This is called customer segmentation, and it prevents your customers from feeling like they are just walking dollar signs to your business, which is often the case when companies send out mass email or SMS promotions that don’t differ from customer to customer. When you use this information to group your loyal customers into several specific categories based on product preferences, demographics and other tendencies, you can tailor your marketing strategies to be more relevant to each customer. Loyalty programs allow you to accumulate data on each customer who signs up, such as what products they purchase, their spending habits, and other invaluable information that in turn provides you with upselling and cross-selling opportunities. This is where digital customer loyalty programs really show their superiority over the old-school “punch card” system. Pro: Target Your Marketing (Customer Segmentation) VINO VIDI VICI MASSENA NY HOW TOYou can learn more about how to create a successful offer for your loyalty program here. However, so long as you take the time to crunch the numbers, and choose appropriate rewards to ensure your customer loyalty program is balanced, you will increase your profits, not decrease them. This is one of the problems with loyalty programs. There are plenty of cases of businesses failing to conduct research properly before implementing their customer loyalty program, and putting themselves in financial trouble as as a result. If you give away rewards or discounts that are too large and are not increasing repeat purchases and customer spend, you are going to do some serious damage to your business’ bottom line. Perhaps the biggest trap you can fall into when implementing a customer loyalty program is to make your offers so good that you aren’t turning a profit. Con: Potential damage to your business’ finances VINO VIDI VICI MASSENA NY FREEIn the small New York state town of Massena, right up near the Canadian border, there’s an Italian restaurant called Vino Vidi Vici that offers incentives like free appetisers and discounts on pizzas to return customers… but what really put this restaurant on the map is their bigger offers, like “Get a free Ferrari with your millionth purchase” or perhaps the more achievable, “Have your name engraved onto one of our tables with your fiftieth purchase”.īy having a bit of fun with the process, your customer loyalty program can become part of your business’s identity and attract new customers as well as hold onto your existing ones. Pro: Stand Out from the CrowdĪ customer loyalty program can spread awareness of your brand and help potential customers differentiate between you and your competitors. However, if you maintain your customer loyalty program properly and pay close attention to your customers’ spending habits, the benefits of loyalty programs are endless. Your program will need adjusting and tweaking as your customers’ needs change, and it may take a few attempts before you settle into an appropriate loyalty program strategy that allows your customers to reap rewards while still remaining profitable for you. Con: Some Maintenance is RequiredĪs with anything worth doing, an effective loyalty program requires a certain level of attention and regular maintenance. In a nutshell, it provides you with a way to make your customers feel valued and reward them for their continued support. One of the prime benefits of loyalty programs is that they allow you to offer your customers discounts on future products and exclusive offers that other customers don’t have access to. If you offer a customer a reason to come back, you have the beginnings of a sustainable business model. Since their conception back in the early 18th Century, the main motivation behind customer loyalty programs has been customer retention. Here are some pros and cons of loyalty programs to help you determine whether a rewards program can help you achieve the results you desire: Pro: Keep Your Customers Coming Back So before you go ahead and create and implement a loyalty program for your business, it's important to know what to expect. Businesses that are considering starting a customer loyalty program naturally have a wide range of questions on the topic, all of which strive to answer a single question – is it going to increase profits?
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