Loyalty programmes are a great way for small retailers to set up reliable dialogue with their core customers, whilst also promoting their brand and creating revenue streams to benefit both them and their customers. These schemes are also a great way to leverage existing gift card infrastructure to create a loyalty programme that drives customer acquisition, retention and behaviour.

My top tips are as follows:

1. Keep it simple. Customers need to understand a product before they buy into it. Points systems work well as the mechanic behind a loyalty scheme, specifically because they can increase the perceived value of rewards. However, when consumers have no concept of the value of their points, it can diminish their interest in the scheme. Make it clear what the points stand for and how they benefit the customer.

2. Drive customer behaviour. The biggest advantage of loyalty schemes is that they introduce a personal relationship between the customer and the retailer. Careful monitoring of spending patterns within specific demographics can significantly increase the value and efficiency of promotional activity to drive customer behaviour.

3. Make it quick. There is a small window within which the average customer is willing to focus on and devote time to joining a retail promotion. The quicker this process can be, the higher the success rate. Some stores have begun embracing this by offering quick registration booths where loyalty cards can be set up instantly and with little hassle. This may well be the best practice approach taken by retailers to their loyalty programmes in the future.

4. Get the balance right. Loyalty programmes offer a great opportunity for companies to open up communications with their customers. However badly handled communications, poor spelling and irrelevant information can be a real turn-off. Customers need to be given a simple set of options to control the level of communication they receive. This needs to be introduced after the sign-up stage to keep the onboarding of customers as painless as possible.

5. Make the most of technology to understand the customer. Loyalty schemes are a great way for retailers to collect a multitude of data on their customers. Loyalty schemes can shed light on what the customer likes, how they tend to shop and how best to connect with them in the future. Retailers must use technology to their advantage and act upon this information to ensure best practice.

6. Keep it personal. Customers want communications and offers that are relevant to them, based on their profile, demographic and spending patterns. Simple gestures such as birthday rewards, additional points on “the things you love” or exclusive sale previews enhance engagement with the scheme and the retailer.

There are plenty of priorities to balance against one another and technologies to bear in mind when establishing and optimising a loyalty programme. The important thing is to be aware of all the possible advantages and pitfalls. In this way, a best practice approach will be brought within reach.

 

By Ajay Sethi, Retail and Corporate Manager at PrePay Solutions. 

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