Tags: Incentives & Rebates
11 Super-Effective Loyalty Program Design Characteristics for Customer Acquisition
Customer acquisition is essential for any business and implementing an incentives program is the key to developing loyal customers. While customer retention is often viewed as the easier, less expensive of the two, without customer acquisition there is no growth.
The leading factor of customer acquisition is incentives and loyalty programs. As consumers, we are all drawn to things like freebies and rewards. In fact, over 56% of customers surveyed said they would prefer a brand with personalized incentives over a brand with none.
It lets customers know that the companies they choose to spend money at care about them and their business. That being said, consumers have begun to expect rewards for loyalty given the sheer amount of rewards programs out there. Don’t lose out on customer acquisition because of a lack of targeted incentives.
At Group O we provide robust incentive marketing solutions to enable your company to acquire loyal customers. Inspire brand loyalty with Group O’s O-vations™ platform that handles all of your customer incentive needs. From program development to implementation to a variety of reward types, our incentive technology is sure to inspire customer loyalty in your company.
Ready to implement a loyalty program that provides personalized incentives to acquire loyal customers? Let’s jump in.
Loyalty Program Design Tips
It’s clear that customer acquisition and loyalty are boosted with a strong loyalty program. But how do you know what type of program is best for you? When designing your company’s customer loyalty program, there are five key factors to consider:
Personalize your incentives
Customers want to know that they are valued. It’s no fun when an incentive has nothing to do with them or when they are bombarded with seemingly random deals that have nothing to do with their interests and only serve to clog their inbox. That can easily drive away potentially loyal customers.
Instead, use market research and existing customer profiles to determine what makes your customers tick. Monitor your incentive strategy and customer engagement on the O-vations™ platform. Once you discover what your customers like and what fits their lifestyle, tailor your rewards program around that and watch as new customers become valued members.
If your company’s incentives are the same as your competitors, there is nothing keeping potentially loyal customers from taking their business elsewhere. To gain a competitive advantage and increase customer satisfaction, consider creating unique branded rewards or incentives.
Group O provides customizable rewards in the form of branded merchandise, gift cards, and rebates. Give your customers something totally different from everything else out there. They just might tell their friends about it!
Make it Tangible
Rewards that take too long to earn are not useful. Customers may get sick of slowly earning enough points to get $5 off a $50 purchase. Instead of the slow crawl to an unsatisfactory finish line, create points programs that customers can actually earn and use.
For customer acquisition, offer a sign-up bonus or additional reward points that they can start using right away. Loyalty points will motivate them to engage with your business early on and make frequent purchases. A good first impression sparks a long-term customer relationship.
Accessibility is Key
Another factor to consider when designing your incentive program is accessibility. Can customers use their rewards across different devices? Most consumers are using mobile devices for online shopping. It’s important to enable mobile and desktop use to redeem or claim rewards.
Group O’s incentive platform, O-vations™, supports rewards programs across different platforms and can integrate with pre-existing platforms to make sure your customers can access their rewards wherever they are.
Make Data-Driven Decisions
Finally, let customer data drive the decision-making process. When designing your incentive program, Group O makes it easy to monitor, track, and optimize your reward program by looking at customer behavior, trends, and spending patterns. This data helps determine personalized rewards. Based on a customer’s purchase history, offer discounts on their favorite items or services. Customers like to know that they aren’t just one of many, but an actual valued person in your business.
Building Customer Loyalty
Customer acquisition is an expensive, but necessary, process. So, what’s the point in putting in all that time, money, and effort into acquisition for a customer to just up and leave after their first purchase? Building customer loyalty takes newly acquired customers and turns them into life-long repeat customers.
Customer incentives and loyalty programs enhance the overall customer experience. Loyalty is built throughout the entire customer lifecycle, not just at the beginning or the end of the purchase. The customer lifecycle maps out the journey a customer takes throughout their relationship with a retailer. It’s important to understand the customer lifetime value in order to maximize the effect of your loyalty program strategy. Here is a breakdown of the traditional customer lifecycle:
Reach: The customer becomes aware of your company and its products or services.
Purchase: Next, the customer makes their first purchase, officially becoming a new customer.
Experience: After the purchase, having been impressed by their shopping experience, the customer continues to value your company.
Retention: This step involves reaching out to the customer to check in on their feelings towards your company. Show them that you care.
Loyalty: This stage is built successfully when the customer continues to use your company and even advocates for it, earning you new customers in the process.
Most companies focus on awareness in order to draw in as many new customers as possible, but many drop the ball when it comes to the customer retention rate. Attitudinal loyalty is based on the emotional connection from a customer.
It is the most important step as it leads to further acquisitions from other customers so it is worth spending time building a successful loyalty program.
Financial incentives like cash prizes or gift cards are great motivators for customers to not only continue supporting your business but to tell other people about your company. Group O offers many different rewards and incentive solutions to fit your company’s needs.
Our team works with you to customize a loyalty program with rewards to match. That could mean customized rewards cards or amazing company merchandise for your customers, channel partners, or employees.
Loyalty Programs as Customer Acquisition Tools
Loyalty programs are useful in retaining customers but they can also be used to encourage potential customers to join your member program. These tools foster a sense of belonging that encourages lifetime loyalty to a brand. Loyalty program incentives for customer acquisition can look like:
Offer new customers special rewards like an additional discount or additional points towards a new purchase. If a customer is debating joining, a perk like free shipping or a percentage off their first purchase could be just the thing that clinches the deal.
The welcome reward incentive draws potential customers in and also helps with retention because they want more rewards again on future purchases. The important thing is that this incentive pushes potential customers to make their first purchase, getting their foot in the door for even more rewards to come.
Limited Time Rewards
Limited time rewards are useful for customers who are a little hesitant. With a time limit as an added factor - it could be hours, days, or a week - customers are more likely to make a purchase using their limited time offer.
Including a helpful, yet persuasive, reminder - like a countdown clock - motivates customers to make the purchase quickly before their reward expires.
Limited time rewards are not just useful for new customers. These types of incentives are great during holiday sales and black Friday deals.
At Group O, we have experience monitoring and optimizing loyalty programs to fit the changing needs of your customers. Regardless of the time of year or customer shopping trends, we work with you to determine the very best loyalty program.
Make your rewards fun! Have new customers spin a wheel or enter a contest for a chance at some seriously amazing rewards. Gamification is a great customer acquisition tool as it gives customers the opportunity to play for bigger rewards. The rewards can vary from free shipping to a shopping spree depending on the game and the loyalty program.
This type of loyalty marketing inspires customers to play again and again, increasing their chances of winning big, and spending more. Successful gamification engages customers, encouraging them to continue interacting with your brand.
Social Media Contests
Social media contests are fun and useful for younger consumers who are more likely to interact with companies on social media. Creating a contest also helps you reach your customers on a more personal level so you can hear their feedback and thoughts and use that to tailor your loyalty solution strategy. Rewards don’t have to be strictly monetary, either! They can also be experiential, adding value to your customer relationship.
The more you engage with your customers, the easier it is to craft meaningful rewards to suit their lifestyles. It also shows customers that you truly care about them and their satisfaction.
Seeing as 65% of new business comes from referrals, it’s no wonder having a strong referral program for new customers is essential to customer acquisition. Referral programs for new customers inspire them to tell their friends and family. It works as a chain system where more and more people invite others to interact with your company.
Word of mouth is a fast and effective way to gain new customers and a referral program that offers rewards to customers who tell their friends and family is a great tool for customer acquisition.
Customer Acquisition Cost
While retention is certainly less expensive than acquisition, acquisition is clearly important to the success of any business and both should be used in conjunction to maximize the effect. Once you have developed a sturdy loyalty program for customer acquisition, it is a good idea to continually measure your spending in this department for optimization.
When determining the allocation of funds to customer acquisition efforts, calculate your customer acquisition cost. Customer acquisition cost (CAC) is the total expense needed for a business to acquire one new customer. CAC should be balanced against paying customers in order to maintain the profitability of your business.
To calculate your CAC you will need to take into account all of your marketing expenses and spending sales. This includes things like employee salaries, any web development costs, advertisement costs, content production costs, warehousing costs, and inventory maintenance.
Once you have an accurate total of your spending on marketing and sales, divide that by the number of new customers acquired within that same time period (month, quarter, year, etc.). Both sets of data need to be taken from the same time period for accurate results. The result is your company’s estimated cost of gaining one new customer.
CAC provides some insight but is most useful when context is added. To fully understand your CAC, compare your results to the average customer spending. How much money are you pulling in on average? How does that compare with your expenses towards customer acquisition? With a fuller picture of overall profits in place, determine how much money your company can continue to spend on customer acquisition while still making a profit going forward.
It’s true that in order to make money you have to spend money too. Make sure you are spending your money the right way. Comparing CAC against other key business metrics offers more insights on other campaigns like marketing, sales, and customer service. Use this data to craft more meaningful incentives in your loyalty programs and optimize your current rewards programs.
Designing Effective Loyalty Programs for Customer Acquisition
Loyalty programs play a critical role in the customer acquisition process. While many companies focus on customer retention, acquisition is equally important in the overall success of a company. Loyalty programs for acquisition are a staple of marketing strategy that cannot be ignored.
With so many different loyalty programs and incentives to choose from, it can be difficult to determine which one will be the most effective for your brand. Will a rewards card be most effective? What about branded merchandise as a sign up bonus? Group O’s customer incentive program solutions can help you analyze your needs and optimize your loyalty program strategy to boost customer acquisition.Call an expert today 866-476-8761.