From simple stamp cards that let you purchase your way to a free smoothie or coffee, to complex reward programs supported by a range of digital bells and whistles, most companies today are invested in loyalty.
From a brand perspective, it’s not surprising when you consider that loyal customers are likely to be more profitable in the long term. For example, surveys by global management consulting firm Bain & Company found that repeat customers spend more and generate larger transactions, and they also refer more people and bring in more business.
And, of course, there’s the fact that it’s much more cost effective to hold on to your existing customers than it is to try to win new ones.
The same goes for companies wanting to retain skilled staff members. It’s more expensive to hire new recruits, and a high turnover rate costs companies in more ways than one.
If you’re thinking about launching a rewards program, the good news is that you’re doing it in a market that’s open to loyalty initiatives. In a recent Nielsen Global Retail Loyalty Survey, 84% of South African respondents said that they were currently members of a loyalty program, and 62% stated that they belonged to between two to five schemes.
While these statistics are encouraging and show that South Africans are well versed in the language of loyalty, they also mean that your rewards program will have to work hard to make an impression.
Here are eight tips to help you get it right.
1. Define the ‘why’
One of the first things you need to do is identify the program’s reason for being. Do you want to retain high-value customers, incentivise your channel partners, attract top talent to your company or reward your existing employees? Make sure you know exactly what you want to achieve – these goals and objectives will help you make decisions at each step of the process, from design to launch.
2. Get to know your market
The more you know about your potential participants, the more you can tailor your program to appeal to them. If you’re planning an employee rewards program, you’ll have basic data at your disposal, but it might be worth running a survey or two to get input from your staff. Try to find out what sort of rewards will drive the most engagement, whether that’s time off, cash bonuses, gift cards, merchandise or experiences. The same goes for a customer rewards program. You’ll want to know their spending habits, favourite retailers and brands, what media they consume, etc. Use your existing customer segmentation data and conduct market research if you need to.
3. Align your design
Here are three things to keep in mind when getting to grips with the design of your program:
Your participants: Keep them front and centre throughout the design process, from the mechanics of the program and the communications strategy through to the choice of rewards. What will draw them in and keep them interested?
Your brand: Your program should reflect your brand in terms of your company values, visual design and tone of voice. What you offer and how you offer it should strengthen your brand and make sense to your market.
The user experience: Design a program that’s easy to understand and use. Avoid the temptation to complicate things and focus on creating a seamless experience for your participants.
4. Select a range of rewards
Factors to think about when choosing rewards for your program include your program objectives and brand values, as well as your participant profiles. What will drive engagement and encourage the loyalty that you’re looking for? When making your selection, you could consider including any of the following in your offering: merchandise, retail cards (such as pre-paid gift cards and reusable shopping cards), digital vouchers, experiential rewards and travel experiences.
5. Gather data – and use it effectively
Your rewards or loyalty program gives you the opportunity to gather valuable information about your customers. Build analytics into your system so you can mine this data, from the registration process through to customer transactions. This will enable you to personalise the program and deliver targeted rewards. Remember that you can also test various rewards and promotions to see which work best with your different customer segments.
But beyond your loyalty program, this wealth of information can help you to improve your overall customer experience and inform business decisions, from future product development to campaigns.
6. Keep on testing
It goes without saying that you should test your loyalty or reward program extensively before launching it, from the onboarding and registration process through to rewards fulfilment. But testing doesn’t stop once you launch the program; it should continue throughout so that you can keep improving the user experience.
7. Think about delivery and distribution
How you manage your delivery and distribution will depend on whether you offer physical rewards like merchandise, electronic rewards like digital vouchers and online shopping rewards, or a combination of the two. You may want to invest in digital infrastructure and software which you can run yourself, or you could consider outsourcing your delivery and distribution to experienced service providers who already have the required infrastructure in place.
8. Determine how you measure success
What is your criteria for a successful loyalty or rewards program? Here’s where you go back to the beginning and revisit your reasons for implementing your program. Identify key metrics based on your goals and objectives and use them to measure specific program results. For example, in a loyalty program, some of the metrics you can measure include customer retention rates, customer lifetime value, customer engagement and repeat purchase rate. For an employee rewards program, you may want to look at metrics like engagement with the program, reward redemptions and employee turnover rate.
Put together, these eight tips can help you shape a loyalty and reward program that connects people with your brand, meaningfully and memorably. In an age when customers’ loyalty is being pulled in different directions, you’ll want to do all you can to attract and keep your customers close.