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Off and On: What Consumers Do and Don’t Want in a Loyalty Program

Many businesses introduce loyalty programs in the hopes of attracting new customers and turning occasional customers into loyal brand advocates. Take a look at the loyalty program benefits that US consumers say motivate them more – or less – and compare this list against your own loyalty marketing strategy.

by: Elizabeth Kraus

Give ‘Em What they Want: Are Your Loyalty Program Benefits Getting the Job Done?

Nielsen study shows what loyalty program benefits are most effective in motivating consumers so that you can meet your business marketing and growth goals. How does your customer loyalty program measure up?

If you are considering a loyalty marketing program for your business or want your company’s loyalty program to do a better job in meeting customer-attraction and other marketing goals, you might want to check out a new global study by the consumer opinion experts at Nielsen. This new study details the types of benefits that work best in the US as well as other parts of the world.

Overwhelmingly, consumers indicated that discounted and free products are what they want most in a loyalty program. Here are the top five benefits listed by US consumers in the 2013 Nielsen loyalty study:

  • 75% – Discounted or free products
  • 42% – Free shipping
  • 25% – Exclusive products or events
  • 24% – Enhanced customer service
  • 12% – Special shopping hours

In the same study, consumers were also asked what factors would make them opt-out of a brand’s loyalty program. These were the top six responses:

  • 50% – Program too expensive
  • 43% – Not shopping enough with the brand to receive the benefits
  • 37% – Program is too complicated
  • 30% – Didn’t like the benefits offered
  • 27% – Too many program communications
  • 25% – Did not want to give out personal information

Increase the Effectiveness of Your Customer Loyalty Program

Do you know what you want your customer loyalty program to accomplish? If you want your loyalty program to help you increase profitability or margins, offering the discounts or freebies consumers said they want most in a brand loyalty program could actually hurt your bottom line.

Defining loyalty program goals is essential to identifying and providing the types of rewards that will help you meet your targets. The benefits that help you convert occasional customers to more frequent shoppers could be different than the type of benefits that will help you attract new customers in the first place.

Here are some potential goals that could help you design a more effective customer loyalty program; should loyalty rewards help you:

  • attract new clients
  • motivate clients to shop more often
  • cause existing customers to shop with you on a greater number of channels (online as well as in-store, at an affiliate site, etc.)
  • incentivize customers to spend more per visit
  • stimulate referrals

If you answered “all of the above” or identified more than one goal for your loyalty program, you may wish to consider launching more than one type of customer loyalty program; at a minimum, you may need to offer different rewards in order to trigger different types of behaviors.

For instance, offering a Buy-One-Get-One offer may help you with new customer attraction or referrals, but it goes against the other goals which lead to bigger margins or profits per customer. One size simply may not fit all when it comes to your customer loyalty program.

In addition, when designing (or re-tooling) your brand loyalty program, make sure that you try to avoid consumer loyalty program turn offs:

  • If there is a cost associated for loyalty program members, make sure that benefits outweigh costs or add a money back or partial refund guarantee
  • Consider increasing benefits accrued (if customer’s aren’t shopping often enough to get benefits from the program) or offer increased benefits at tiered levels to incentivize customers to shop often enough to realize member benefits
  • Let customers choose from a range of rewards
  • Survey members to see whether their benefit preferences are changing on a regular basis, such as annually at the time of renewal
  • Let customers choose channels and type of communication they want to receive and make it easy to opt out or change their preferences online
  • Don’t require loyalty program members to reveal information they don’t want to share, and reduce information requested to only what is most necessary to administer the program

A loyalty program can help you meet your marketing goals, grow your business and become more profitable, especially if you take a strategic approach. Tailor your loyalty program to reflect specific business goals and to reflect the preferences of your customers and you are far more likely to get the results that you desire.

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For more information:
sales@experientialfoodtruckrental.com
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