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3 Questions to Determine if You Are Ready for a Loyalty Program

Our data shows that approximately 30% of a brand’s customers are repeat customers, and most brands have less than 50% repeat customers. Many brands see these numbers in their own data and immediately decide to create a loyalty program to increase the number of repeat customers. However, jumping into any marketing program without thinking about your customers and business goals can lead to a lot of wasted time and money. Below are three questions to ask your team to determine whether your brand is ready for a loyalty program:

  • Do you have a full view of your customer and their purchase habits?

This question needs to be addressed before you start any customer-centric marketing initiative. Connecting disparate data from all touchpoints online and offline will give you a full customer view that allows you to track customers and their purchase behaviors and preferences. Having a full 360-view of your customers will help you create a loyalty program centered around your customers and their behaviors, making it easier for customers to adopt and use the program.

  • Can you send offers that are targeted and relevant for each customer?

Your customer data needs to be robust enough to send the right message, at the right time, targeted to each individual customer. Once you have a full view of your customer, do you have the technology in place to personalize communications and offers for each customer? If not, you risk sending irrelevant messages and offers that can disenfranchise customers and cause them to stop using their membership.

  • Will your loyalty program be truly customer-centric?

Take a good look at the plan for your loyalty program. If you have a customer who visits once a year, how will the loyalty program motivate them to make a second purchase this year? On the other end of the customer journey, how does your loyalty program motivate your best customers to purchase, and not feel entitled to the benefits of the program? A truly customer-centric loyalty program will motivate each customer to purchase one more time than usual, helping grow their future value as customers.

Did you answer “No” to any of the questions above? Your brand might not be ready for a loyalty program, which is okay. You have to crawl before you walk, and nurture the new customers and customers on the fence before you try to push a loyalty program to them. Addressing all of the questions above will make your organization more customer-centric, and ultimately lead to more customers and increased revenue.

Success Story

One of our clients, Johnston & Murphy, has 70% of their revenue generated from repeat customers, much higher than the average 30%. Once Johnston & Murphy organized their data to become more customer-centric, they implemented a “Surprise and Delight” loyalty program, where their best customers received a $50 gift card as a thank you for being so loyal. This gift card increased customer spending by 51%, and increased cross-category conversion by 71%. If they had not first taken the steps to organize their data and become truly customer-centric, they would never know who their Best Customers were, and their loyalty program may not have generated as much revenue.

According to the 2017 Colloquy Loyalty Census, there are now 3.8 billion loyalty memberships in the United States, up 15% from 2016. However, only 54% of those memberships are active, leaving a lot of room for improvement. By analyzing your customer data to make your loyalty program more customer-centric, you will see an increase in not just active memberships, but also in customer future value and ultimately, your revenue.