Loyalty programs are an effective way to reward your most frequent customers. In other words—you should definitely have one.
Unfortunately, it’s not as simple as issuing a few colorful punch cards and calling it a day. As fun as they are, these wallet-fatteners don’t come close to allowing you to tap into the full potential of your regulars. (Not to mention their high fraud rate and the inevitable redemption headaches that come along with the all-too-common “hanging chad.”)
At SCVNGR, we spend a lot of time researching loyalty, testing out the relative merits of various programs and mechanics and accruing thousands of points and rewards that we’ll never have time to redeem. (On that note: Anyone out there want a complimentary magic gravity ball that we earned? First to to tweet @SCVNGR or @TheLevelUp gets it!)
Here are 5 key points culled from our research to keep in mind as you construct your own loyalty program:
Do Have it Be Transactional
Integrating your loyalty program with actual transactions at your business accomplishes two crucial goals:
First, it reduces friction for the consumer. By using the transaction as the basis for your program, you’re eliminating any redemption issues that quickly arise with more complicated systems. Obviously, your employees have to understand the specifics of your program in order to deploy it successfully. If the program is tied directly to a task that they already perform, it’s far more likely to succeed.
Take Starbucks, for example. Their mobile rewards app, which allows users to pay seamlessly via their mobile phones, has over 3 million users in the 6 weeks since its launch. The novelty of the mobile payment method is undoubtedly a motivating factor, but since consumers are rewarded with Starbucks “stars” for merely completing a successful purchase, participation is a no-brainer.
Another important point to keep in mind: Whenever you ask the consumer to complete an additional action beyond the transaction in order to gain credit in a loyalty program, you’re placing distance between the positive emotion elicited by the reward and the action of purchasing an item or experience. Think of it in these terms: If you want to motivate a child to complete their chores, then you should reward him or her immediately after they clean their room. If you require them to land a perfect backflip before forking over the reward, they’ll associate the reward with the acrobatic move, not the desired chore completion.
Takeaway Point: Less consumer backflips, more transactional rewards.
Read the complete list of Seth’s tips here.