4 Factors to Consider Before Starting a Loyalty Program
It has long been said that it’s easier and less expensive to sell to existing customers than it is to acquire new ones. As a result, many businesses try to focus on retaining customers and turning them into regular shoppers through the implementation of loyalty programs. Few companies seem to realize, however, that loyalty programs are a serious commitment and need to be developed with care.
Starting a loyalty program with a “set it and forget it” attitude won’t allow you to keep up with changes in the marketplace and achieve your objectives. If you’re thinking about establishing a loyalty program, here are 4 factors to consider before you start.
1. Do you already have loyal customers?
Contrary to popular belief, loyalty programs alone are not capable of creating customer loyalty. The only way you can build customer loyalty is to ensure that customers have positive experiences with your products, staff, service, store, website, etc. No matter how great a loyalty program is, it will never make up for poor products or service. If your company doesn’t have many loyal customers yet, you may need to focus on improving your offerings and customer service first before launching a loyalty program.
2. Loyalty programs take time to produce results
Not only does it take time to set up and execute loyalty programs, it also takes time to track and analyze results. If you’re looking for a marketing method that will achieve success quickly, a loyalty program probably isn’t the right solution.
3. Will it provide a return on investment?
Watching your bottom line is crucial if you plan to create a loyalty program because there’s no point in launching a loyalty program if it’s only going to cost you money and won’t bring you any returns. If the type of business you run typically deals with customers on an infrequent basis, you may not be able to bring in enough return visits to warrant offering discounts and other bonuses.
4. Loyalty programs are difficult to eliminate
You have to be sure that launching a loyalty program is right for your business because formal loyalty programs are difficult to eliminate. Once you announce that you have a loyalty program to your customers, you won’t be able to cancel it without making your existing customers angry.
Loyalty programs have the potential to make a positive impact on your profits and the satisfaction of your customers, but think long and hard about the ins and outs of creating a loyalty program before launching one. Make sure that a loyalty program is indeed the best solution for achieving the goals you have in mind.