Increase Retention and Repeat Sales with an Online Loyalty Program

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If you want to grow your business, you know that the secret is a combination of two things: first, retaining your existing customers; and second, attracting new customers. Sometimes business owners put too much emphasis on the latter – but the real key to making your business a success is to find ways to build loyalty in your current customers.

The fact is that it costs at least seven times as much to attract a new customers as it does to retain an existing one. That means that customer retention has to be a priority. Perhaps you are already sending retention emails to customers, but a loyalty program that offers customers real rewards for repeat business is one of the best ways to build a solid customer base and turn the people who buy from you into brand ambassadors.

Benefits of Creating a Loyalty Program


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    Why are loyalty programs so effective when it comes to retaining customers? Let’s look at some of the reasons.

    1. Loyalty programs incentivize full-price purchases. Some online retailers make the mistake of offering repeated discounts to new customers. The problem with doing that is that it creates an expectation that customers will never have to buy anything at full price – something that can be a real problem for any company, but especially for one that sells luxury products. That doesn’t mean you can’t ever have a sale or offer a discount, but it’s far better for your bottom line if customers have to earn those discounts with purchases. For example, you might give them a 15% discount off a single item once they reach a certain threshold of points.
    2. A well-designed loyalty program can serve as a way of centralizing all of your customer retention efforts. As customers sign up for your program, you can add them to your email list and send them retention emails. One good way to do that is to set up autoresponders to go out on a regular basis, and then to add a special series to notify customers when they reach a certain number of loyalty points. Many online retailers do this successfully. One example is Sephora, which sells makeup and other beauty products. Their Beauty Insider program is set up to notify customers when they have enough points to get a free deluxe sample as well as to send them reminders about free birthday gifts.
    3. If you want to turn your customers into brand ambassadors, a loyalty program can be a very effective way of doing that. Let’s face it – you might ask your customers to share information about your online store on social media, but the chances are that very few of them actually do it. They are far more likely to do it if they have a real incentive to take that action. For example, you might offer them bonus points if they share information about your loyalty program on Facebook or Twitter. That way they are earning something valuable by taking the action you want them to take.
    4. If you make a referral program part of your loyalty program, you can get your existing customers to do some of the work of attracting new customers to your business. One example of an online retailer who uses this strategy effectively is discount retailer Zulily. When existing customers refer a new customer who makes a purchase, they get a 10% off discount code that they can use on an entire order – something truly valuable for people who buy from Zulily on a regular basis.
    5. One of the things that makes loyalty programs so appealing to customers is the sense that they are getting insider information or opportunities not available to the general public. You can increase that feeling and work it to your advantage by offering members of your loyalty program access to products before the general public sees them, or by setting up special online events for them. A lot of successful loyalty programs do this and it can be extremely effective.

    Clearly, having a loyalty program is a cost-effective way of increasing customer loyalty and turning customers into ambassadors for your brand.

    Tools to Manage Your Loyalty Program

    The key to managing your customer retention efforts, including your loyalty program, is to find the right online tools to use to make it work. There are a lot of options available, but let’s look at the three best loyalty management tools.

    1. Preferred Patron is one of the best-reviewed loyalty programs available. They offer a variety of options that make their services affordable for small, medium, and large businesses. Their regular software can be installed on any desktop or laptop computer. For business owners who want a portable option, they offer a tablet-based system that comes with a free Windows tablet so you can greet customers and manage their rewards without being at your desk. They also offer a free mobile app that you can offer to customers who enroll in your program.
    2. The Loyalty Box is another well-reviewed option that provides customizable loyalty program software for as little as $50 per month. Their software can be used on computers, mobile devices, and even at point-of-sale cash registers to make it easy to integrate your loyalty program across all platforms. They also offer the ability to accept payments in multiple currencies, which is useful if you have online customers who live abroad.
    3. Five Stars is a program that has some nice features, including a free Customer Touchscreen so you can sign customers up for your program without a hassle. The software works on computers and mobile devices. It also offers options to send emails and text messages to people in the program. The software makes it easy to track customer purchases and buying behavior so you can learn which incentives work and which may need to be refined.

    The key to running a successful loyalty program is to know your customers and choose the incentives that will most appeal to them. When you offer incentives that have real cash value, people will want to join your loyalty program – and tell others about it, too.

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