How to create a customer loyalty program and increase sales

May 5, 2017

Parts of this post were originally published in October of 2015

Have you begun a customer loyalty program? Should you?

Last year, Restoration Hardware announced a new customer loyalty program. For an annual fee, members of their loyalty program received a variety of benefits. They included set discounts on purchases, free interior design services, special financing terms and early access to their large annual sales. Unfortunately, Restoration Hardware stock prices dropped immediately. Experts said it was a big mistake. Was it? The store reported less than stellar sales in the 3rd quarter of last year. Nevertheless, more than 90% of sales were coming from customer loyalty program members. RH believes with renewals from last year and new sign-ups, the program will be a huge success in 2017.

Women like to be in the know

According to Bridget Brennan in Why She Buys, women love customer loyalty programs. They love to feel special, valued and a source of good information. Women need assurance up front that your company will be responsive to their needs, so a loyalty program is a natural fit. Brennan says, “To ingratiate women to your company, let them feel like insiders.” Establishing a loyalty or rewards program, is essential if women are your target demographic (which is probably most of you).

Customer experiences that build loyalty

Having a pre-paid membership such as Restoration Hardware, Sam’s Club or Costco isn’t the only way to implement a loyalty program. There are other customer experiences that studies have shown build loyalty in your customers.

Let customers pick their own sale item –

A study in 2015 found that 42% of customers find this a valuable shopping feature. Customers love to feel they have some control over when and how they save. This helps them to “personalize” the shopping experience. Hobby Lobby offers a weekly online coupon where you save 40% off one regularly priced item. I’m a fan. I love the feeling that I’ve saved on the items I choose, not that Hobby Lobby chooses for me.

Hassle-free returns build loyalty – 

This was noted by 41% of respondents as important. Their favorite benefits included no time limit, no need for a receipt and free postage on returns. Many consignment, thrift and antique stores do not allow returns. I must admit I have a problem with no time limit or receipt. These services were started by some of the biggest chain department stores such as J C Penney’s, Sears and Macy’s (Note: all 3 of them are currently experiencing financial problems). To apply this service to a smaller resale shop seems very difficult. However, offering a “buyer’s remorse” time period such as a set 14- day return policy, is possible to build customer loyalty.

No coupons needed to get the sale price –

Let’s face it, the days of clipping coupons are gone. Nearly 40% of survey participants want the lowest price automatically without having to clip coupons. Like Hobby Lobby, shoppers want to receive deals on their smartphones and many of the larger stores are beginning to use “beacons.” A beacon will target a customer in a particular department of a store. Then, it immediately sends a message about a special price on the item they’re currently viewing. I,  find that creepy, but Millennials love it.

A Rewards Points Program – 

Ranked by 33% of shoppers as an important benefit, rewards points are still a strong loyalty builder. Often a solid Rewards Points program can lead them to spend more with the shop when rewards are easy to accumulate and redeem. Many POS systems such as SimpleConsign have a built-in Rewards Points program that you can easily implement without the use of punch cards, etc.

Loyalty begins with service

In the same study quoted above, 73% of shoppers at apparel stores said they’d shop more often if there were attentive, helpful sales associates. Remember, the success of brick and mortar stores is the quality of the customer experience. Reward your shoppers at every turn. Make them feel valued and special. They, in turn, will reward you with steady sales.

Deb McGonagle

I have been a writer for various forms of marketing for over 40 years. I've written my share of radio and TV scripts, magazine and newspaper ads as well as direct mail brochures and newsletters. Currently, as the Marketing Director for Traxia, home of SimpleConsign software, I've moved into blog posts, eBooks and website text. It's been an ever changing and ever challenging journey but I've loved it all along the way.