Converting rewards into sales: how to use your loyalty program to drive sales
Across the country there are thousands of unloved loyalty programs ticking away adding cost to business’s 1P&L’s whilst racking up potentially huge liabilities on balance sheets.
Why? Because marketers haven’t worked out how to drive sales from this asset they so lovingly developed.
At best your customers bought into the original proposition of the loyalty program – excited by the chance of getting some real rewards for shopping with you. At worst they took a card just to stop your sales staff harassing them.
But, you protest, customers are using their cards. Is it because your efficient sales staff prompt them every time they front up to purchase? Are they just playing the game of building points or earning future discounts without even thinking about it? If so that’s a real problem. All that has been added to your business is a cost line and no extra sales or margin have resulted.
They aren’t being incentivised to change their behaviour by exciting and motivating promotions.
However you now have a valuable asset – whether you know it or not. Assuming the overall structure of your program is right for your business (that’s the topic for a blog another day!) its time to drive sales.
1. Don’t treat your loyalty program as an island. It should be a key contributor (and hopefully over time a driver) of your sales growth. Don’t leave your loyalty program isolated – develop a fully integrated plan that includes all marketing components. I’m still amazed by some retailers who sign up for issuing loyalty points with various cards and programs, promote it via email and direct mail but you wouldn’t know they were a partner when you walked their aisles!
2. Leverage other promotions and seasonal activities. You wouldn’t advertise your door stopping 50% off sale on TV and then not back it up with point of sale, so make sure your loyalty program members know about it too. Better still tell them first…and provide them with an opportunity to take advantage of the offer before everyone else.
3. Make members feel special. Ensure there are special offers only for loyalty members – they are (or should be) your best customers and therefore treat them accordingly.
4. Make offers realistic and attainable. Not all customers are created equal or for that matter can behave equally. This is where your data should come in. It is the most valuable aspect of your loyalty program and together with simple segmentation based on distinct customer groups can really start to drive sales. Focus on average spend, return visits, cross shopping – the aim being to gain greater share of wallet, and
5. Have some fun. Shopping should be fun – even if for business goods! People want to enjoy themselves and smile even if time is short. So why are so many loyalty programs so earnest? Differentiate your loyalty program, and your business, by creating a buzz. Make it a discussion piece – utilise social media sites like Facebook to get customers sharing and talking about you. Regularly introduce new elements, offers and events that your members want and will talk about – it needs to be fun!
Remember though to start small and test, test , test. Some things will work, other won’t…that’s fine as long as you’re learning.
And, if you’re listening hard enough, your customers will make it very clear how to get them to spend more with you and less with your competitors.