How to win the Loyalty Marathon

 
May 20, 2013

By Chris Luo, VP of Marketing at FiveStars

I recently ran my first half marathon, and as I reflected on the experience, I realized that the mindset needed for successful marathon running is very similar to the mindset you need to launch a successful customer loyalty program. To achieve strong results in either one, you have to be patient, willing to stick to your plan and trust your training.

Patience

In a marathon, you can't simply run as fast you can at the gun. It's tempting to join the many runners who take off at a pace that's far too fast. Even though you have a lot of adrenalin and excitement at the start of the race, you have to be patient and know that you'll eventually pass all of these runners who aren't pacing themselves. Similarly, with loyalty marketing, you have to be patient with results, as you won't see them immediately as you might after running a short-term customer acquisition campaign. With a strong loyalty program, a realistic objective is for your customers to come back one more time per month every month for years. This eventually results in an entire business franchise that is stronger, because your customers have superior lifetime value to that of your competition. With this kind of strategic advantage, you will eventually pass the competition that's too focused on short-term results.

Stick to your plan

Moreover, when running a marathon, you have to define your plan of attack and stick to it. It's similar with customer loyalty programs. Without a good strategy ahead of time, you will be left in your competitor's dust. Here are five simple things to help you set the pace in loyalty and stick with it at all costs:

 

1. Create an attractive loyalty rewards structure. I recommend having a rewards structure that has strong incentives across multiple tiers. You want an easily attainable reward early on—after maybe five or 10 visits—to get people hooked on your program. And then you can add even more distinctive rewards for more visits or higher spend-levels. These can appeal to your customers' sense of competition and achievement. One of the best loyalty programs on our loyalty platform gave out a free stuffed panda after a certain number of visits. The prize became a word-of-mouth sensation, as customers loved photographing themselves with the reward after attaining it and posting it to social media sites.

2. Train Your employees. Every one of your employees needs to understand the importance of your loyalty program. They need to understand why you have it—so you can build up your customer database and drive repeat visits—and how it benefits them. The best merchants on our platform reward employees for signing up daily a target number of customers to their loyalty program.

3. Enroll As Many Customers As Possible. The fuel that drives your loyalty program is the number of participants in it. Loyalty giant Panera Bread has almost 14 million members in its loyalty program. At FiveStars, the average established merchant has more than 1,000 loyalty program members and some have more than 10,000. This doesn't happen overnight, but it takes commitment to continuing to grow this number. When your loyalty strategy works, you will be able to multiply its impact across the number of participants you have.

4. Engage customers in-store and out of store. A great loyalty strategy recognizes that customer loyalty isn't just a program. It is an entire business philosophy. It's similar to how successful marathon runners don't just include a daily run in their schedule. Good competitors incorporate marathon training into every aspect of their life, like adjusting their diet and sleeping habits. In order for loyalty to pay off, you also need to invest in improving your customer service, using your loyalty program to recognize your VIPs when they come in, and engage your loyalty program members after they leave the store with relevant and timely promotions that are exclusive to them.

5. Take advantage of loyalty automation. When running a marathon, having a good GPS watch that tells you your pace makes achieving your goals a lot easier. With my GPS watch, I automatically know if I'm on pace or not, and know how to get back on pace if I'm off. There are a number of loyalty automation platforms, including ours, that take the guesswork out of your loyalty marketing. These tools will help you understand exactly where you're at in your loyalty efforts, and can get your loyal customers to come back more often by automatically communicating with them.

Trust Your Training

On race day there's not much you can do except have fun and trust that your training will pay off. If you're patient and stick with your plan, it should be no problem. It's the same with loyalty. We see time and time again that 20 to 30 percent gains in visits per month are easily attainable from companies who invest in loyalty. Companies like Armadillo Willy's, an eight-store barbeque chain in the Bay Area, have used their loyalty program to achieve 39 percent improvement in visits per month among regular loyalty program participants, which has translated to more than 10,000 additional visits to the store since the program launched in January 2012.

Now that I've run my first half marathon, I'm already planning for my next. It was rewarding to see how patience, sticking to my plan, and trusting my training paid off. Every day, these same principles are being applied by businesses investing in loyalty, and they're the ones that are winning. Harvard Business Review said that customer loyalty is the single most important driver of growth and profitability. So hit the ground running by leveraging these concepts, and good luck winning your own loyalty marathon.

Chris Luo is the VP of Marketing at FiveStars, a loyalty automation platform for small and medium businesses. Previously, he was Head of Global SMB Marketing at Facebook, where he built the global team responsible for SMB adoption of Facebook Ads and Pages. He has an MBA from the Wharton School, where he was a Palmer Scholar, and is a Phi Beta Kappa graduate of Harvard University. In his spare time, he is trying to break 20 minutes in the 5K.

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Topics: Marketing / Branding / Promotion , Online / Mobile / Social


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