Expanding Your Business Online With Loyalty Programs
This is the very first in a series of articles we will be publishing relaying thoughts and concepts from the Internet Retailer Conference in Chicago, which occurred June 5th by way of June 7th. Mark Goldstein, CEO of Loyalty Lab (a business that implements loyalty programs for merchants), and Gary Korotzer, CMO of Red Envelope (a company that specializes in promoting gift items), delivered a presentation about loyalty applications. Red Envelope currently has a loyalty system managed by Loyalty Lab.
Loyalty applications are taking off. If you have a retail internet internet site and you do not have some sort of loyalty system...chances are that by the customer loyality on-line finish of subsequent year you will. Jupiter Investigation expects that by the finish of 2007, 78% of retailers carrying out enterprise online will have a loyalty system, compared to 24% now. So what is the large deal?
It expenses a lot far more to produce a new client than to sell to a repeat customer. Loyalty applications allow you to create a client base that is loyal to your goods, and will continue to obtain from you, rather than your competitors. A loyalty plan is some type of system that makes it possible for your buyers to develop up credit to apply to further purchases, or to redeem benefit of customer loyalty for money. For example, a retail net site could grant a buyer "points" for each buy he tends to make. When he has sufficient points, he can redeem them for a discount on more merchandise, or possibly redeem them for money.
To implement a loyalty system, you need to have some way to maintain up with your customers' accrued points (or whatever sort of measurement you use). This should be accomplished by keeping records of a customers' transactions in a database. Goldstein and Korotzer advised tying the data to a customer's credit card quantity. Every time a consumer makes purchases with a certain credit card, a record of the buy is recorded along with the credit card number. In this scenario, if a customer employed a different card than in earlier purchases, her current loyalty account would not receive additional credits.
You should attempt to make it simple for a client to know how many points they have. Out of sight, out of thoughts, as the old saying goes, so make sure your consumers are aware of how numerous points they have and how a lot of a lot more they need to redeem their rewards.
When you begin the procedure of deciding on the facts of your loyalty program (specifically what participants will receive, and how a lot they have to obtain for redemption), Goldstein and Korotzer argue that you must discover your company's economics as deeply as attainable. Two critical statistics to examine are the lifetime worth and acquisition cost of your consumers. This will far better support you figure out how considerably you can afford to give to your clients. One more vital consideration is specifically who gets to participate in the plan. You may decide on to only extend an invitation into the program to the best 20% (or whatever percentage generates the majority of your revenue) of your clients. If there is a segment of your consumer base that represents the majority of your revenue, then it makes sense to concentrate your advertising and marketing dollars on that group.
An additional point that Goldstein and Korotzer emphasized is that your loyalty system should be cross-channel. In other words, if you operate a physical retail place and take orders by phone in addition to your try go mobile app web web site, the loyalty program should extend to all of the channels. Stay away from confusing your customers. Make it simple for them to acquire credits and cash in on their loyalty regardless of what channel they use to make purchases.
Loyalty programs have been around for years in certain industries (i.e., airline frequent flyer miles) but are just beginning to gain traction with a lot of retailers. If you sell retail, you should begin the approach of researching the implementation of a loyalty system now - ahead of your competition does. Feel free of charge to make contact with Operate Media for info on implementing a loyalty plan for your web web site.
