Loyalty programs proven and actionable expectation


Here is a typical loyalty program today in a small shop that I snapped a picture of a few days ago. If you notice, they offer their loyal customers a 2% discount on sales. 2% is not arbitrary, as this is what most experts think a loyalty program can return without supplier help.

It will not be 2% as most points will not be redeemed and, if redeemed, are in shop goods, so the shop has a margin.

Here a customer would need to spend $500 to get a voucher for $10 on their next buy, and there are variations on the scheme, which I will discuss in a future post.

Enough to say now that here are some advantages.

- It is free, quick and easy to set up as it is in your software now.
- This scheme has a proven track record.
- The rewards to the customer are tangible, concrete, visible, and measurable
- It works over time, so a customer is incentivised to return.
- The reward directly supports the shop
- Give a person a $10 voucher, and they will probably spend more. Few will hit $10 exactly, $12.50, $20, and I have seen $50, etc., being spent with the voucher.
- The value to the customer is more than the shop as the goods purchased with the discount voucher have a margin.
- The customer sees the reward as valuable and practical rewards as it's what they already buy.
- You get a loyalty program mailing list to market to your clients. Using something like Mailchimp, which is free, you can drive more business to your shop.

Have a chew, and as always, let me know your thoughts.

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