So here's the really big deal: your Mum nagged at you to always say "please" and "thank you" when you were younger (or still does if she's anything like mine...) but when your time is split between ordering stock, accounting spreadsheets, marketing and trying to fit in a social life, the little things sometimes get forgotten. And one of the most important of those little things is saying "thank you" to your customers in the form of rewarding their loyalty.
It's important for a number of reasons: it encourages them to return, helping to forge long-term relationships with them and increasing repeat sales at the same time; it demonstrates how much you value their business, that you will reward them for shopping with you and at the same time appeals to our innate desire to feel valued. Loyalty schemes are relatively common but few are done correctly, with human behaviour in mind. So just how do you go about doing it right to ensure maximum uptake and greater customer return?
Firstly, you need to ensure the reason for opting into the loyalty scheme is obvious, it makes sense and most importantly, it has a reasonable and attractive incentive. For example, if you're a car wash and you offer a stamp each time someone gets their car wash but when they collect 10 stamps, they get a free top of the range car wash worth £20, that's a good incentive to keep coming back. If you're a coffee shop and, like I saw recently, you collect 6 stamps to get £1 off a cold drink, that's a way off, totally ridiculous non-incentive!
So make the end goal clear, relevant and attractive for your customers.
Secondly, get something tangible printed up: a card they get stamped; tokens they have to collect; stickers they add to a card or a plastic membership card that gets points added. You can incentivise using anything that works for you and tyour brand or your customers' shopping style: collect 10 stickers; collect 500 points; bring back 6 hangers etc.
But here's the really, really clever secret. Professors Nunes and Dreze revealed something quite interesting about customer behaviour when faced with loyalty schemes. If you present a customer a card with 8 empty circles on it, for their loyalty stamps, the opt-in and effectiveness of that card is pretty poor. The reason is because it's all blank: it looks like you're starting right at the bottom and have a long way to go and that incentive looks so far out of your reach.
If, however, you present the customer with their loyalty card and it has 8 empty circles for their loyalty stamps but 2 more, which you stamp there in front of them, the efficacy increases. The customer still has to collect the same amount of loyalty stamps (in this case 8) but because you've already given them 2, it helps to motivate them to finish collecting. So, never hand out a blank loyalty card; always stamp the card to get them started BUT - and this is where it gets very clever and interesting if you're interested in psychology - the stamp you give the customer must always be relevant and in reward for something. So don't just reward loyalty points randomly; only in recognition of a purchase, for example.
With these clear ways to improve customer loyalty, build long-term relationships with your customers; enhance their shopping experience with you and reward them for their custom, why would you not have a loyalty scheme? Dedicate some time this week to crafting a scheme and launching it so you can encourage multiple sales and nurture those important relationships with your customers.
Member since: 6th June 2013
Jez Rose is an internationally renowned Behaviour Change Consultant, professional speaker, award-winning entrepreneur, author and media personality.
Despite being the “go-to” guy for memorable and behaviour-changing...