“How To” Guide for Loyalty Programs
How do you compete if you’re a small retailer or restaurant?
Loyalty cards are an important part of retail or restaurant businesses these days. You compete everyday with big box stores, fast food chains, and online shopping. And honestly, you can’t give shoppers the rock bottom pricing these places can. So how do you compete?
It’s all about customer experience. The customer should WANT to come to your store, or restaurant. Your establishment should be so inviting, and cool that people want to come back again and again. And it starts with customer loyalty.
Loyalty Cards and Programs
Loyalty cards and loyalty programs aren’t a new idea. You probably have one for your grocery store. You buy X, you get Y. It’s pretty simple. But what it does, is gives people a reason to come back. So much business is a “one-and-done.” And any expert will tell you that it’s much easier to retain customers than find new customers. So why not make an enticing rewards program?
Super America, Jamba Juice, Kohl’s, Qdoba, Macy’s, Nordstrom. Would they offer loyalty programs if they weren’t making money? They make huge profits on return customers. If you spend $10k a month on advertising, and it brings you $80,000 in revenue from new clients, that’s great news! But what if you got that $80,000 every month from old customers, plus a new $80,000 from new customers? If you start in January, by December you’re making $960,000 a month! And $6,240,000 in a year! That’s big time money.
But loyalty alone doesn’t keep the money rolling. How do you keep people coming in? You have to utilize that customer database you have. Since you started the loyalty program, people have been giving you email addresses and setting themselves up with you. Now it’s time to move to the next level: Segmentation and Email Blasts.
What do I mean by “list segmentation?” It’s simple. You’ve got a couple hundred names and email addresses in your CRM/POS System. It’s time to extrapolate some data. How specific you get has a lot to do with your POS system and its loyalty program, but here’s some ideas.
- You’ll want to split the list up to separate people based on what they buy.
- You don’t want to send the same offer to someone who buys a pack of cigarettes each week, and someone who stops in every day for lunch.
- After you’ve split the list up, it’s time to make a promo.
What you’re looking for is data. You want to make a replicable system, you can do again and again. So if you’re a restaurant and you’re always slow on Wednesday, send out a promo email blast saying “Come in on a Wednesday during February, and get 10% off with your loyalty card.”
When February ends, compare Wednesdays to the Wednesdays in January, and see if you’ve had an increase. If you have, that’s great!
This is important! We send the same promo to all the groups. The point of this exercise is to see which group buys the most stuff. If nobody takes advantage of the promo, it was a bad promo, and we start with the next one.
But here’s the information you’ll take away. Maybe one of your groups is older people 55+. They may not like the same promos as people age 23-30. So by using one promo at a time, we find out which deals work, on which groups of people.
Emailing your Customers
You all receive emails from companies you shop with. But how do they do it? Simplest answer is, they don’t do it directly. Another important tip! If you send 10,000 emails from your company email address, your email address will get blacklisted. DON’T DO THAT.
Instead, go check out Mailchimp, Sendgrid, or Mailgun. These websites specialize in “Email Blasts.” They can send thousands of emails on your behalf, and they’re cheap or free.
Each of them will have email templates you can choose from, so you can craft an email that’s nice looking, and informative. Remember, less is more when it comes to information. No paragraphs or text. Bullet points are better.
Here’s a link to a great article on writing email blasts:
The other perk to using one of these email providers, is that you get a bunch of data. How many people opened your email? How many unsubscribed from the list? How many opened the email 3+ times? You’ll know the answer to all of these and more. They offer you a treasure chest full of data. This is a great way of knowing if you’ve written a good email, but the proof is really in the results.
Make sure to take note of when emails are sent, and how good the response is. If you send out 1,000 emails, and 600 people read it, that’s great! But if that only translates to 3 people coming back to your business, that’s not great. If you’re getting people to read, but not come in, then it’s time to change that promo again.
Ok, to recap we’ve:
- Started a loyalty program
- Collected customer data
- Created list segments for marketing
- Emailed your customers
Now that we’ve gotten all of this done, it’s time to look at the results. You should at this point, have a pretty good idea of some promos that will work. You should know which list segments get excited about the promos. And you should be getting a good response.
The best part is, this was all free marketing. You didn’t spend even an extra dollar to get people in the door. Just the cost of loyalty cards. For less than a dollar per customer, you can expect significant returns. Which is pretty cheap as adventures in advertising go.
Now let’s do it again! You’ll basically repeat this process again and again to get people in the door all the time. Some people run promos each month. Some a couple times a year. But big box stores run one every week! You won’t want to run the same promos over and over. That will get people to jump off your mailing list. But if you can send out a meaningful promo every week, people will respond!
A couple of quick notes.
First off, people will unsubscribe from your mailing list. Don’t take it personally. It’s common for you to get unsubscribes during each email you send. The trick is to sign up more new loyalty clients, than people who unsubscribe.
Second, just because promos don’t work right away doesn’t mean you should stop trying. But also, a promo might take a few tries to take off. The point is, don’t get discouraged. Try things a few times. Don’t quit because you try it once and it doesn’t work.
If your POS software doesn’t have a direct loyalty plugin like say, Revel Systems, or Vend, then see if they offer a plug-in style system. Lightspeed offers an integration with a great company called Thirdshelf.
And last, if you have questions, get in touch! We’re always happy to help you out, and talk to you about what you need. Check out our other blogs about gift and loyalty cards here!
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