Everybody loves loyalty programs. And why not? For customers, loyalty programs are a way to get rewarded for shopping at the stores they love. For small businesses, loyalty programs let them better connect with customers in a way that is profitable and unique. It’s a win-win.
Unfortunately, though, things don’t always go as smoothly as planned. Everybody makes mistakes, and when it comes to small business loyalty programs, that fact, sadly, holds true. Loyalty program mistakes can make the program fall apart.
Get the most out of your loyalty program and avoid commonly made mistakes. With that in mind, here are the five mistakes that small businesses make when it comes to loyalty programs.
1. They Misunderstand Loyalty
A misunderstanding of loyalty is probably at the root of most small business loyalty program mistakes. We all know that customer loyalty is a good thing. But what exactly is it?
Good question. Well, in general, a loyal customer should spend more at your business, visit your business more often, and be less likely to churn than an average customer. Here’s the thing, though: loyalty looks different for every business. The key to understanding what customer loyalty means to your business lies in understanding the effect that each of these three components has on your bottom line.
A loyalty program can encourage purchase frequency, increase spend per purchase, and reduce churn, but it should be focused on encouraging the behavior that will benefit you the most. When it comes to loyalty, one size doesn’t necessarily fit all.
2. They Don’t Set Goals
Many small business owners only create a loyalty program because they think it seems like a good idea to have one, and they don’t set any goals for what they want it to accomplish. After it runs for a few months, they have no idea if it’s working or not because they don’t know how to measure its success.
Don’t make this mistake. First, make sure that you understand what component of loyalty is important to your business. Then set goals for improving in that area. Try something like: “Loyalty program members should spend 20% more per purchase than nonmembers.” Goals keep your program running in the right direction.
3. They Offer the Wrong Rewards
If a small business loyalty program doesn’t have the right goals, there’s a good chance that it’s giving away the wrong rewards. Rewards are the core mechanism of a loyalty program, and it’s essential to get them right. They should provide the incentive for the customer behaviors that will most benefit your business.
It’s important to structure your rewards in a way that makes them seem attainable. Instead of offering a $10 reward when customers spend $100, try a $5 reward when they spend $50. And be unique. Think about what your customers’ already love about your business, and play off of that. Try offering an experience, like a cooking lesson from your restaurant’s chef or a chance to display their artwork in your gallery. Be creative, and be ready to adapt your program to the rewards that best help you reach your goals.
4. They Don’t Promote the Program
Small business owners have a lot going on, and it’s easy for loyalty programs to get lost in the mix. Unfortunately, no matter how great your loyalty program is in principle, it won’t work in practice until you get people signed up. Spend time thinking about the best ways to communicate your program to your customers. In-store promotion is necessary. Use other channels, too. Is social media how you connect the best? Tweet about it. Do you have a huge email list? Send it to their inbox. Do you have a multitude of marketing channels you’re great at using? Use them all.
Too many small business loyalty programs look great on paper but never get off the ground because customers don’t hear about them.
5. They Let the Program Go Stale
Last but not least, don’t let your loyalty program stagnate by ignoring it for months at a time. Customers will likely tire of the same old incentives, or even realize that you’ve forgotten about your own program. Vivacious loyalty programs are the most successful. Be willing to adapt your program as you see what works and what doesn’t, and change things up by offering different incentives during different seasons. This will keep your customers engaged and active. Make sure your program stays fresh.
So, now you know the five mistakes small businesses make with their loyalty programs. Unfortunately, it’s not always as easy as it sounds to elude these mistakes. Want to make sure you get things right? Consider using a community loyalty program like LoyalTap to makes things easier. Get in touch with us to see how our loyalty experience can get you headed in the right direction.