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Your 5-Step Guide to Launching and Growing a Loyalty Program

 

Look, there's no easy way to say this: You're going to have to spend some $$$ to acquire new customers.

But (and this is easier to say)...

It's much easier to get a repeat purchase from an existing customer than it is to acquire a new customer.

This is where loyalty and rewards programs can be a major value-add because they can help you increase revenue in a few ways:

 

1. More repeat purchases.

We revert back to the Pareto Principle here: 80% of your revenue will come from 20% of your customers. A loyalty program offers incentives to your most loyal fanbase to keep them coming back and buying more.

 

2. More customer referrals.

Reward existing customers who bring their friends into your community.

 

3. Social proof.

UGC (user-generated content) is the bee's knees of content. This includes reviews and ratings that your customers create for you. It's arguably the best stamp of approval you can get, so why not reward it?

 

What makes a good loyalty program?

First: Keep. It. Simple.

If you gamify your loyalty program to the point where your customers can't figure out how to use it, you've got yourself a big ol' problem. 

 

Here are some ground rules for launching and growing a successful loyalty program:

 

Step 1: Decide what you're going to call your program. The name should be catchy and on brand for you. For example, at Starbucks people can collect Stars, at bodycare retailer Blume you can earn Blume Bucks, and at book retailer Chapters Indigo you earn plum rewards.

 

Step 2: Decide on your rewards system. But before you decide, understand what customers want out of a loyalty program, other than free shipping and discounts.

 

You have some choices here:

  • Perks like the obvious: discounts, free shipping, gifts with purchase, etc., but also early access to sales and new products, and tailored offer recommendations. This type of program grants rewards to all members, regardless of status.
  • Tiered programs that allow customers to gain access to greater benefits by advancing through the ranks. This system encourages customers to spend and engage more so they can level up. If you use the tier system, try adding an extra invitation-only tier at the top for your VIPs. 
  • Gamified rewards programs require your customers to complete a certain set of challenges to unlock different tiers or to collect badges.
  • Hybrid loyalty programs merge two or more different types of programs to give customers more variety.

What's the value of your rewards currency? How much is each $1 a customer spends with you worth in your own unique currency? If getting 1 point means a customer has to spend $10,000 and takes 5 years, you may want to re-evaluate your loyalty currency.

 

Step 3: Determine how customers earn points or other loyalty currency. What do your customers have to do to get points? Leave a product review? Refer a friend? Follow you on social? 

 

Step 4: Spice up your referral program. Give members access to exclusive content made just for them. Sephora's Beauty Insiders program lets member enroll in free beauty classes.

Many brands also let customers exchange points for a monetary donation to a charity the brand supports. For example, Lyft's Round-up program lets riders support charities that provide free or discounted rates to refugees and disaster survivors. 

Level up further by marketing new initiatives like bonus points events. Shoppers Drugmart is known for their bonus redemption events and Sephora offers a Beauty Insider Week to members where they can earn 4x the points during certain times of the year.

 

Step 5: Don't keep your loyalty program a secret. Tell the world about it! Create a standalone landing page on your website dedicated to your loyalty program. The page should explain how customers can earn points and what they can use them on. 

Don't forget to include information about your loyalty program in your emails and on your social media.

Not sure where to start? Smile.io and Loyalty Lion are apps that integrate seamlessly with Shopify.

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