How to increase customer loyalty?

September 12, 2022

The customer loyalty program is the process of developing long-term relationships with the client, fostering trust and love for the store.

Imagine your ideal buyer. He often visits your store. Buys are not everything in a row, but only goods with high margins. Constantly interested in new products. You know his family and friends because they also buy from you. He never buys in other stores what he can buy from you. At the mention of competitors, he grimaces: “I know where it is better,” and tells everyone what is best with him.

There is a life hack how to grow such a buyer – use a loyalty program. Arrange your store in such a way that the buyer becomes your friend.

customer loyalty

What are the types of loyalty?

Rewards – discounts and bonuses – help to convince the client to buy. The discount is the amount the store is willing to reduce the cost of goods.

So, the bonus is a percentage of the purchase price, which is credited to the customer’s account.

Accordingly, the scheme by which discounts and bonuses are accrued determines the type of loyalty program.

Discount program

The customer receives a discount with every purchase. The discount can be fixed, for example, a constant 5% of the check amount. Or progressive – the larger the check, the greater the discount.

The purpose of the discount is to encourage the customer to buy here and now. The discount will be an excellent argument when the buyer is ready to buy, but chooses between competitors.

Discounts do not work well for retention: the client has already received the benefit and, perhaps, next time he will buy not from you, but from a competitor. But customers love discounts, use them, and you can set up such a program at the checkout.

Loyalty bonus program

Bonuses are awarded for purchases to the client. As with discounts, the percentage of accrued bonuses can be constant or grow with a check. Use bonuses as a discount on further purchases, turning them into cashback or exchange for free goods or privileges.

Bonuses not only affect the choice of a store but can convince them to buy a product that the client had not even thought about buying before.

Bonuses are delayed discounts. You promised it to the client, increased his loyalty, and secured a repeat sale. Before the client uses the bonuses, he will make several purchases.

The disadvantage is that bonuses do not work in stores with a low purchase frequency: it is not profitable for customers to accumulate bonuses from rare purchases.

Loyalty bonus program

Multilevel program

A multi-level program is a complicated discount or bonus program. Thus, each client has his own level of loyalty. The more the customer buys, the higher the level and the greater the discount or bonuses.

A multi-level program has a serious advantage – you do not reward everyone, but only profitable customers. Accordingly, customers receive incentives if their purchases buy the discounts and bonuses issued.

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Combined Program

A combined program is a combined discount and bonus program. For example, you accrue bonuses to customers, while cardholders receive additional discounts on certain categories of goods or on special days. Or offer a discount and additionally accrue bonuses from each purchase, which can be written off only in a certain period, for example, on a client’s birthday.

The combined program allows you to take advantage of discounts and bonuses, increase customer reach and increase their loyalty.

Depending on the frequency of purchases, average check, marginality, determine the ideal loyalty program for yourself.

Conclusions

1. There are two basic incentives: discounts and bonuses. Discounts help to make a positive decision on a one-time purchase faster but do not work well for further retention. Bonuses are more flexible than discounts and have more opportunities to manage customer behavior. At the same time, bonuses are useless for rare expensive purchases.

2. You need to choose a loyalty program taking into account the specifics of the business, the frequency and size of purchases, and the needs of customers. But it is important to consider that the loyalty program is dynamic. What worked well two years ago may be useless and even unprofitable today. Therefore, it is not necessary to go in cycles in one worked-out mechanic. Combine, test, and develop.

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