Groupon, LivingSocial and other daily deal sites offer a plethora of options when it comes to deep discounting programs. Many of these programs do, in fact, create great loyal customer behavior – but unfortunately for retailers, its to the daily deal company, not the store.
One of the best ways for retailers to avoid this is to combine loyalty programs with Groupon and LivingSocial vouchers. Developing a great program, however, takes a systematic dedication from retailers and a deeper program than 10-punches-gets-you-a-free-sandwich. It takes creating a program that drives loyalty, developing a strong program membership and collecting spending behavior to analyze and improve the customer experience.
Create Programs that Drive Loyal Behavior
These programs need to be easy for new members to join, but provide a feeling that the program is exclusive and has benefits that everyday customers cannot receive. For this reason, many discounts should be for members only. One large, national pharmaceutical store comes to mind that constantly breaks this rule – I can’t tell you the number of times I have reiterated that I am not a loyalty member, yet been scanned as such by an apathetic checker.
Additionally, if a program provides rewards and incentives, make those goals worthwhile. For example, a great way to implore customers to earn rewards is to have the price be a discount for future shopping. This encourages customers to continually spend – not just shop until they hit their perceived reward ceiling.
Build a Strong Customer Membership Group
Oftentimes, great programs sell themselves. An example is Amazon’s Prime program. Ingeniously, the program provides reduced and expedited shipping rates for its products, encouraging shoppers to spend impulsively – and frequently. They offer it free for a year to students, and then for a discount after the first year.
But other programs require a bigger effort from retailers to get the program snowballing. Because loyal customers are some of a business’ strongest brand ambassadors, “bring a friend” promotions are great at getting new members to join your program – and become new loyal shoppers.
Collect, Analyze, and Act Upon Loyalty Member Spending
Finally, one of the greatest benefits to running a loyalty program is being able to closely analyze spending behavior. Looking at this data provides a number of new ways to make effective promotional and sales decisions.
For example, retailers can look at what some of the most popular items are, and allow loyalty members a discount on these items or the first chance to purchase them. This further increases the allure of a loyalty program. Alternatively, retailers can find which items are some of the slowest moving among all inventory, and offer these items at a discount to push them out.
About the Author
Michael Koploy is an ERP Analyst at Software Advice, a point of sale software review website. Michael also helps manage the company blog, where he commonly writes about retail, supply chain and general ERP software. He can be reached at [email protected] or 512-364-0129.