Chapter 7: Building Your Customer Database with Loyalty Programs & Special Offers

A vital part of building your business is gaining customers. Customers are of two kinds, those that buy once and disappear, and those that come back and buy again. Ideally, as many as possible of your customers will engage with you repeatedly, and you will collect information about them through those engagements. The information you collect becomes your customer database. You can use that database to discover your most valuable customers and create personas of your ideal customer. You can also use your database for several marketing activities, such as building customer profiles, sending calls to action and, as we shall discuss in this chapter, creating loyalty programs and making special offers.

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In turn, these programs help you generate a larger customer database, since they encourage one-off and occasional customers to return more often, register with you, and spread the word to friends and family. In these ways your database will grow and grow, providing a firm foundation for your business and increasing your revenues and profits.The value of repeat customers to your business is enormous. It takes between five and ten times the resources and money to acquire a new customer than it does to sell to an existing one. Furthermore, loyal customers spend on average 67% more than new customers do. Building customer loyalty and expanding your base of repeat customers is the most cost-effective way to expand your business and increase your revenue stream. There is no doubt this is a marketing activity that you should focus on, and one that you should certainly not neglect. Consider it a foundation activity of your marketing program.

What Is a Loyalty Program?

A loyalty program is a way of rewarding customers with discounts for repeat business. They have become a common part of marketing for many businesses. The rewards given may be direct cash back, store credit, free shipping, gifts, or a variety of other things. There is plenty of scope for innovation in designing what kind of reward is best for your business. Companies are often very creative with their loyalty programs, and in recent years, they have expanded the types of programs they offer consumers. What all loyalty programs have in common in the concept of customer loyalty. They reward customers for repeat shopping, and are normally linked to the amount of money spent.

A loyalty program gives something back to customers for being loyal to your company. Many businesses, both large and small, implement these programs. The actual reward and amount of loyalty varies based upon the individual business. Rewards could include free gifts, cash

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back, store credit, or any number of other items. Companies have become more creative with their loyalty programs in recent years, expanding upon the types of programs available to consumers.
Today, loyalty programs are found in many sectors of business, as this chart shows. Retail and hospitality are the biggest users, with over a billion enrolments in the retail sector alone. The largest retail users of loyalty programs were grocery stores and specialty retailers, but in recent years drug stores and department stores have seen rapid growth, and are beginning to catch up with specialty retailers in their total enrolments. The chart below shows some details of the growth figures
Retail Sector 2006 membership 2012 membership Growth
Grocery 135,493,000 172,420,000 27%
Drug Store 80,039,000 142,400,000 78%
Specialty Retail 137,473,000 360,517,500 162%
Department Store 89,985,000 193,892,000 115%
Total 481,457,000 1,035,114,000 115%

Figures taken from 2012 Colloquy Loyalty Census

How Did Loyalty Programs Develop?

The earliest loyalty programs in America began in the 18th century, when stores gave copper tokens as bonuses for purchases, which were then used as money in the store for future purchases. Later the Green Stamp system was developed, by a firm called Sperry & Hutchinson who created it in 1896. This became very popular in the depression years of the 1930s, and continued into the 1980s, until it was replaced by other systems, such as loyalty cards.

Retails such as stores and gas stations signed up for Green Stamps and gave what looked like postage stamps to customers, as a bonus to their purchases. The stamps came in different denominations of points, and the consumer put these into a special book, given free by S&H, until they had collected a sufficient number. Customers used these books of stamps to ‘buy’ products from Green Stamp stores or catalogs. Loyalty to the stores came in two ways – from the fact that they gave stamps, but also from the ability of stores to give more stamps per dollar spent than other stores did. The program spread to the UK, but died away during the 1970s, as more and more stamps were needed to obtain the gifts.

Betty Crocker introduced ‘box top’ loyalty coupons in 1929, and these also were popular with consumers, and developed brand loyalty. 1981 saw the introduction of ‘Frequent Flyer Points’ by American Airlines, a program that still exists today with 50 million members.

What Are Special Offers?

Special offers are marketing tools designed to raise a customer’s interest in a product, or influence their purchase habits. They are used to highlight a product and make it stand out from the competition. Usually they are offers of reduced prices, enhanced services, free upgrades, or other enticements, targeted towards specific people or through a specific outlet. Whatever form they take, special offers should only be available through a specific outlet or for people who have done a specific ‘task’, since if they are too general, sales at full price may fall sharply. Special offers typically take place through email, in-store , via social media, or for online shopping only. A wide variety of tasks may be used, from something as simple as ‘liking’ your Facebook page, following you on Twitter, signing up for a blog or email, as well as the more obvious purchasing of a specific product. These promotions may be offered through any type of business outlet, both virtual and real.

Why Are Loyalty Programs and Special Offers Important?

The purpose of these programs and offers is to increase sales, repeat business and company loyalty. Looked at another way, the goal is to convert a casual, and probably one-off visitor to your business into a customer, to convert that customer into a repeat purchaser, and from there to make them an advocate for your brand

Visitor -> Purchaser -> Repeat Purchaser -> Brand Advocate

Both loyalty programs and special offers help to bring in more business, and so they are another way of growing your customer database. More importantly, they help to create repeat business.

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At the beginning of the 20th century an Italian economist called Vilfredo Pareto realized that in many different circumstances, approximately 80% of effects are produced by 20% of the cause. For example, he discovered that 80% of the land in Italy was owned by 20% of the population. This idea is often called the ‘Pareto Principle’. Therefore, we often say, with some truth, that 80% of our results come from 20% of our work, but getting that last 20% requires 80% of our effort. A study of your sales may show that 80% of them come from only 20% of your customers, which should therefore encourage you to work on that other 80% to increase both the number and frequency of their purchases.

[OF NOTE: it’s hard to say that the Pareto Principle is actually true, and in many cases it does not in fact hold true at all, but it has the sound of something that ought to be true, and if following it leads to good outcomes, then something good has been done – what works is always worthwhile.]

Loyalty programs also show your customers how much you really appreciate them and their business, and this in turn is an important way to increase loyalty. Everybody likes to receive recognition for the things they do, and people tend to support businesses which support them, and pay attention to them.

Special offers are also used to drive sales towards a specific outlet of a chain, usually when sales in that outlet are low. By making a special offer only available at ‘our downtown store’ or something similar, sales can be increased and the exposure of customers to the outlet may also increase long-term business.

Special offers and loyalty programs are also often used as research and analysis tools to conduct studies on the success of various marketing efforts, and to assess how well certain marketing outlets are working.

Overall, these kinds of programs can and should be an integral part of your overall marketing strategy and they form part of the larger framework of your business activities.

Seven Steps to Creating Loyalty Programs and Special Offers

Step One: Decide on Your Goals

Begin by thinking about what it is you want to achieve with your program. For most companies, there are three possible goals for these programs, and you may want to do just one of them, although usually a company needs them all.

  • Generate Leads: we have talked in earlier chapters about the importance of leads and their vital place in a viable marketing plan. Both loyalty programs and special offers allow you to create leads by reaching out to visitors or complete strangers and attracting them to your business. However it is obvious that special offers will do this much more effectively. A person who doesn’t know your company is not going to be interested in being loyal until they see what you have to offer, and if it is valuable to them. So if your primary goal is to generate leads for your company, then some form of special offer is where you should focus your attention.
  • Encourage Existing Leads: Here again, special offers are probably the best way to encourage a lead to become a first-time customer. The extra impetus of ‘20% off’, or ‘free shipping’ may be all that is needed to create that purchase in a customer who is already thinking about it.
  • Create Repeat Purchases: If this is your goal, then clearly a loyalty program, alone or perhaps combined with some kind of special offer, is the way to go. Once a customer has started using your services, or buying your goods, the incentive of future benefit from more purchases is going to encourage them. This is where careful design of your program can give the best results

Step Two: Design Your Program Properly

The first thing you need to decide is what it is you are willing to give away. The next thing to realize is that whatever it is, the loss of revenue should not impact too much on your bottom line, since you are a business, not a charity. Consider the outcome you expect from your customer and how that will affect your ROI.

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Here’s an example…

You have a restaurant, and you run a special offer of a free desert with the purchase of a main course. Your normal dessert price is $5, but the unit cost to you is only $2. If the marginal profit on the main course is $12, then you are still left with a marginal profit of $10 – not bad, especially since the special offer will probably bring in some extra customers, increasing your take for the night. Overall, you have not impacted your bottom line negatively, and in fact, with the money they saved, some of your customers will buy a drink, generating more profit. Even more importantly, if this is their first time in your restaurant and they like it, they may turn into repeat customers and be back again. They may also write a review and become advocates of your restaurant for you. That is a pretty good return for $2.

Imagine though, that instead of a free dessert, you were to give a free main course with every dessert bought. Your marginal cost on main courses is $8, while the marginal profit on that dessert is $3.

Therefore, every meal costs you $5. Perhaps with a drink purchased you break even at best, so even if your restaurant is full (and with an offer like that it probably will be!) you will end the night with no profit to show. The best you can hope for is repeat business based on the quality of the experience and your great food.

Now in this example the correct choice to make is pretty obvious, but in other areas it may not be, so give careful thought to how your planned offer is going to impact your ROI, and make sure that is leaves you with some return.

VERY IMPORTANT: You MUST Train Your Customers the Right Way

This restaurant example also opens up another matter you should consider. After such a good deal as free dinner, if you don’t keep making great offers, customers may simply not come back. After something for nothing, everything seems expensive. This is a common problem if you become too addicted to giving offers, which is something that uncertain new business owners can easily do.

Here’s another example…

Jonnie runs a business giving seminars on retirement investment. She markets her seminars with an email newsletter, using an extensive customer list she purchased. The first email always includes an ‘early-bird discount’. That is, if someone books during the first seven days, they pay 30% less. As the date of the seminar approaches, she always sends a last-minute special offer of 30% off. Although her seminars are usually almost full, when she looks at her records she realizes that almost no one has paid the full price and she is losing money. What has gone wrong?

This business owner made two mistakes, however.

  • Mistake 1 – Those who get the newsletter and immediately book would almost all have done so without that early-bird discount – they are keen to get their investments going.
  • Mistake 2 – Anyone who gets the newsletter regularly soon realizes that Jonnie always put out that last-minute special, so they wait for it before booking. What she is doing is training customers to wait. Wait for the best deal, instead of acting right away and paying the full price.

This is something you want to avoid at all costs, and you need to devise systems that prevent it. Think about this – why is it that when you go shopping for clothes all the most popular sizes are already sold out? Maybe you think the buyers are stupid, because surely they would just buy more of those sizes, so they can sell more clothes. Well no, because if they do, there is a good chance they will be still be on the racks when sale time rolls around, and everyone will wait for the sales before they shop. Filling the racks with popular sizes would be training their customers to wait. So instead, they train their customers to buy quickly, at the beginning of the season, before their size is sold out, and of course for that ‘privilege’ they pay full price.

This trap is most common for goods where the purchase is either optional, or can easily be deferred to a later date. Even if you always offer a discount on, say, milk one day before its expiry date, most people will still be buying milk at full price and not waiting, since they need it now, not at the end of the week, and since the cheaper milk is about to expire they can’t stock up. However for, say, a bottle of perfume, you can always wait, and it will keep for a long time, which is why you never, ever see perfume on sale, except possible to launch a new brand, and even that is very rare.

Always consider these situations when planning your offers, and don’t make the mistake of sending out the wrong lessons.

Step Three: Decide What to Give

OPTION 1: Special Offers

Special offers are what they sound like – something that is only available for a limited time.

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There are several kinds of special offer systems commonly seen in marketing:

  • The commonest special offer is the simplest – a percentage off a certain product or off the whole order. This is often done with items that have sold slowly, or that have a large marginal profit, so that you are still left with some profit after the discount. If you offer a discount on a whole order, usually you need to set a minimum purchase, so that the cumulative marginal profits left after the discount will be sufficient. Although it might be tempting to dump a very slow selling item at a price below its cost to you, to generate some revenue, try to avoid doing this. That loss must be made up from other sales, eroding the value of sales at full price and sharply reducing your overall profit for the period – you could even end up making a loss overall. This in turn may impact your relationship with backers and lenders, who prefer to see even a very small profit to an outright loss. The correct time to sell those unwanted items at clearance prices is during the busiest times of the year, so that the profit from the other sales more than covers the losses.

  • Free shipping for a limited period of time is another popular offer. Again, the marginal cost of that shipping must be covered by the marginal profit of the purchases, so it is usual to limit free shipping offers to a minimum purchase – $50 for example. If you sell large or heavy products, shipping could be quite expensive, and you may already be doing it at a break-even price, so free shipping is more suitable for small items with low shipping costs.

  • A gift with purchases that reach a certain minimum is another popular kind of special offer. The trick here is to find a gift that customers will want enough to spur them to make a purchase, but not so expensive to you that it eats up the marginal profit on the item purchased.

  • Store credit or gift cards after spending a certain minimum amount is another alternative. This is like giving a free gift, but it has the advantage that the customer gets to choose the gift, which is obviously a good thing. The other benefit with this kind of special offer is that many customers will spend more than the value of the credit, so you will make a larger sale. Special offer credits and gift cards are usually time limited, often short-term, such as three to seven days. This is because open-dated credits and cards usually end up never being used at all, so their potential value is lost to both the customer and your business. By limiting the time, customers are encouraged to act on the offer, thus generating the up-sell and increasing their exposure to your shopping environment.

OPTION 2: Loyalty Programs

These programs differ fundamentally from special offers, because they are continuous, with no expiry date. Their prime purpose is to develop repeat purchases, and to create a relationship with customers so that your business is their automatic choice. To do this a loyalty program has to get better the more it is used, so there should be different levels available, if possible.

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Here are some examples of common types of loyalty programs:

  • A percentage off the next purchase is perhaps the simplest program, but also probably the most expensive to operate. To incentivize larger purchases, these are usually tiered. For example, if someone spends $25 they may receive a 5% coupon, while if someone spends $50 they may receive a 10% coupon. Just how high to go with this depends on your average marginal profit, but the upper limits are usually between 30% and 50%.
  • Free offer after several purchases is the system we associate with ‘coffee cards’ and other punch-card systems. Here you buy a certain number of units, and then get the next one free. These are popular systems that work best with smaller but frequent purchases, like that morning coffee or Friday night pizza.
  • Store credit systems based on points are used by many retail businesses, such as grocery stores and drug stores. These are accumulated via loyalty cards, and that also give the store an opportunity to collect immediate customer data, like their address, email and mobile number. Since the card is now linked to a customer profile, it also generates a lot of data on buying habits, which can be more valuable than the cost of the discounts. A customer earns points based on the purchase, so for example you could award one point for every $10 spent. Each point could then be worth some amount, such as $1, or $0.10, depending on the marginal profits available to you. Of course, the points must be spent in the store, or sometimes other stores of the same group. As points accumulate, they can become more valuable, so for example the first 100 points are worth $1, the next 100 are worth $1.20 up to 500 points, the next $1.50, and so on. This method is used to discourage customers from cashing in small numbers of points on small purchases, and eating up the small profit on those small items. Instead, they are more likely to wait to accumulate more points, then make a larger purchase where you have a good margin of profit.
  • Tiered gifts also generate loyalty. In this system, as customers spent in your store they accumulate a set amount of money towards gifts, which could also be a service, like shipping or a consultation. Like the increasing value of points, the longer the customer defers cashing in, the more valuable the gift becomes. Although a customer can redeem the value at whichever tier they wish, many will continue to save them in order to reach a higher tier. Often the uppermost tier is an extremely valuable gift, such as a car. In practice this tier will only be attainable if a large amount is spent, but some customers will defer cashing in for lower gifts indefinitely, developing loyalty at no cost at all to the business.
  • Limited edition products are sometimes offered for accumulated points. This may be your normal product, but in a unique color, or with a special logo. This tactic is not used much, since it depends entirely on a high demand for the limited edition product. This is usually found only in prestige or niche brands, where a lot of status can be acquired among the in-crowd by having the item. High-end running shoes or skateboards might be examples of this.

Remember that you can allow your customers to earn nearly anything through a rewards program, and you can set your special offers up in any way you choose. The big point is that you are rewarding them with something for patronizing your store. Since this makes your customers feel wanted, needed, and appreciated, it helps to grow your customer database.

How to Build Customer Retention

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Remember that a loyalty program is just one part of your larger job of developing customer loyalty and retaining those all-important regular customers, who generate most of your business.

The two other ‘legs’ on the loyalty stool are customer service, and providing a product or service that your customers see as high value.

All three legs of the stool need to be balanced, and you cannot expect any one of them, such as a loyalty program, to make up for failings in other areas of your business. There is no one ‘quick fix’.

Step Four: Decide What Customers Must Do

A large part of this step was done in Step Three, so these steps tend to overlap. Now you must decide the details of what your customers must do to gain their rewards. Of the loyalty program ideas we looked at above, giving coupons is a good one to use as an example, since this type of loyalty program can be applied to all forms of business.

Here is what a coupon Loyalty Program might look like…

  • Using our marginal profit as a guide, we set a minimum purchase requirement of $25.
  • Since there may be additional expenses, such as packaging and shipping, we make a rule that the $25 must be in a single purchase, not accumulated across several smaller purchases. There is an assumption here that some of our goods or services sell for less than $25, and others for more – otherwise that cut-off point is illogical, something your clients will quickly notice.
  • Now we establish the steps in the program. Let’s say we make them like this:
    • 5% off coupon for $25 spent in a single purchase
    • 10% off coupon for $50 spent in a single purchase
    • 15% off coupon for $75 spent in a single purchase
    • 20% off coupon for $100 spent in a single purchase
    • 25% off coupon for $150 spent in a single purchase
  • We could continue to go up, as long as we do not exceed our marginal profit and start selling goods below cost. Notice that you need to be very specific in making your offer. The percentage off a future purchase and the size of the necessary minimum purchase has been listed. These small details are important to make your offer completely clear to your customers. This is the way to prevent confusion and stop disputes before they even happen.

And here’s what a Special Offer might look like…

Everyone on your email customer list, or who subscribe to your blog receive a message giving them a code or printable coupon that can be used for a discount on a purchase, a free gift or something else we discussed earlier. Typically, your offer will be available through a specific outlet – a new one perhaps, or one that has been recently renovated, or perhaps one that has been suffering lower sales than others have. Such a special offer will normally be time dated, perhaps for seven days.

Something to consider carefully with both special offers and loyalty programs is that rewards should not be too difficult for a customer to obtain. They should be well within reach or your customers will go somewhere else where the rewards are easier to obtain. However, this does not have to apply for all levels of your program.

As we discussed earlier, having a really big prize at the top, which is hard to obtain, makes for a more exciting program, but the lower level rewards need to be worthwhile too, otherwise the incentive is lost. Two things – immediate gratification and deferred achievement – motivate people. People differ in which is more important to them. A good program will appeal to both kinds of reward seeking, and therefore to all kinds of people.

Also, keep your program simple, straightforward and easily understood. If it is hard to understand people will lose interest, just as they will if rewards are too slow in coming.

Step Five: Decide How to Keep Track

There is no point in setting up a loyalty program or making special offers if you don’t track the results. As part of your initial planning, design a way to keep track of from the start. The easiest way to track special offers is to create a link to a code or coupon. Then you track activity on the link in relation to the total offers you made and you can calculate a percentage take-up of the offer.

For loyalty programs, the best way to keep track of their success is to keep a database. This will include the basic information for each person signed up to participate in the program. Keep track of the redemption rate and you can see if people are actually using the program. Don’t expect everyone who signs up to actually use the program sufficiently to reach a redemption, but if you only have a low number then perhaps your program is too difficult and needs revising.

Loyalty Apps

Loyalty programs across the consumer world have experienced rapid growth, but for small businesses developing one can be a daunting task, with all the cards, tracking, and systems needed. Fortunately, mobile devices – smartphones and pads – have become so widely used that they now offer a viable way to run a loyalty program.

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A number of providers have stepped in to offer ready-designed loyalty systems that you then tailor to your particular requirements. These require little or no new procedures for the business, and include full tracking facilities. They operate through an app downloaded by your customers, which then tracks their loyalty and gives the rewards. Some of the larger providers are:

  • Belly – allows you to organize both the marketing and running of your loyalty program, and can be customized for your specific needs.
  • Spring Rewards – uses customers’ existing debit and credit cards to run the program, and it has powerful analytics to track everything you need to know about the progress of your program..
  • Pirq – has a virtual punch card that tracks loyalty and shows the level of reward the customer is working towards.
  • Five Stars – signs up customers in your store, then allows them to check their rewards on their phones. It includes follow-up emails and full tracking.

Step Six: Market and Promote Your Campaign

Now that you have hammered out the details for your loyalty program or special offer, it is time to develop a campaign to promote it. Your loyalty program or special offers will not work if no one knows they exist. So developing your marketing campaign is just as important as developing the promotion itself.

Here are a few tips for setting up your campaign:

  • Start with your website – add all the relevant information about your program in a high-traffic area of your site. This may be on the home page or on a side bar. You could also create an entirely new page, of course with bold, clear links to your home page and other high-traffic pages.
  • Always incorporate social media into your marketing campaign. Put your program on your Facebook page, use twitter to distribute it, and generally stay connected.
  • Use calls to action at the end of your blog posts that ask people to sign up for your loyalty program. For special offers, you can have them sign up or direct them to the outlet you plan to use to host your offers.
  • Stay true to your company brand – Whatever you do, make sure it fits your brand, so do nothing down-market if your brand is upscale.
  • Use visual promotion as well as text. As in other marketing campaigns, visuals add a lot of value and make your campaign more successful.
  • Create a YouTube video explaining your loyalty program or special offer. In an increasingly visual world, many people prefer words and pictures to text.
  • Expand your primary reach as much as possible during this campaign, as these programs are a great way to encourage new customers to join you.
  • OF NOTE: physical advertisements are still very important, even in this modern, virtual world. Traditional advertising aids like flyers, posters, commercials, billboards, banners, and information sheets set up in your store should still be part of your promotional campaign. This is especially important to reach older demographic groups, but even the most virtual of potential customers responds well to visual cues.

Step Seven: Get Your Program Up and Running

Now you have all your ducks in a row, launch your campaign. A special offer to draw people to your loyalty program could be a good way to get the ball rolling. If you have successfully promoted your offers or your program, you can look forward to seeing your customer database begin to grow steadily.

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Loyalty Program & Special Offers Upkeep

While setting up these promotions is undoubtedly the hardest part, there are some tasks that must be done on a daily, monthly, weekly, and annual basis to keep your programs up to date. Since special offers usually run for a limited period, the upkeep for these is much easier than for loyalty programs. For special offers, daily upkeep is all that is required, since most run for less than a week.

Here are the daily upkeep items for special offers…

  1. Track how many people have clicked on your promotional link.
  2. Track how many of those people have actually used the special offer.
  3. Track how well your offer is helping your other statistics. You should see an increase in likes or follows on social media or blogs, increased sign-ups for emails, and other things you may have set up especially for this program.
  4. Check for any glitches or errors in your campaign or offer links.

A loyalty program is more difficult to maintain. Because they run long-term, instead of for a short period, these programs need more maintenance, which in turn is more difficult to do. Loyalty programs can span decades. The good news is that although they may be more difficult to maintain, they also build your customer database better than many short-term promotions can.

With that in mind, here are the upkeep items for your loyalty program…

Daily

  1. Analyze your statistics. See how many people have signed up for your loyalty program in the last twenty-four hours. Tracking this shows you just which days do better than others do. You can cross-analyze this at later points with the marketing techniques you may have implemented on any particular day, to see if there is a trend in the best approach to use for your target audience.
  2. Share a helpful bit of information about your program on your social media accounts. This could be answering a question, highlighting a specific feature, or anything else that may be helpful to your target audience.
  3. ‘Like’ all comments left on your previous day’s informative post. This shows your customers that you care about what they have to say, and that you take the time to read their comments.

Weekly

  1. Check all links (on your website, blog, etc.) which redirect to your loyalty program sign up form and make sure they are working correctly.
  2. Gently prompt your audience to sign up for your loyalty program. Use a promotional picture to help you do this, but be gentle, and do not make it too pushy.
  3. Boost at least one post containing information about your loyalty program on Facebook. You can boost posts for as little as $5.

Monthly

  1. Host a giveaway on Rafflecopter, a platform widely used by companies of all sizes for giveaway promotions. Use signing up for your loyalty program as the most prominent way people can enter.
  2. Reassess the marketing campaign you set up for your loyalty program. Update any areas of the campaign that are not working well.
  3. Check your analytics in depth. How many people have signed up over the last month? Is it better or worse than the month before? Compare this to the marketing techniques you have been using during that time, and compare it to other periods using different campaigns.

Annually

  1. Update your loyalty program to include any new information, products, services, or ideas that you may have.
  2. Revamp your loyalty program description to fit any changes you have made.

7 Things to Avoid

These are things to avoid at all costs – you want your social media campaign to be successful, don’t you? Watch out for these very common mistakes:

1. Making your rewards too difficult to obtain – they should be reasonably within your customers reach.
2. Making your rewards program confusing – keep it simple and straightforward. Have someone from outside your business look at the program outline and see if they can easily understand it. A family member could be ideal for this. If they are confused, then start over.
3. Copying another company’s loyalty program – an exact copy of another program will not help you at all, since your customers can go elsewhere for the exact same thing. There are plenty of small, key ways to differentiate your program from others, and increase its value, so use them.
4. Calling your program anything other than what it is – call it a loyalty or rewards program. Cute names for it might seem like a good idea to differentiate your program, but they will only confuse your customers.
5. Over or under marketing your program: – under marketing can mean your customers forgetting about it entirely. Over marketing can annoy them and hurt your company and program. Find the right balance for your target audience and stick with it.
6. Never changing your programs – add variety and incorporate other items throughout the year. For example, if your rewards are primarily given as points, offer your loyalty program customers a few coupons or special deals throughout the year. Adding extras means that everyone is receiving something regularly enough to stay interested.
7. Using just one channel for your rewards program – instead, market and promote it through all channels. Your customers should also be able to access it through most or all of the channels you are on.

Your Top Priorities

Everything is important and should be completed, but what if you just don’t have the time? Small startups can simply lack the time, money, and work force to complete successfully every given task day after day. There are some companies with only one person carrying out all their marketing. If this sounds like you, what should your top priorities be? If you only have five minutes each day to devote towards your offers and programs, what should you do with those five minutes?

Here is a comprehensive list of how to spend those five minutes productively…

    Monday-Friday

    Share a bit of helpful information about your loyalty program or special offer on your three main social media networks. (Estimated Time: 3-4 minutes)

    AND

    Like all comments left on the informative post about your program you put up the day before. (Estimated Time: 1-2 minutes)

    Saturday

    Post a gentle, visual reminder to sign up for your loyalty program. (Estimated Time: 3-4 minutes)

    AND

    Boost your visual post on Facebook to gain more views. (Estimated Time: 1-2 minutes)

    Sunday

    Check all links and images pertaining to your loyalty program or special offer. (Estimated Time: 5 minutes)

Although these are the items to focus on if you have only five minutes a day, a much better solution is to outsource a few additional items. Like all other aspects of business, the more work you can put towards these promotions the better your results are going to be.

Getting Professional Assistance

Outsourcing is a popular way to get more work done for less money and in a shorter amount of time. Hiring a professional has benefits over and beyond this, however. With a professional, you will receive higher quality work with a smaller margin for errors. You may also find you encounter less stress in your life because you can be certain things are done right . . . the first time.

Here are some tasks associated with your social media campaign for which most experts would advise hiring a professional:

Social Media Marketing
The social media marketing portion of your loyalty program or special offer can easily be outsourced to save time. It’s a mundane task and one of the jobs most commonly outsourced by companies today. Professionals are also better qualified to market. They can assess trends, formulate visual promotions as well as text, and ‘sell’ your program better than you can. They will use the appropriate methods for these particular marketing outlets.

Design
Some people wonder why they need to hire a designer at all, but a quick look at your competition should convince you. You need a page on your website designed to explain your program to your customers. You need a form designed so people can sign up. You also need promotional graphics designed for both your blog and social media accounts. A professional graphics designer has the skills and creativity to get the job done successfully. Taking this option means that all your material is professional and of high quality – just the way you want it to be.

Management
Hiring a manager to look over the day-to-day tasks of your programs can help reduce your workload. As the owner of a small business, you already have enough on your plate. Besides simply easing your own stress and freeing up a bit of extra time, other benefits come from hiring a manager for your program and associated campaign. These professionals may be better at assigning tasks, making use of available time, and increasing productivity. A professional always does a better job.

Link Building
Link building is a viable tool that helps direct people to your site, but throwing links up anywhere and hoping they work is not effective at all. It takes skill, knowledge, and a lot of time to learn where the links will do the most good. Hiring a professional takes the hassle and guess work out of this task. It also gives you confidence that it is really being done correctly.

When Will I See Results?

One of the great things about marketing campaigns using loyalty programs and special offers is that the give quick results. With their short life-span, special offer campaigns will give you measurable results in a matter of days. Looking at the rate of uptake, the growth in enrolments and the growth of your customer database will immediately show that you have succeeded.

Loyalty programs, on the other hand, take time to develop and show an increase in business, and the sign-ups that expand your customer database take time too. However, within a few months you should see a measurable increase in your database, and if you integrate your program into your business activities, that growth should continue steadily year on year.

How to Measure Success

Since all programs are different, and may have different goals, measuring success of a loyalty program can be complex.

These metrics are especially useful in making that assessment:

  • Customer Retention Rate – This is a measure of how long a customer has been with you, so you will need to have your loyalty program in place for some time before you see meaningful figures. Although the increases may be small, remember that a 5% increase in retention can translate into an increase of between 25% and 100% in your company profits.
  • Negative Churn – Your churn rate is the measure of customers coming or going, so negative churn measures how many customers don’t upgrade, or buy additional services, for example. If this rate is falling, your program is succeeding.
  • Net Promoter Score – This is the answer to the survey question, “Would you recommend our company to others?” An increase in this score indicates success of a loyalty program. 70% is considered a very good score to aim for.

Summary

In this section of the course, we covered the following topics. Make sure you understand them all before moving on to the next section:

  • What is a Loyalty Program?
  • What are Special Offers?
  • Why are Special Offers and Loyalty Programs important?
  • Seven Steps to Creating Loyalty Programs and Special Offers
    • Decide on your Goals – know what you need and choose the right program
    • Design your program properly – build the program for the results you want
    • Decide what to give – make it what your customers want
    • Decide what customers must do – keep it clear and achievable
    • Decide how to keep track – metrics are everything
    • Market and promote your campaign – get the word out
    • Get your program up and running – time for action
    • Loyalty Program & Special Offers upkeep
  • Keep your Social Media current
  • Tips for success
  • Things to avoid
  • Your top priorities
  • Getting professional assistance – why professional help pays for itself
  • When will I see results?
  • How to measure success
  • Conclusion

    Using loyalty programs and special offers can be an incredibly effective way of growing your customer database. They offer one of the best ways to build loyalty and increase customer retention. follow the steps listed above, keeping the tips provided at the forefront of your mind, and you will successfully execute these promotions in ways that will be effective in growing your customer database.