Why you should think about a Loyalty Program

Here’s an observation that will likely have you rolling your eyes and saying ‘D’oh!’ Ready? Startups don’t have established user bases.

OK, so it’s obvious… but it’s still important. If you’re a typical e-marketer, you’re completely focused on those first-time sales. You talk about ‘conversions’. How do you get more visitors? How do you change visitors into followers? How do you make followers into customers?

What your company should do with those customers after you’ve won them is a problem for someone further down the line. You want new customers. Why would you be interested in a loyalty program?


Why loyalty programs rock…

There’s a very simple reason why. Loyalty programs win additional sales.

Forget how boring you find it to pull out a store card every time you go to the mall. Loyalty programs look a lot less dull from the other side of the sales counter. They’re a way to boost sales without the upfront costs of advertising campaigns or promotional tie-ins.

In fact, leveraging existing customer relationships is one of the best growth hacks of all!


Word Cloud "Big Data"


…why they work; Big Data…

Loyalty programs have been around for centuries. The retail business has *always* been low-margin, and issuing tokens to save regular customers a few cents on the dollar proved a winner from the very beginning.

Loyalty programs made a great leap forward with the arrival of computers, but it took the arrival of Big Data to really get things cooking. Marketers can now sift customer data at a level of granularity that would have astonished their predecessors… while the Internet enables them to deliver targeted offers with military speed and precision.

Today’s loyalty schemes are slick, automated processes that put tempting offers in front of targeted consumers in the blink of an eye.




…and why setting up a loyalty program is easier for you than for WalMart

Of course, you shouldn’t get the impression that companies like WalMart and Tesco find their loyalty schemes easy to operate.

The marketers who run the programs at established businesses face the challenge of correlating unreliable user data harvested during signup with inconsistent point-of-sale (POS) material and incidental detail from other sources. Even with Big Data, it’s a royal pain. But none of this has deterred ex-Wall Street analysts from rigging up their Hadoop clusters in the offices of the biggest companies. They’re panning for demographic gold. Shouldn’t you follow their example?

After all, as an e-business, you have a significant advantage over WalMart and Hilton. Since all your interactions with prospects and customers are online, your data is in much better shape than theirs. And, because you’re likely using conducting some of those interactions via social media, you have more data to draw on. Much more. (If crunching customer data is panning for gold, you’re downstream from a richer seam… with a bigger sieve.)




Working with better tools

But there’s even better news.

Companies which established themselves off the Internet have had to build their own Big Data tool-sets from the ground up, because that’s how they acquired their POS systems, customer databases and accounting functions.

By contrast, your business model likely incorporates some off-the-peg components… and there are plenty of enterprising startups with pre-built tools that can help you digest streams of raw data from Google Analytics, Twitter, Facebook and YouTube.

In short, you’re closer to having a loyalty program than you think!


Three steps to loyalty heaven

1. Remember that your loyalty program is a growth hack
Don’t think of your program as a way of hanging on to customers. Think of it as a way of winning new sales. Given what you know of your customers’ behavior, how can you sell them more of whatever it is that you sell?

2. Work that data!
Big Data excels at making new connections, extracting usable marketing info from the most unlikely sources. Look at your whole customer data ‘estate’, think laterally… and, if a data scientist tells you he can extract usable demographics from server stats, hear him out.

3. Keep your eye on the ball
Whether you’re giving out tokens across the counter or crunching Big Data from your social media feeds, the fundamental things apply. Use your new, data-driven perspective to segment your customer base, and identify the target groups to whom you want to reach out.

Big Data too tech-y for you? Stay with us! In the next post, we’ll be putting a new spin on one of the most familiar sales tools of the last century.

Jerre Baumeister

Jerre is the founder of TweetFavy and the co-founder of Novim Media. He is also a web-developer & -designer who specializes in back-end development. If you'd like to connect with him, you can find him on Twitter @JerreBM