In today’s competitive business environment, cost cutting and streamlining your processes are crucial for survival. There’s one element of your business strategy that you could be overlooking as a drain on your bottom line – your loyalty program. Chances are you’ve got a traditional loyalty program. Unfortunately, traditional loyalty sucks. Here’s why.

The Most Common Pitfall – Rewarding Existing Behaviors

First, let’s begin by defining what we mean by traditional loyalty. You know the type: your customer buys nine coffees and their tenth is magically free. These reward programs ignore the fact that if a customer has bought coffee from you nine times, they’ll likely return for the tenth, eleventh, and so on. Rather than creating a new behavior pattern, you’re rewarding the action that already exists in their routine. Essentially all you’re doing is spending money to reward a customer who is already loyal to your brand.

Free Gets Expensive

Small discounts may seem inconsequential at the time, but each free coffee you give away comes straight off your bottom line. Not the most strategic business plan. Don’t confuse loyalty and reward programs. Rewarding customers for visiting frequently is great; but true loyalty encourages a relationship between a business and its customers. The big difference is the value it provides to both parties.

Loyalty Done Right

You should reward your loyal customers for their good taste. However, try creating new behaviors instead of simply rewarding existing ones. To do this, provide your customers with serendipitous perks that incentivize future behaviors. These benefits should ideally be more ‘delightful’ than predictable. For example, instead of offering your customer their tenth coffee free, send them a text message at the same time they usually pick up their coffee in the morning offering a great deal on a cinnamon bun. Your customer will love the suggestion, and if they enjoy it, they may end up adding a pastry to their coffee order once a week. Ta da! New behavior created.

Customer behavior goes beyond trying a new coffee flavor, or adding a dessert. It’s ultimately about delivering a better customer experience through your loyalty program. Loyalty members should be an elite group that have privileges not available to everyone who walks through your door. Offer VIP perks that make sense for your business, like access to a wider selection of items or special menu options, discounts, promotions, or even extended shopping hours. With very little cost to your business, VIPs will enjoy their premium status while strengthening the allegiance to their favorite brand.

Convenience is Key

Punch cards and stamps are a thing of the past. They’re left at home, in the car, lost, and just plain irritating. Not to mention you’ve got to rely on staff to accurately credit the purchases and redemptions, which can be a challenge to say the least. It’s time to get tech savvy and deliver your customers’ loyalty and rewards straight to the phone in their hand. The best loyalty programs have automated tracking, fraud prevention, and even data analytics; all allowing you to get to know your customers better and cater to their needs.

A well-placed loyalty program that works new offers or incentives into your customer’s daily routine can ensure you’re top-of-mind, as each message you send creates lasting brand impressions, cementing you as a brand they interact most with. In the crowded and competitive business world, rewards are nice, but true loyalty gives you a real advantage.

Brooke Sherrill

Author Brooke Sherrill

Marketing Communications Manager

More posts by Brooke Sherrill

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