Loyalty Programs - Why You Need One!
Welcome to the Material Retail Dumps podcast. If you've listened to us before, thanks so much for coming back. If it's your first time listening, welcome Material Retail Dumps is a short form podcast with briefly valuable content for independent retailers. As business owners, we don't have time for a 30 minute lesson with a ton of banter. We get straight to the meat of the topic and aim to give you actionable information and will help you optimize your retail operation and make more money every day. Welcome to Material Retail Dumps, episode 36. This episode's gonna be about loyalty programs and why they work. So let's jump right in. So what is a loyalty program? Basically it's a program that businesses set up to give rewards or discounts to its customers who shop at them. And the more you shop, the more awards you get. And the goal behind loyalty programs is to build more loyal shoppers who will spend more, most businesses have loyalty programs.
Everybody from you know, Starbucks to Macy's to even your credit card. You know, you get credit card points, things like that. Those credit card companies are trying to basically bribe you to use their card versus someone else's. And sometimes it makes all the difference when it comes to brand loyalty. So, simple question, should you have a loyalty program? And the shorter answer is yes, you definitely should have a loyalty program. The reason you should have a loyalty program is because study after study show that that businesses with loyalty programs get more out of their shoppers that use the loyalty program. So your goal is to set up a nice loyalty program and then get as many of your customers as possible to opt into that loyalty program. Customers don't have to join the loyalty program to shop, but once you get a customer's information, you get 'em into the loyalty program, they should get a little bit more excited to shop.
Um, it almost turns the shopping experience into a game. I know when I used to get my coffee from Starbucks every single morning, I would be super excited because you need to get like 15 stars to get a free drink. And I remember checking my stars once a week or once every two weeks, see how close I was to my next free drink. That definitely got me to go to Starbucks versus the coffee shop next door. Most POS companies have a loyalty program built in. So I recommend just going and turning that on. If you haven't yet, if you don't have a po o s with a loyalty program, there are separate loyalty softwares out there, but it's a little tricky because you really want it to be integrated with your point of sale. Cause you want to keep track of customer purchases, what they're buying, customer information, things like that.
So a couple of things you should think about. First of all, you want to think about how are customers gonna earn points. Um, is it by shopping or is it by, you know, taking action or some combination of both. For example, we could give, you know, one point for every dollar they spend, but if you tag us on social media, you get 50 points or something like that to kind of just increase the connection with your customer. The other thing you wanna think about is rewards, obviously the customer's earning points. So now when do you give customers rewards? Are you gonna give a customer, you know, a reward automatically? Do you want the customer to be able to choose from their points balance basically and come in and say, I have 500 points, I'm gonna go spend 200 points on this coupon, or something like that. You kind of wanna set that up
Just the way that you want to. There's no hard and fast rule, you just wanna make it a little bit exciting for your customer. You don't have to, you know, give away the bank here. Just give them a little bit of an incentive to shop with you. The next thing I wanna talk about is, uh, expiration dates. A lot of businesses will put expirations on the points or the rewards. The reason is because those businesses want those customers to shop with them. So for example, you can have a rule that says you need to get a hundred points within six months to get a reward. So if you shop once every five years, you're never gonna get a reward. But if you're shopping all the time, you'll get a reward. I personally don't love that. What I really like is putting a expiration date on the reward.
So give the customer as long as they need to get those points and then put an expiration data on the reward. So make it that, you know, if you spend 300 bucks, you get a $10 reward. And then once you get a reward, you have 30 or 60 days to spend at $10 because the idea is we wanna get that customer back into the store as quickly as possible. So they come in on a Monday, they get their reward, let's get them back into the store within a week. Another really important thing when I'm thinking about loyalty programs is notifying customers and getting customers excited about it. So you should be doing very basic things like having the point balance automatically be on the receipt, texting and emailing with your customers when they get points and rewards and things like that. It should all be automatic in your system, in your POS system or in your loyalty system.
Whatever you're using, it should have that functionality. If it doesn't have some of this functionality, you should really look into just getting a new system there. Um, but basically it's not enough that the customer earns points. The customer needs to know that they earn points and it's not enough that the customer earned the reward. The customer needs to know that they got a reward. Cuz if they don't know that they got a reward, guess what? They're not coming to shop because they don't even know they have the reward. The last thing I'll say here is don't not do a loyalty program. I talk to a lot of business owners who are just like, eh, loyalty program is not for me. You know, it's not worth the money or anything like that. And you know, I gotta tell you that most of the time, the vast, vast majority of the time, they're dead wrong.
It really works. I see it time and time again where we, where we turn on a loyalty program with some texting tools for the business and then boom, right, right away you see some increased customer engagement. It's not gonna change your life. You're not gonna go from doing a hundred grand a year to a million dollars a year, but you can definitely take your business from doing, you know, 500 grand a year to 530 grand a year just by putting in the loyalty program. You don't have to take it from me. There's countless studies and articles that talk about the same thing. Well, that's it. Looking forward to the next episode. Have a great day guys.
