Loyalty program for wholesale customers. Secrets of new generation loyalty programs. Advance payment for VIP privileges

* Calculations use average data for Russia

INTRODUCTION

Loyalty program is a modern customer-oriented method of increasing sales, the most typical for retail. As part of loyalty programs, the selling party provides profitable terms to make repeat purchases.

MARKET ANALYSIS

To date, the most popular programs loyalty in Russia are discount and discount-accumulative. Their advantages are the greatest clarity for the consumer and the ease of support by the issuer (seller). According to Russian retailers (RBC.research analytics), maintaining a loyalty program on average costs about 4% of the network's turnover, while the average check of a loyal customer (discount card holder) is on average 20-25% higher than that of an ordinary customer.

Discount cards are of two main types:

a simple plastic card with the specified denomination of the discount (for all goods or a specific group)

a card with a chip or magnetic stripe (usually provides for the accumulation of bonus points for purchases made)

The most common discount cards are in chains selling clothes and shoes. It is there that they give maximum results in terms of increasing revenue. Loyalty program cards are usually issued when making purchases for a certain amount; however, some issuers issue cards with any purchase.

Figure 1. Conditions for issuing a discount card depending on the purchase amount in Russian retail chains, 2016, % (according to RBC MARKET RESEARCH)

In addition to the positive effect in the form of revenue growth, there are also negative sides loyalty programs. Firstly, almost every retail chain in one way or another provides customers with discounts. Thus, they cease to be an instrument of competition. In addition, discounts reduce the profitability of sales. Secondly, discount cards are usually not named, and one card can be used by an unlimited number of people, which also leads to a decrease in profitability. However, some companies, on the contrary, recommend that customers give the card to friends and relatives, thereby leveling the decrease in profitability by increasing sales.

As part of loyalty programs, there is usually an active informing of the client about new products, discounts and promotions using various channels: SMS, e-mail, etc. Contact information is collected, as a rule, when issuing a discount card. Mailing lists for other information occasions are also widespread - congratulations on your birthday and other holidays, as well as the provision of discounts in connection with personal holidays.

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Recently, in some companies, there is also a trend towards the implementation of social programs- for example, providing discounts for a pension or student certificate, a certificate for a disabled person, and so on.

According to a study by RBC MARKET RESEARCH, for a one-time purchase of 5,000 rubles, most loyalty programs guarantee a discount of 250 rubles, and for a purchase of 10,000 rubles - a discount of 500 rubles.

Figure 2. Discounts when making a one-time purchase for 5,000 rubles. in retail chains, 2016, %

Figure 3. Discounts when making a one-time purchase for 10,000 rubles. in retail chains, 2016, %

Another trend in loyalty programs in Russia is co-branding - issuing trading networks discount (in some cases debit) cards together with banks. Such programs predominate in the retail sector, as well as in the air travel industry.

Figure 4. Number of co-branded projects by industry in Russia, 2016

As world practice shows, co-branding programs usually gain popularity after successful implementation own loyalty program. This fully corresponds to the state of the loyalty program market in Russia. Experts predict continued development of this segment with some redistribution of industry shares. If in last years While co-branded travel loyalty programs and coalition programs developed most actively, they will be used more by retail and e-commerce in the future. According to RBC.research, as of August 2016, 58 co-branded banking projects with a bonus accumulative system were being implemented.

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Figure 5. Dynamics of the implementation of bonus accumulative co-branding projects in Russia, 2002-2016

Figure 6. Availability of co-branded cards and awareness of co-branded projects among Russians, 2015, % (depending on average monthly income per family)

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In recent years, Russia has seen a significant increase in sales of duck meat, which is associated with the emergence of large-scale production, the development of retail forms and a change in consumer preferences.

In 2015, domestic tourism destinations were even more in demand than in previous years; and in 2016 we should expect unprecedented growth in the industry.

The estimated capacity of the quail meat market in the Rostov region in physical terms amounted to 21.22 tons / year. Therefore, the market capacity of quail meat in terms of price is...

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Everyone regards marketing as customer acquisition. Kind of like an advertisement. Marketing = advertising. Attracted customers, they bought.

Everyone is satisfied: the head of the company, the customers themselves. The only thing is that it has long been proven that selling to a regular customer is 5 times cheaper than to a new one. And that's the problem with most leaders.

They do not think about how to retain a client, although there are simple and unobtrusive marketing tools for this. For example, a customer loyalty program.

Marketing and discounts

Although no, I'm wrong. Managers and marketers think like . But usually, the maximum they think of is discounts.

Those same banal discounts and, moreover, the greater the discount in their opinion, the higher the probability of retaining a client.

There is definitely truth in this. Only now they forget what discounts mean in business and how much it hits their margin. And all this as a result is very far from a working customer retention system.

And how do you keep...

Let's take as an example a classic situation in any business when a client asks you for a discount and at the same time subtly hints that if you do not give, then the consequences may be irreversible.

Bad option:

- Will you give me a discount?
We don't have discounts.
- Then I'll go buy from competitors!
- Well, I will give you my personal discount of 5%, but only to anyone about it.

A good option :

- Will you give me a discount?
– Yes, if you buy more than 10,000 rubles, you get a 5% discount.
- Okay, I'll buy it then.

The best option :

- Will you give me a discount?
- Of course. Moreover, the more you buy from us, the more discount you get. When buying for 10,000 rubles you will get a 5% discount, and when buying for 20,000 rubles you get a 10% discount.

- Nuuuu, okay, then let's get this coat for 22,000, then it will cost me 19,800.
- Yes that's right.

I think you have now recognized the model of the customer loyalty program, which is used by more than half of small businesses in Russia. And now is the time to change your business and stop being like 99% of your competitors.

If you do not have a loyalty program for customers, it's time to break the system and start it immediately after reading the article, especially since you will learn chips and life hacks that work in modern realities in Russia.

And even more so, if you have exactly the way I described in the examples, urgently fix it!

And if you are lucky and you are not so, I congratulate you, but I still strongly recommend reading the article in order to understand what to add / improve in your loyalty system.

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Three tasks - one way

So. What is a customer loyalty program? In short, it is a way to motivate your customers with three main objectives that most managers forget about when developing it:

1. To retain customers (Will you go to organization B if you have the maximum discount in organization A?!);
2. To increase sales (Will you buy just another 2,000 rubles to get an 8% discount?);
3. To (Remember before everyone went to Letual or Ile De Beaute with other people's cards to buy at the maximum discount?).

And in fact, all customer loyalty programs revolve around two simple actions(I would even say arithmetic operations) - write off or accrue, that is, plus or minus, that is, a discount or accumulative program.

It is them that we will now consider and get to the thought “Which is better - a discount or bonuses?”. If you do not want to read the article further, watch the video:

In general, there are more than 4 loyalty programs, but today we will study only these 4. And yet, get ready that while reading the article, you will have thoughts of changing the old one that works well / poorly for a new one that you will learn literally within 3 minutes.

Discount Loyalty Program

As I wrote earlier, this is the most common of the loyalty programs, and not only in Russia, but also in the world in general.

Expressed either in a one-time or cumulative discount. As a rule, this is a discount card that gives a certain percentage discount when buying. Why certain?

Because discount cards come with either a fixed or a cumulative discount.

The cumulative discount is due to the following function - when buying at certain price thresholds, the client receives an increase in percentage as a reward for loyalty to the company.

Some are sophisticated and come up with conditions that if the client does not appear with them, for example, once a month, then it goes down a step and so on until he comes to his senses and comes again.

Pros :

• Customers love discounts. In Russia especially. In the conditions of this time is very special.
• Such a program is simple and clear, so it is easy to organize and control.

Minuses :

• Now any person usually has at least 2-3 discount cards of companies in the same field.

  And usually the amount of the discount is the same everywhere. Therefore, in competitive areas, one might say, “loyalty” is more like a word than a really working tool;

• As soon as the client stops growing in the process of winning the maximum discount, his interest to progress in purchases also begins to fade;
• The main disadvantage of discounts is that they are given from net profit (example below).

Let's give an example about the loss of money from net profit due to discounts. Let's say you sell some product for 9,000 rubles. Your margin is - 30% Discount - 5% or 450 rubles. It seems to be a little, BUT!

You have the cost of a product / service that you will not get anywhere, and accordingly you give a discount on your net profit.

Thus, you actually lose 450 rubles not from turnover, but from your net profit, which, for example, is 2,700. It turns out that at the output, taking into account the discount, you earn 2250.

The total size of the discount (if calculated on net money) is not 5% at all, but as much as 17.5%. And this, you see, is essential. Of course, this will not be so noticeable if your margin is 100-200 percent, but what if the discount is larger?

Loyalty bonus program

In this program, the client no longer receives discounts. They magically turn into bonuses. But the principle is the same.

When making a purchase for a certain amount, you receive a certain percentage of bonuses from the transaction amount on your account/card, which you can spend when making your next purchase (even exchange for free item).

The bonuses themselves can be in any form: points, stickers, rubles. Yes, even the fictional currency of the store (not the worst option, by the way).

Pros :

• If you mean repeat purchases, then the system can work for quite a long time and successfully without unnecessary troubles;
• To accumulate a decent number of bonuses, the buyer must buy constantly or on large sums which is extremely beneficial for the business owner;
• Bonuses may tend to burn out, which means that this will be an additional incentive to come to you as soon as possible and spend them;
• Not all customers come to spend bonuses, so you can say that you leave this money with your company and end up selling without a discount at all.

Minuses :

• If the purchase is one-time or very expensive / rare, then such a loyalty program will not work. The client simply has no interest in participating in it, since he will not come to you again;
• If you make tricky / complex rules for a loyalty program, buyers may get confused or not understand it at all, which will completely destroy the whole idea of ​​\u200b\u200bcreating it;
• More difficult to control than discounts, so special software may even be needed.

What is the second fastest way to increase profits in any company? Have you thought about the first one? Don't think it's a price hike. The second is to switch from discounts to bonuses.

Remember our example about a product worth 9,000 rubles and a 5% discount? Let's apply it to bonuses. All the same.

You accrued 5% to the client on his bonus card at the first purchase, which he will be able to use at the next purchase. We consider.

1st purchase - 9,000 rubles
2nd purchase (also) - 9,000 rubles
Bonus from the first purchase (lies on his card) - 5% or 450 rubles.

Thus, 2700 (first purchase) + 2700 (second purchase) - 450 (rewards deducted from first purchase) = 4,950 (your net profit minus the bonus discount). The total discount from your profit was 8.5% versus 17.5% in the first case.

Particularly attentive should have noticed that from the second purchase the guest will still receive another 450 rubles to the account and it turns out, as a result, we will give out the same 17.5 percent. And they will be right.

Only if we return to the advantages of this system, we must remember that half of the people will not come, half of the bonuses will burn out and these bonuses will encourage the client to come again.

And also answering your question right away: “What will happen if we cancel discounts and introduce bonuses, will all customers run away?”. Nothing will happen! Yes, some part will leave, but its departure is compensated by an increase in your profit.

In general, it is not dangerous. We checked repeatedly. And by the way, the part that will leave is the most unreliable and few customers who are ready to go to the other end of the city if they find a product/service 10 rubles cheaper. You don't have to rely on those.

Although, of course, in order not to be guilty later that your company has ceased to be profitable, I will still make an amendment.

And I have a request for you. No need to ask customers: “Which would you choose: discounts or bonuses?”. The customer will always respond with a discount.

This is how our psychology works - “Good now, bad later”. Therefore, take yourself for ... willpower, cancel discounts (if any) and introduce bonuses.

Life hack. If you want to get a ready-made loyalty program, then I advise ““. Very cool functionality and flexible settings. And with the promo code "INSCALE" - a 10% discount.

Tiered loyalty programs

This is a fairly simple and at the same time complex system. The more money a person spends in your company, the more interesting group of customers he gets and the more interesting bonuses he gets.

For example, it may be some additional free services ( free shipping, extended warranty, etc.).

That is, by spending more money, the client raises himself in status. Often such loyalty programs are used in banking, insurance or airlines.

Pros :

• Such a program is built on pride, since the more a person spends, the more interesting group he will fall into, which positively affects the client’s desire to spend more;
• Ideal for the segment of VIP and Double-VIP people (double-VIP).

Minuses :

• It is both a minus and a plus. Such a system is ideal only for expensive goods and services;
• You need very strong bonuses when you reach one or another bar;
• Quite difficult to implement and track. Again, you need special software.

Paid loyalty program

Or getting some bonuses / privileges / goodies for a subscription. That is, the client pays money (usually a fixed subscription fee) and as a result receives privileges.

This may be an increased service, additional services, access to some closed resources, and the like.

Pros :

• Very easy to organize;
• Ideal for products that are bought frequently;
• Clients buy access to such a loyalty program, but often do not use it (that is, “free money”);
• You can work out the cost of bonuses so that they are the most profitable for you in terms of money.

Minuses :

• If the value (perception) of a paid subscription is below the price, then the whole program may fail.

Let's just say, this is the coolest and strongest loyalty program. The one you get paid for, but let's be realistic.

For this to happen, you need to be a very popular company in your sales territory.

How to choose a loyalty program for customers?

This is very important point. Since a manager or marketer always perceives his business in a special way, so to speak, “in rose-colored glasses” (this is a fact that is also relevant for us), it is very difficult for them to understand what his client wants.

Yes, to realize everything as in the popular proverb - "Eat the fish and do not wash the pan after yourself." Duck what to do?

1. Trite, but you have to put yourself in the place of the buyer. Let's pretend you have wholesale organization.

   What do you think your favorite (for you) client wants? Accumulate bonuses to exchange them for something free? Or does he want (and is used to) getting discounts here and now?

   Therefore, you take the side of buyers, analyze your range of goods / services and find the answer to these questions.

2. Ask customers who already buy something from you what they want (but remember the stop question: discounts or bonuses?). You can post a survey on the website, in social networks, networks or in your office.

   As a rule, the answers will be from the series “lower prices, more discounts”. But sometimes adequate people will come across who can tell interesting ideas, this is the essence of this action.

3. Do a competitor analysis and decide on one of two strategies:

   3.1 Go the other way. If the client gives a progressive discount, up to the maximum, then it may be better to refuse discounts altogether and switch to bonus program, just with very interesting prizes.

   3.2 Model it and improve it. Just remember that everything can be ambiguous.

   After all, maybe the competitor miscalculated, introduced discount program loyalty, now he doesn’t earn anything at all and grieves from this at night, but you didn’t analyze it and decided to copy it.

4. And the last step, when you have thought about everything except yourself, ask the same question as in the first paragraph, only to yourself: “What do I want?” or “What benefits me?”.

   Sometimes it is better to make a system with discounts, and sometimes with bonuses. As I wrote above, there is always a factor in the market that can change everything.

   Therefore, calculate under what scheme your company will grow in profit (or in your case it may make sense to grow in turnover to capture market share now).

And finally, a few life hacks that will make your customer loyalty program even more interesting:

1. If you decide to switch to a discount loyalty program, then make it progressive.

   Buying for 10,000 rubles - a 5% discount, for 20,000 rubles - a 7% discount, for 50,000 rubles - a 10% discount.

   The more the customer buys, the bigger the discount he gets. The only thing is that discounts should not be just crazy on an ongoing basis (from 20%), this can play a cruel joke and scare off buyers.

2. If you have a catering or a store, and you count bonuses manually, then rather go to turnkey solutions that don't cost a lot of money.

   For example, such as Plazius (for catering) or Bazaronline (for retail stores). They already have everything you need. You only need to connect them, calculate the amount of bonuses based on your marginality, and put them into action.

Briefly about the main

Video in the end, how stupid the picture as a whole can look when you complicate it too much and stop understanding yourself 🙂

And a small summary of the article: if you just want to start a customer loyalty program because you need to quickly increase profits, then ... No, it will not help you and you do not need it.

A customer loyalty program is just one of the marketing tools that can get your customer (sorry for the tautology) more often and more, but in the long run.

And one more parting word - do not complicate. I remember we decided to introduce a loyalty bonus program for one client in the catering.

We've been counting it for about a month. Well, for a very, very long time. He called me constantly and offered new mechanics. Confusing both me and myself, and even future guests of my institution.

In the end, I spat and introduced the following conditions: 20 percent of each check was accumulated for the next visit. As soon as the guests got used to the new system, we began to gradually complicate it.

According to the 2015 Colloquy Customer Loyalty Census survey, on average, Americans are enrolled in 29 different loyalty programs. But they really use - accumulate or spend points during the year - only 12 of them. It turns out that companies often waste money on organizing and supporting loyalty programs: sales growth is not stimulated, and customers do not receive any benefits.

HubSpot, a developer of software for marketers, has published a list of 7 real-life loyalty program models on its blog. We present to your attention an adapted version of this material.

Simple point system

Even though it sounds pretty simple, in reality, creating links between virtual points and real rewards is far from being such a painless process.

As a result, you can often see schemes like “14 points equal a dollar, and twenty “dollars” is a 50% discount on the next purchase in April”, which are extremely difficult to deal with.

For customers to truly enjoy a loyalty program, the links between points and rewards need to be as simple and intuitive as possible. It must be remembered that this format of the loyalty program is only suitable for businesses that sell everyday goods that you can buy often.

Example: Boloco restaurant maps

The American restaurant chain Boloco, famous for its burritos, issues special cards to customers with which they can track all purchases. For every $50 spent, you get a free meal. At the same time, it doesn’t matter what the visitor wants - a huge burrito or a small smoothie. This, and the fact that the points are real dollars, makes it easier to understand the program, which is in significant demand.

Multi-level system to stimulate repeat purchases

It works like this - at the beginning, a client is entitled to a small gift for joining the program, subsequent purchases allow him to move to the next level, where the value of the prizes increases. This avoids a situation where users forget about the accumulated points and do not use them, since the time between the first purchase and the possibility of receiving a reward is too long.

The main difference with the usual points system here is the ability to extract short-term benefits from the loyalty program. This model works best for companies that don't sell the cheapest goods and services, such as airlines, hotel chains, or insurance companies.

Case Study: Virgin Atlantic Passenger Club

In addition to accruing miles, membership in the Virgin Atlantic Passenger Club allows members to earn special points. After joining the club, the user is assigned the status of Club Red, which can then be changed to Club Silver and Club Gold.

• Club Red - users earn miles on flights and receive discounts on car rental, airport parking, hotel accommodation.
• Club Silver - at this level, users are credited with 30% miles for flights, and they are also entitled to expedited check-in and priority boarding.
• Club Gold - holders of this status receive double miles for flights (60%), priority landing and access to the airline's exclusive business lounges, where you can eat, drink and even go for a pre-flight massage.

The whole point of such a loyalty program is to offer something tangible at the initial stage, and then entice the buyer with the prospect of receiving a larger reward. When the client returns and moves to the next level, he will understand that the "gold" status is quite within reach, and for this it is worth trying, given the benefits offered.

Advance payment for VIP privileges

Such loyalty systems are well suited for companies that want to encourage regular shopping.

Example: Free Amazon Prime Shipping

How to evaluate the effectiveness of a loyalty program

Customer Return Rate

This indicator allows you to understand how long customers stay with the company. Implementation successful program loyalty program should help increase these numbers - the more members of the loyalty program, the higher the average should be. According to Fred Reichheld, author of The Loyalty Effect, a 5% increase in the return rate translates into a 25-100% increase in company profits.

Negative churn

The churn rate tells you how many customers the company has lost. In turn, negative churn is a metric that describes customers who, on the contrary, bought additional goods and services or switched to a more expensive tariff plan.

These numbers help to understand the real state of affairs and compensate for natural churn, which cannot be avoided in any business. This metric is important for evaluating the effectiveness of multi-level loyalty programs.

NPS consumer loyalty index

NPS shows the level of user satisfaction on a scale from 1 to 10 - this is the degree of probability that a person will recommend a company to someone else. The index is calculated by subtracting the percentage of brand critics (detractors - those who would not recommend the company) from the percentage of supporters (promoters - people who are ready to recommend it).

The fewer critics, the better. A good indicator of NPS are numbers over 70%.

Customer Effort Evaluation

The CES indicator (Customer Effort Score) allows you to understand how difficult it was for them to solve their problem with the help of the company. Some believe that this metric is preferable to NPS, as it is based on the real experience of the client, rather than emotional ratings.

In today's competitive environment, it is becoming increasingly difficult to get and keep a customer. Sometimes, a business spends ten times more when attracting a new customer than when selling a service or product to an existing one. But, after all, existing customers (loyal) spend 50-70% more than those new ones who were recently attracted. What can you do to keep your customers coming back? If you are ideologically related to the majority of marketers, then, for sure, you have already implemented a loyalty system.

But does it work so well? According to a survey conducted in 2011 by Colloquy, a third of the miles and bonus points that were issued to customers as a result of the loyalty system were not claimed. It turns out that companies were wasting money and time on attracting customers who never received that added value despite their “loyalty”.

How to influence this segment of a third of customers and add real value to the loyalty program so that customers return to you? I won't bore you. Here are some ideas that you can use to improve your current or development new program loyalty that will help your business.

Use a Simple Points System

This is the most common methodology for loyalty programs. Frequent customers earn points, which are then converted into all sorts of gifts. It can be a service upgrade, a small gift, a discount, a baseball cap or something else that your client is aiming for and collecting their points for. It is rather strange why many companies fail in this component and cannot properly explain to their client exactly how and how many points he gains and what he can then spend them on. I believe that for some loyalty programs, you can enter separate calculators (which, by the way, many companies not named in the article already do) to calculate their benefits. Descriptions such as: "You'll get 3 points for every $100 spent, and spending $2,000 will get you 30% off next month!" I don’t even want to read, and even more so to think about how best to spend in order to extract this benefit ... if you please. This is not a loyalty system, it is, even more so, not a reward, it is a headache. If you are going to use points in your loyalty system, think about how your appeal will be perceived - it should be as simple and intuitive as the program itself!

As an option for a simple system, link points to rubles (hryvnia, dollars, euros ...) after calculating the benefit for the client and the return on investment for the company in advance. Then tie gifts to a certain amount and your client will always know that for the conditionally spent 1000 rubles, he will receive a service (certain) for free (or a product). Or, say, with each "thousand" he will receive a gift for a hundred rubles. And one more thing - do not be shy to speak with the consumer in his own language, leave the marketing jargon in your office, or even better if you get rid of it and start talking and thinking like your consumer.

Although this type of loyalty system is the most common, it may not be applicable to any type of business - it is more suitable for companies that want frequent, small purchases from customers. For example, you can hardly sell cars like that.

Enter the grading system

Finding a balance between achievable and desired rewards is a serious issue for many companies that develop loyalty programs. One way to overcome this problem is a level system. Offer small rewards to start with as a base for those just joining the program and motivate them to repeat action (purchase) by increasing the reward as the customer moves up the ladder of your loyalty program. It will also help solve problems with members who forget their points and never use them due to the waiting time between purchase and reward.

Take Virgin Airlines as an example. The Virgin Loyalty System takes its members to the Red level, then progresses to Silver as it progresses, and eventually Gold. So, at the red level, customers have access to a discount for renting a car and booking hotels, and they also earn miles. At the Silver level, they earn 50% more points for flights and related expenses. Gold level members earn double miles, priority boarding, and access to exclusive services that make them available, such as a massage or a glass of beer before a flight. The key to the program is that all these "charms" are necessarily presented to the client at the time of initial contact in order to make him think about returning again. When the client realizes that the "golden" status is achievable along with all its benefits, he usually returns.

The difference between points and a tier system is pretty obvious. In the first case, they derive short-term benefits, in the second, more strategic and long-term ones. As a rule, a loyalty system with a tiered system is used in a high-yield business with expensive services such as airlines, hotel business or insurance companies.

Set entry fee for VIP service

What's wrong with that? Loyalty programs are designed, in essence, to break the barrier between the client and the company. In many cases, a one-time payment (annual subscription) that allows customers to overcome a common barrier is quite a big advantage for both the company and the client. By identifying the factors that can cause a customer to leave you, you can develop a one-time payment based loyalty program for the "whimsical" of this world and allow them to overcome the barrier that prevents them from enjoying all the charms of the program.

In 2011, the e-shopping cart abandonment rate surpassed a record 70% and the number is still going up. This is largely due to the shock buyers experience when they see the price after shipping and taxes have been added. Amazon found its way to solve this problem, and it is through its loyalty program, which is called Prime. For $79 annually, in addition to all the other benefits of this program, members get the opportunity to receive any item from millions within two days. And it doesn't matter how much you paid for this product!

This program is truly innovative. Analysts have calculated that Amazon loses about $11 annually for each Prime user, but earns quite a lot on high frequency operations that would not have taken place without this program with its remarkable capabilities.

This system is good for businesses that need frequent and repeated purchases. In just a minute, with a one-time payment, your customers get access to all the richness of the program. It can also be well suited in the B2B sector for companies that are engaged in, for example, delivery.

Create a non-monetary program around the client's values

If you think you know your client well, consider whether you really know their value system and sense of usefulness. After all, depending on the industry, your client may find more value in non-cash or discounted rewards. Each company can offer coupons and discount codes, but not every company can offer something else that is not subject to the ruble and at the same time unites with the audience.

Such programs may concern environment, animal protection, street cleanliness – in a word, everything that can be called corporate social responsibility. Therefore, before launching your loyalty program, take care to research your client and recreate a portrait of a consumer with whom you can then work.

Join the coalition

A strategic partnership for a loyalty program, also known as a "coalition" program, can be quite effective in retaining a customer and growing a company. In this case, as above (point 4), you need to know the psychology of your client. Knowing the portrait of the consumer, you will be able to understand what exactly he consumes in addition to your products, what services he uses and make a really attractive offer.

American Express has an extensive partner base around the world. Their recent Twitter campaign rewarded members who tweeted about them. Companies such as Whole Foods, Staples, Zappos participated in the program. Amex cardholders have received over $2,000,000 in rewards, according to Visibli.

What kind of coalitions can you personally create? If you are in the business of producing dog food, it would be a good idea to consider collaborating with veterinary clinic or a grooming center for animals (dogs). The target audience, obviously loves and owns a dog, and maybe more than one. Moreover, it is likely that they are familiar with other dog owners. In this case, you can create a great loyalty package that goes beyond the usual promotions and discounts offered by your company, and also expands the network by giving you access to your partner's customers.

Make a game out of it

Who doesn't love to play, right? By turning your loyalty program into a game, you will encourage customers to return after the first purchase and, depending on the type of game, strengthen the brand image.

Entertain the audience, but if you make gifts available during the game, do not forget that the chances of winning should be at least 25%, and even more so, you should not put up “unrealistic” barriers! A well-thought-out and implemented program can bring success to almost any type of business. This approach will make the buying process more interesting and attractive.

Abandon the program completely...

Just think how many marketers offer loyalty programs? How many have already been launched? We are not talking about efficiency, no, we are talking about how clouded the mind of the buyer is. Build loyalty by offering exceptional benefits to first-time customers or customers. Hold their hearts hostage, and then continue to offer these benefits with every purchase.

The concept sounds quite simple, but one of the most innovative companies on the planet is using this program with might and main. This is Apple. Even Apple's most loyal customers don't get special discounts or discounts... because they don't. nobody! Has the number of fans decreased due to this? Judge for yourself. We can only say that in the case of Apple, customer loyalty awakens in a completely natural way.

This minimalistic approach works best in companies whose products or services are unique or different from others. It's not about price, quality or convenience - it's about redefining the category. Call it whatever you like - creating a new market, the Blue Ocean strategy of bringing an old product to a new market, or new product are brought to a new market when the company is a pioneer in the industry and receives recognition from society, because. the product is really needed, the loyalty program may not be required.

How to measure the effectiveness of the implementation of the loyalty system?

Yes, as you already understood (and most likely you already knew) after the introduction of a loyalty system, there is a need to measure the results of its work. Otherwise, how can you evaluate the effectiveness? There are several methods for measuring the effectiveness of a loyalty program, and they have nothing to do with what “an acquaintance said” or “a neighbor was delighted.” There are many ways to measure, and in fact each program is unique and the measurement should be “tailored” to its definition. But here are some of the most common:

Customer Retention Rating (CRR): This metric is a measure of how long customers stay with you. With the successful implementation of the loyalty program, this number should increase over time and increase the number of members of the program. For measurement, you can perform A / B testing on those who are not a participant in the program and those who are, thus finding out the overall effectiveness of the initiative. According to Fred Rescheld, author of The Loyalty Effect, a 5% increase in customer retention can lead to a 25-100% increase in profits for a company.

Negative Churn: Churn is the rate at which customers leave your company; negative churn is therefore a measurement of customers who do the opposite - upgrade or purchase additional service. They help offset the natural churn that occurs in most companies. Depending on the nature of your business and loyalty program, especially where you choose a complex, tiered loyalty program, this is an important metric to track.

Net Promoter Score: NPS is customer satisfaction, which is rated on a scale of 1-10. The scale is sort of the degree to which a person will recommend your company to others.

NPS is calculated by subtracting the percentage of detractors (customers who would not recommend your product) from the percentage of promoters (customers who would recommend you). The fewer detractors, the better. Improving the NPS is one way to establish criteria for measuring customer loyalty and, over time, calculating the effectiveness of your loyalty program. A good NPS is over 70% - and a loyalty program can help you get there!

Customer Effort Evaluation (CES): CES evaluates how much effort it took to solve a problem with a company. Some firms prefer this metric over NPS because it measures real experience rather than emotional satisfaction. A Harvard Business Review study found that 48% of customers who had a negative experience with a company told 10 or more people about it. Thus, customer service affects both new customer acquisition and customer retention.