The explosion of online retail coupled with the economic downturn has made it increasingly challenging for UK brands that rely on encouraging customers through their doors, to maintain consistent sales. However, those that are focused on developing loyalty amongst their target consumers are reaping the rewards, particularly by capitalising on the opportunities digital media offers.
In the UK, 73% of people are members of at least one loyalty scheme (Analysis Mason for Buongiorno, 2011) and particularly in the hospitality sector, it has become second nature for customers to more frequently visit a coffee shop, restaurant or bar that offers them a loyalty programme to suit their needs. However, in tight financial circumstances, consumers can be fickle and quick to switch allegiance particularly if they feel the brand is not delivering exactly what they want.
Here are the ‘top tips’ for creating an effective loyalty marketing programme:
1. Above all keep it simple for the consumers
Complex points-based systems are always tempting, but your staff need to be able to explain it to a customer in one line for it to be really effective. The best is often a stamp card: “Visit us six times and we’ll give you a free drink”. We run a promotion along these lines in nearly 100 Greene King pubs. Simple, but very effective.
2. Keep it simple for your staff
By far the most common reason we see for the failure of loyalty programmes is that the staff don’t know about or understand the system. Make sure they are offering to sign customers up to the programme at every opportunity, and know what to do when presented with a card. Your staff talk to every single one of your customers- they are by far your most effective marketing tool!
3. Make sure you are changing peoples’ behaviour
We see far too many schemes that simply reward customers for doing exactly what they would have done anyway. In the end you are just discounting to your most loyal customers who probably don’t need the discount in the first place. Effective schemes will either get them to come to you rather than your competitors, get them to consume more often, or ideally also get them to spend more on each visit. Getting this bit right is key to the financial success of any loyalty plan, and is where working with an experienced company like Footfall123 can really help. Think of once a day stamp cards, escalating rewards, double points during quiet times – these will all change behaviour.
4. Consider tiered rewards
You can keep customers coming back by increasing the reward the more they visit. For example, a restaurant might offer a free side dish on the fourth visit, a free glass of wine on the seventh visit and a free bottle of wine on the tenth visit. This helps customers to appreciate the value in the programme right from the start and makes the scheme aspirational.
5. Collect customer data
If you’re offering out cards, make sure customers can register them easily. It is often worthwhile offering an additional reward for registering. We have many successful programmes involving stamp cards where the customer can gain extra stamps simply by registering the card. It’s a great way of gathering data and allowing you to contact your customers again.
6. Calculate your margins, but be generous.
Make sure you can afford it in the long term, but try to be as generous as possible. Remember it takes more than you think to change people’s behaviour.
7. Try to keep the time it will take a customer to earn a reward between one and eight weeks.
If customers have to visit 20 times or it takes four months to reap any reward then the majority of people will give up early in the process. Keep the reward close! Long term rewards only really work for very powerful brands, for example Tesco or BP, where the customer will be visiting very regularly over a long period of time.
8. Be aware of fraud
If you offer a decent reward, you may encounter fake stamps and customer or staff fraud. One way of tackling this issue, which we use for our programmes, is to use secure 2D barcodes which can prevent fraud completely.
9. Use a plastic card as a marketing tool, and a digital card for customers to use.
The best loyalty schemes combine both a physical card to give the customer and a digital card for the customer to keep on their phone. We track everything around loyalty cards, and we have found that on average for the first few transactions people use a plastic card, and after that they switch to using a digital version. This is because while the plastic card is a great marketing tool, people tend to lose or forget them, but will always have their phone on them.
10. Remind People about the programme with a snappy newsletter
If you have collected the data it is important to use it. If possible, send out a monthly newsletter to remind people they have your card, just to keep it front of mind. A good programme will also enable you to identify your best customers, and you can reward them by offering them a little extra something when they visit. E.g.to the people that have already come five times this month send a little thank you, “We know you love us and we want to help you share that love, so come down with a friend and treat them for free. We’re offering a two-for-one on any main, but shhhh…this is just for our favourite customers.”
And as a bonus word of wisdom don’t forget the obvious…!
11. Don’t forget to promote your own programme
Use visual marketing within your business (for example posters and flyers) to promote the loyalty scheme to existing and potential customers. Utilise the opportunities offered by social media, and update all these channels with the relevant information. If you have a database, sending out an email is a simple and effective way of communicating the message.
