How to Launch an App Loyalty Program
How Long Does It Take To Setup?
The good news is that this is already part of your app software. When we build apps the loyalty program is integrated as a matter of course.
The realistic time for implementation is really up to you and will progress as you sign up your customers. So the straight answer is as long as it takes you to learn the system. From our end we can have the program up and running as soon as your app is launched.
Set A Start Date
Appoint a Loyalty Manager
If you want your launch to go as smoothly as possible you need to have someone running it. This person will become the project manager for your loyalty program implementation and execution, and ideally be the one who will oversee the loyalty program after launch.
Your loyalty program is not a sit and forget it tool and will not run itself. It is not an employee that will clock in and work for you. It needs maintenance and updating. You should make a commitment and a decision that this is what you want to do. Abandoning this half way through will disenfranchise your customers. On the other hand run it well and you will be rewarded with more income, reduced marketing costs and increased profits.
By appointing a loyalty manager you are ensuring that someone keeps the program on track. They also become an expert on the software and loyalty in general. You get a faster launch and have a loyalty expert on staff to make changes and tweaks down the road. All of this will ensure your program is as successful as possible!
Should I Scrap My Existing Program In My POS?
This question is asked all the time. It neither yes or no. Here are things to consider.
The App Program ties the customers to the app itself. This then in turn allows you to directly communicate with them as they will have to register and login to the app. Customers are then never more than a few feet from their phone and thus more likely to keep up with their points. When an app user is registered you can send them direct messages via push messages.
This program does not need an expensive POS system. This means it can run alongside or instead of the POS.
You could run two programs. This way you reward app users for downloading and using the app.
GOAL: Increase In Repeat Purchase Rate
The first sign of customer loyalty is the willingness to make a second purchase!
When a customer is loyal to a brand they will spend more per order.
Number of Customers That Purchased More Than Once Divided by Unique Customers in (365 Days)
GOAL: Increase In Customer Referrals
If a customer is loyal to your brand they will want to share you with their friends and family.
To track: Total number of referrals made in the last 365 days. Will require a tracking or measurement system.
GOAL: Increase In Spending
If the goal is to increase in spending you will need to know your average customer spend per year.
To Calculate: Annual revenue divided by # of customers in a year. You must be able to track customers via a database. IE Point of sale system. You may be able to track by your average customer spend per visit.
Decide How to Structure Your Loyalty Program
Step 1. Setting your point value
Now that you know what you are looking to achieve, you need to create the framework that will get you there. We like to work under the assumption that there is a customer journey that you are taking your shoppers through on the way to customer loyalty. This journey, combined with your loyalty program goals will help you decide the structure of your program, including what you want to reward points for, and the types of rewards you will offer your shoppers.
Knowing how much your points are worth is the most important part of your loyalty program. If you don’t know how much your points are worth then you don’t know how much money you are giving your customers.
REMEMBER POINTS = MONEY
Setting this is the 1st step in starting your loyalty program.
Step 2: Determine how much points are worth. (Redemption Value)
Firstly points only have value when they are spent and a customer gets something of value in return. For example a discount, free product or anything your customer can spend their points on.
Once we know what the customer can get in return for their points (Value of Reward) and how many points they are going to spend to get that rewards (points spent) we will then know the value of the points.
Heres an example. If a customer spends 1000 points to get a $10 discount then the points are worth $0.01 per point. What each point is worth is the Redemption Value. Setting this is the fist step in your program.
Lets say I want to determine how many points to give a customer for signing up I would determine how much money I was willing to give them for setting up an account. Lets say this is $.010 per customer and the value is 0.01 then the amount of points given to sign up is 10 points. If I were willing to spend $1 per customer to sign up for your program then I would of course give them 100 points.
Most retailers have a value Redemption Value of 0.01 but this can be anything. If you set your value at $1 then the customers will have have less points but higher value. You can make them less value, like $0.01 but give them more points and you will make your customer feel like they are rich in points.
IMPORTANT NOTE. Once you set how much your points are worth or Redemption Value you can then decide how much you are going to reward them for actions like making a purchase or giving a referral.
Motivate your customers with effective rewards.
Now you have determined how much your points are worth and their value you need to determine what to rewards your customers with.
There are many way to do this but a customer must be motivated so the reward needs to be valuable otherwise they will not be motivated.
#1 This would be a $ amount off or a % amount off or a free product. Discounts are effective when customers purchase frequently and want more of what you sell. If you are a luxury retailer with premium priced products or a furniture reseller this might not be a good or effective method for you.
#2. Exclusive Items or Status. This would be products or services that other customers cannot get. a good example of this would be to give loyalty program members exclusive access to sales or products or items. Exclusive items or status work well because of the principle of Scarcity. People want things more when other people cannot get it. Exclusivity is effective when you have a social customer base that loves to share. Customers love to show off things that others cannot get.
Reward # 3. Experiential Rewards. these rewards are things that your members can DO that make them happy. Examples include concert tickets, donating points to charity or meeting a celebrity, dinner for two, exclusive shopping parties etc. These work because customers associate happy memories with your brand. These rewards work when your customers don’t value material things and put more value on experiences.
You should choose the rewards that your customers value. Sometimes a customer survey is your most effective way finding out what motivates them.
What Should You Reward For?
How you should map your rewards to the customer. This ensures you are providing an effective motivator.
Now you have determined what your points are worth and what your customers can spend their points on, we can now look at what we can give our customer for doing.
What should you reward your customers for?
First you need to figure out what we want our customers to do.
We want to create a customer journey where our:
- Visitors become customers
- Customers become repeat purchasers
- Repeat customers become brand advocates and referrers.
To determine what to reward for you need to decide what will motivate your customer to move along this journey.
For example: To motivate visitors to become customers you can reward them for signing up on the app and give them a sign up bonus.
To motivate purchasers to become repeat purchasers you reward them for spending money. Their orders and purchases.
To reward repeat customers to become brand advocates you reward them for sharing and referrals.
When deciding what to reward for remember where the customer is in their journey.
Rewarding Customers For Purchasing
The most common and important action you can reward customers for is purchasing and ordering. But just how many points should you give them for this.
You have a few options.
Most retailers give a % back on purchase and the average is 1 – 2 % of the order but this depends on your margin for that product. If you know what your margin for that product is you can determine what % to give to the customer. If the customer is spending $200 on a product and the margin is 50 % you would of course give more than if the margin was only 20%. You could give a flat % across all your products to simplify things or a higher % if your were trying to clear things out from your store. An example would be 5% of points on all items over 90 days in your store. Instead of discounting the items to sell it just give a higher point value.
To make things easy you can start with 2 options.
Give 1% back on orders
Give bonus points for spending above the average order size. IE if your average order is $150 then give 2% for purchases over $200. This will encourage customers to spend a bit more to get bonus points.
How Many Points Should You Give For Actions?
How to determine the value of different customer actions you can reward for.
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