How to Manage Your Loyalty Programs

Submitted by ebonardi on Wed, 2011-11-30 16:06

Groupon, LivingSocial and other daily deal companies have provided a great new way for customers to try out local restaurants and retail stores at a discounted rate. Unfortunately for many retailers, these customers don’t end up returning after redeeming the initial coupon. To combat this, retailers could offer additional incentives and future store discounts to encourage customers to return. Additionally, retailers can help customers enroll in loyalty and reward programs.

However, a great loyalty program is not the same thing as a punch card for a free sandwich. To turn these voucher-redeemers into loyal customers, retailers will need to develop a strong loyalty program. Retailers can do that by following these three steps:

1. Encourage loyal shopping behavior. This includes exclusive member discounts and premium (pay) programs such as Amazon’s Prime service. Most importantly, the program should reward continual shopping.

2. Grow your program by force and by design. To increase the size of your loyalty program, provide incentives and goals that encourage loyalty members to share the experience and discounts. This effort will become organic growth as the membership size snowballs.

3. Collect and analyze great spend data. This is one of the greatest benefits of a strong loyalty program. Retailers can analyze loyalty members’ behavior to make decisions on future promotions or sales.

Many retailers are unsure of how to manage a complex loyalty program. Luckily, many point of sale software solutions include loyalty program management within the main application. For example, Retail STAR by Cam Commerce’s loyalty program management program allows retailers to easily adjust reward values and add new promotions. Also, CounterPoint by Radiant Systems allows users to establish multiple loyalty programs that each sport unique redemption methods.

Investment in a customer rewards program may seem like tough sledding, but a great program provides retailers with a loyal customer base and a great data set to make educated decisions about sales promotions in the future.

Guest post submitted by Michael Koploy, ERP Analyst at Software Advice. For more on this topic, check out: A Three-Step Approach for Retail Loyalty Program Success.