Expert Advice for Medium and Midsize Businesses

5 Steps to Build the Best Loyalty Program

Christiane Soto
Marketing Manager - SMB

How many loyalty cards do you have?  Well, I just cleaned out my wallet and found 25 loyalty cards. Twenty-five. Some were from restaurants. Many were from retailers. I was a little surprised, because, that number does not even include the digital programs I belong to through my credit cards.

Why so many?  Well, apparently I shop too much, so that might have to be a new year’s resolution. But I can tell you that I buy from every one of those businesses—regularly. I like receiving rewards for my loyalty.

And I am not alone. Loyalty programs are pervasive.

The Numbers Behind Loyalty

Accenture Interactive found that customers in loyalty clubs generate between 12 to 18 percent more revenue than customers not in loyalty programs. What’s more, loyalty program members rate their customer experiences higher than nonmembers—across most industries. 

Also, I am in the majority with my numerous memberships. American households are members of 29 loyalty programs spread among several industries. However, they are only active in 12.  

Again, like me, consumers join the loyalty programs of brands they like, and their participation in those programs influences their shopping behavior (i.e., where they shop, what they buy, and how much they spend).

Most customers gravitate toward loyalty program membership as a way to save money, but they also want something extra. If they do not receive the kind of recognition and service they are looking for, they drop out (just like the statistic above points out). 

Therefore, punch cards will not cut it anymore. Almost 60 percent of adults in customer loyalty programs say that getting special offers or treatment (not available to other customers) is important to them. Fifty-six percent (and this percentage is growing) want enhanced customer services, such as member-only events or services.

The bottom line?  Discounts are great, but today’s customers expect companies to know their preferences and their history—no matter whether they shop online or in a physical store. But that is not all. Those customer preferences will change. So customer loyalty programs must too.

Loyalty Programs for Small and Medium Businesses

So what is a small- to medium-sized business (SMB) to do? Develop the right loyalty program that will provide value to customers, drive meaningful experiences, and develop influential brand advocates. Loyal customers are not the exclusive domain of large companies.

With the right tools, SMBs can build the right loyalty program to promote and shape consumer behavior and grow the business. Here are five things to think about as you develop your loyalty program.

  1. Determine a target audience. You need to know their interests and preferences, so you can align the rewards you’re offering and provide value. Knowing their purchasing behavior is also essential; how often they buy from you and how much they spend may determine whether your program rewards are based on the number of visits or total dollars spent or if the rewards will be uniform, tiered, or customized. Punch cards cannot provide this information.
  2. Run the numbers. Loyalty programs have costs. Project those costs, determine the breakeven point and margin, and figure out what type of incremental spend is needed to make the program profitable.  
  3. Promote the program.  A critical aspect of your loyalty program will be communicating it to your target audience; this will help bring on new members and keep attrition rates low. Providing regular updates lets targeted customers not only learn about benefits, program enhancements, and new campaigns, but allows them to provide feedback that will help you keep the program fresh and relevant.
  4. Measure, measure, measure. Accurately measuring and understanding the results is a crucial part of any loyalty program. Are the costs too high? Did you hit your incremental spend threshold? Was the program profitable? Does some tweaking need to occur? To keep up with changing consumer demands, SMBs need to know how loyalty club members use the program, how their purchase behavior compares to non-members, etc.
  5. Use the right tool. With Oracle Loyalty Cloud, you SMB can gain a competitive advantage by developing a loyal customer base. Quickly engage and reward your customers and keep them coming back for more. Immediately connect POS data, loyalty data, and marketing data, for a 360-degree member view, to positively reinforce every personalized interaction and improve marketing and sales program.

Oracle Loyalty Cloud is the unified, flexible, customer-centric solution SMBs need. For more information on Oracle Loyalty Cloud, download our newest value brief.

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