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This is the initial in a series of articles we will be publishing relaying thoughts and tips from the Net Retailer Conference in Chicago, which occurred June 5th through 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 selling gift items), delivered a presentation about loyalty programs. Red Envelope at the moment has a loyalty program managed by Loyalty Lab.
Loyalty programs are taking off. If you have a retail internet internet site and you don't have some kind of loyalty system...probabilities are that by the end of next year you will. Jupiter Investigation expects that by the end of 2007, 78% of retailers performing business on the internet will have a loyalty system, compared to 24% now. So what's the large deal?
It costs a lot much more to create a new consumer than to sell to a repeat client. Loyalty programs allow you to develop a customer base that is loyal to your merchandise, and will continue to acquire from you, rather than your competitors. A loyalty system is some sort of program that enables your customers to build up credit to apply to additional purchases, or to redeem for money. For example, a retail internet web site could grant a buyer "points" for each purchase he makes. When he has sufficient points, he can redeem them for a discount on a lot more merchandise, or possibly redeem them for money.
To implement a loyalty program, you want some way to maintain up with your customers' accrued points (or whatever sort of measurement you use). This must be carried out by maintaining records of a customers' transactions in a database. Goldstein and Korotzer suggested tying the data to a customer's credit card quantity. Every time a buyer tends to make purchases with a distinct credit card, a record of the acquire is recorded along with the credit card number. In this situation, if a customer employed a distinct card than in previous purchases, her present loyalty account would not get additional credits.
You should attempt to make it simple for a client to know how a lot of points they have. Out of sight, out of mind, as the old saying goes, so make positive your buyers are conscious of how a lot of points they have and how many much more they require to redeem their rewards.
When you begin the approach of deciding on the specifics of your loyalty system (specifically what participants will obtain, and how a lot they have to obtain for redemption), Goldstein and Korotzer argue that you really should discover your company's economics as deeply as achievable. Two critical statistics to examine are the lifetime value and acquisition price of your buyers. This will greater support you figure out how much you can afford to give to your buyers. An additional vital consideration is exactly who gets to participate in the program. You may select to only extend an invitation into the plan to the top 20% (or whatever percentage generates the majority of your revenue) of your clients. If there is a segment of your client base that represents the majority of your earnings, then it tends to make sense to concentrate your marketing and advertising dollars on that group.
Yet another point that Goldstein and Korotzer emphasized is that your loyalty program should be cross-channel. In other words, if you operate a physical retail place and take orders by phone in addition to your internet website, the loyalty plan ought to extend to all of the channels. Keep away from confusing your consumers. Make it straightforward for them to acquire credits and money in on their loyalty regardless of what channel they use to make purchases.
Loyalty applications have been about for years in particular industries (i.e., airline frequent flyer miles) but are just starting to obtain traction with a lot of retailers. If you sell retail, you really should begin the procedure of researching the implementation of a loyalty system now - just before your competitors does. Feel free to get in touch with Function Media for info on implementing a loyalty program for your net site. marketing for small business marketing for small business loyalty program
