Sauce

One of the biggest threats to success for loyalty programs is that the rewards just aren’t enough to get people to show. When you’re saving a couple of pennies per trip, why go out of your way to buy something you wouldn’t normally get?

The good news here is that there’s a way to keep giving away a small amount, but frame it in a way that people enjoy. For digital goods and services, this can be giving someone a free month instead of reducing the cost for each month.

The even better news is that you don’t have to up the reward significantly even if you think it might be too little. You just need to add in some social appreciation. Say “thanks” in a public way or give your top customers a direct call telling them you appreciate them.

These social efforts can take place on social media, newsletters, in email blasts, blogs on your website, and in many more situations. A core goal of the loyalty program is to make people feel appreciated. Reaching out in a direct way or a public way can make your customers feel like the appreciation you’re showing is genuine.

That said, a loyalty program won’t work on “thanks!” alone.

rewards for loyal customers

Consider Adding a Partner

Partnerships are a common loyalty route specifically for digital services and goods. This is because you may have few recurring costs or concerns outside of your core business.

A partnership allows you to offer deals and discounts on someone else’s service, and in turn, they can offer the same for your service. The net benefit is that you both reach more customers, many of whom you wouldn’t have found otherwise.

Look for areas where you don’t compete but where you think your customers might have a need. You’ll see this a lot on CRM software that hosts deals with other marketing tools. Though, you’re probably most familiar with the concept in your wallet: those airline credit cards from folks like Visa are a partnership.

Partnerships are a strong way to co-brand and gain new customers as well as thank your existing ones. If you have a partner who makes your customers happy, it can be a big win.

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Jake Rheude

Director of Business Development

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