Common Mistakes in Customer Loyalty Programs


Businesses thrive on their ever-growing base of customers. To be able to do that, businesses need to ensure that the customers they acquire stay with them for a long time. This is done by offering best quality products, engaging customers, and giving them rewards for their loyalty.

If you are formulating a Customer Loyalty Program for your business, then you ought to ensure that you avoid some pitfalls which generally lead to downfall of many programs.

Customer loyalty programs are supposed to encourage customers to return to a store or business and to be satisfied with their offerings.

Here are a few things to avoid while making a customer loyalty program:

1. Superficial loyalty programs

A lot of times businesses create loyalty programs which offer superficial rewards associated with each sale. The reward points earned by customers convert into very less monetary value, and hence hold less meaning for customers. This does not succeed in attracting back customers and sometimes even discourages customers.

2. Don't spam

Do not flood loyal customers’ inboxes with too many marketing emails. Customers share their contact details to receive only valuable information. If they get information that in not relevant for them, then they may start ignoring your emails in future, and may even unsubscribe your mailing list.

Ensure that when you send a piece of information to your users, it is relevant and of value to them.

3. Preserve your margins

Offering loyalty rewards does not mean you cut into your revenue. It is good to offer discounts, but only if it adds to your revenue over time. This is done with proper revenue management analysis. Customer loyalty program rewards ought to be in alignment with the goals of the companies.

While designing a Customer Loyalty Program, ensure that it holds real value for both your business and customers. It should empower your customers to derive value and be satisfied.

Retaining a loyal customer costs five times less than acquiring a new customer, and a loyal customer spends 67% more than a new customer, so it’s worthwhile spending some time to plan well to understand what motivates your customers, before you create a loyalty program.

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