Loyalty Programs: Tips and Tricks for your store

Why have a Loyalty Program:

Every day customers have a choice as to what to spend their money on and who to spend it with. When a customer buys from you, they have selected you for that moment in time. The question is, how do you keep that customer coming back and choosing your store over another store each and every time?

When customers are given options as to where to buy and what to buy, their decisions can often be influenced by who will reward them the best for their purchases. If they have already shopped with you and know that each time they continue to shop they will be rewarded, there is incentive to keep coming back, rather than go with a different store.

Loyalty programs are a great way to reward customers, and to give them a reason to want to purchase from your store. A loyalty program can help retain business, generate new business and increase sales. And considering the expense required to attract a new customer with advertisements or sales, loyalty programs are an inexpensive way to keep existing customer's coming back and the money coming in.

The goal of the loyalty program is to create a relationship with the customer and give them a personal experience. A well executed program allows the customer to feel connected, and in some sense obliged to purchase from you. For some customers this may just be because they will save money. For others it will the feeling of friendship, connection and special service offered by your program. Whatever the reason, customers respond to stores that give them something in return for their business, and a loyalty program is the perfect avenue to do this.

The benefits of a loyalty program includes;

An increase in long term customer and brand loyalty
An increase in word of mouth and referral sales
A lift in sales and growth of overall customer base
Support for your in store events and promotions
Offers a platform to launch new roducts, brands, ranges and promotions
Allows you to differentiate from competitors, and
Increases your understanding and communications with your customers

The ultimate goal of a loyalty program is satisfied, joyful customers who will return to purchase again and persuade others to use your products and services rather than your competitors. This in term results in a happy, profitable business, and happy customers.

Types of Loyalty Programs:

There are various types of loyalty programs. The one you choose will depend on your type of customer, your store and can include both hard and soft benefits. Hard benefits are a way to provide
economic reward, while soft benefits deliver recognition and special privileges.

Points Programs:

Points programs first became popular with department stores and airlines. Sometimes called frequent buyer points and for an airline frequent flyer points, this type of program is a great way to reward customer for purchasing and ensuring they come back to into the store to use their rewards.

The program works by giving customers one loyalty point for dollars spend. This number of dollars needed to spend to earn one point is purely up to the store. Customer's can then redeem those points by purchasing items in the store and paying with loyalty points.

From a stores perspective, this program involves tracking which customers are on the program, tracking points earned and redeemed and generally includes the issuing of monthly statements.

Discount Programs:

A 1% increase in customer retention enhances a stores value by about 5%

A discount program is giving the customer a discount at the time of sale. This can be a formal program where you issue a card to the customer that they keep, or it can be more informal, where you give the customer a once off promotion or discount card either at the store or through direct mail.

Discount programs can also be used for special events and birthday promotions. If using a discount card, the title is often VIP card or Reward card rather than 'discount card'. When issuing a card, you can choose to display the discount as a percent or dollar value, or may choose not to show the discount at all.

If not issuing a card, one idea is to have a small sticker made with your logo and if a customer pays by credit card, place the sticker on the back of the card (bottom right generally). Let the client know that next time they come in and pay with their credit card the sticker entitles them to an automatic discount.

Partnership Programs:

Partnership programs are where you partner with a local business/s to provide rewards for both businesses customer bases. There are multiple ways of running a partnership program.

One simple way is to have a gift voucher for the other store. So when a client buys from you, they receive a gift voucher for the partner business. And when a client buys from the partner business, they receive a gift voucher for you store. This is a great way to tap into new customers.

It is worthwhile when partnering with a business to check that their clientele is in line with your ideal clientele.The partnership program may also be run as a discount program where the loyalty card is a discount card with both businesses names and the customer can use the card at either establishment.

You send the loyalty card out to your customer base and your partner business sends it out to their client base. This way you are getting access to another businesses entire customer database. For this program you can also use the credit card sticker idea rather than a loyalty card.

Referral Programs:

With most sales in jewellery stores coming from word of mouth, a referral program is a great way to formalise and track your word of mouth sales. The idea behind the program is to formally ask your clients to refer a friend and give them a reward for doing so.

Examples of referral programs include:

Sending a client two vouchers, one for themselves and one for a friend.
Sending a client vouchers with their name already printed on it. The instructions for the client are to give the vouchers to friends, and for each voucher redeemed they will get a special gift or extra loyalty points.
Send a letter to clients asking them to refer a friend to the loyalty points program. For each client they refer they receive extra loyalty points

As with all the programs, measuring the results of your referral program is very important. By using a computer system that tracks referrals it will be easy for your store to report on and measure the success of your referral program. The computer system will also save you time as it will automatically flag the customers who should be rewarded for their referrals.

Buy X, Get One Free:

An old classic, the buy X get one free is a form of short term loyalty. The program is a predecessor to the loyalty points programs and used mainly by stores who don't have a computer system to track the points. When used sparingly, this program motivates the customer to buy more items than they originally planned, in return for a free gift or free item.

Popular in the last few months with charm and beaded jewellery, be careful not to eat into your bottom line when using this program. Do the figures before hand to ensure you are getting a good return on investment and if the goal of the program is loyalty over a short term gain, maybe consider a points based program rather than this style of program.

Gift Vouchers:

Gift vouchers can be used in several different programs. One way you can use them in order to get a customer back into your store, for example is if a customer buys over a certain amount they receive a gift voucher that can be used next time they come into the store to purchase.

Gift vouchers work well with targeting clients who have not shopped with you for a while or rewarding clients as a once off event, such as a birthday or engagement ring purchase (give them a voucher that can be used towards a wedding ring purchase).

You can use a gift voucher program in conjunction with a loyalty points program, where the voucher gets them into the store, and the loyalty program creates an ongoing relationship so they keep coming back. In this situation, the gift voucher could be for loyalty points, rather than for actual dollars.

VIP Programs:

Jewellery stores can boost profits by almost 100% by retaining just 5 percent more of their customers

The VIP program is a way to reward the customer without giving a discount or affecting your bottom line. It is playing on the customers need for service, status and recognition.

VIP programs can offer the customer special features such as;

The first look (on new product ranges or brands)
The first information on sales
VIP shopping experience (treated like a celebrity), offered tea & coffee, place to sit, assigned a personal staff member
Exclusive home delivery or hand delivery
Exclusive shopping methods
Surprise gifts
Shopping by appointment
Free cleaning
Special exchange offers
Jewellery hire options
Special preventative checks on existing jewellery
A jewellery catalogue (where as a service included in the program you take a picture of all their jewellery pieces, even ones they didn't purchase from you. The customer then feels safe in knowing if anything is lost or stolen that you have a picture and details of the item. And a benefit to you is that if anything is stolen, you'll be the first jeweller they'll come to with the insurance replacement)
Access to sale items a day before the general public
Special VIP nights or the ability to host friends and family nights where the customer is the star and can have a special party just for them.

With VIP programs it is important to track information about the customer's personal shopping habits so that you can serve the customer effectively and make them feel they are receiving something special by being a VIP. Often jewellers include the VIP program as part of a Loyalty Points Program.

Gift Reminder Programs:

Particularly useful for your male clients who may not be interested in the above programs, the gift reminder program reaches out to the laziness in us all. The program offers a gift reminder and suggestion service.

The customer lets you know special dates such as spouse's birthday, children's birthdays (including sex and age), boss's birthday and anniversary. Then one week before the date you send the customer a reminder with suggestions on what to purchase. You can include a reply back form and an offer of free shipping.

If executed consistently this program will give a fantastic return and will increase your customer base through word of mouth, as it is both relevant and helpful.

Gift Program Options:

When creating a program, there are several things you may like to consider. These include:

Charge a fee to join. Some stores charge a fee to join their program. Examples are $20 to join per year to receive a discount of 10% off regular prices.
Set a time limit on using the points or vouchers.
Set a limit on what is covered under the program. For example generally repairs, custom makes and items on sale are not included in the program.
Have bonus buy at random times of the month. Depending on the program applied to it could be a greater discount or extra loyalty points awarded on specific items only.
Sent special promotions through email or text message randomly during the month. The promotion can contain a special code which the customer can use when in store to receive a special discount or extra loyalty points.

Things to consider:

Building a loyalty program requires the ability to collect and maintain data about your customers, track and maintain the loyalty program itself, as well as a way to communicate with the customers. To take the time and burden out of the loyalty program you can use computer software, such as Swim jewellery software to automatically do the work for you.

When creating a loyalty program for your store, you need to consider the motivations of your customer. What type of customer are you trying to target? Are you trying to shift the occasional shopper into a more frequent buyer or are you wanting to hold on to your existing good customers, and ensure they do not go to another store.

One way to find out what motivates your customer is to simply ask them. You can do this in store while they are buying, or you can use methods such as an email survey or point of sale paper questionnaire.

The following are some areas that motivate customers to use a loyalty program. You can create a program that address some or all of these areas.

Recognition and Status:
Having something that others don't have is a motivation for some types of customers. Things such as being the first to know about an event, being given an offer before others, being titled a VIP or having a status as a customer are all motivations for this type of customer.

Discounts & Rewards:
The discount or reward is a hard benefit where customers can equate their spending with a particular dollar saving. Value-seekers and lower-income bracket customers rather than elite customers respond well to this area.

High Quality and Service:
Personal attention can be a motivation for many customers. This can be provided by offering things such as a special service, a personalised recommendations and the ability to have private appointments with the head jeweller or owner.

Convenience:
Some customers are motivated purely by convenience. In a jewellery store this can be achieved through personalised gift suggestions, reminders of special events, free home/office delivery or free clean while you wait.

And remember, loyalty programs should be set up to reward profitable customers or turn unprofitable customers into profitable ones! Don't set up a program that simply attracts the type of customers that you want to avoid.

When creating your program you also need to be clear about what it does and does not include. If you want to exclude repairs, sale items or particular brands or products from the program, ensure the customer knows at the outset.

Ways to make your Program more Effective:

When creating a program it is easy to get caught up in the rewards side and forget how the program will work in practise. Here's a few tips that will take the burden out of maintaining the program.

Make redemption of rewards easy. For loyalty points, make one point equal one dollar. And at the outset let the client know how many dollars they need to spend to earn one point.
Make it easy for customers to update personal information such as address and phone.
Record as much information about the customer as possible.
Use the information about the customers to improve service � it is futile to have a database full of information about customers if it is not used to serve them better.
Match your loyalty program to your customer base and your store promotions. Find out what your customers truly value about your products and services and design your program to match what your most profitable customer truly values.
Achieve balance in you program. Remember that customers are not only motivated by tangible rewards; being valued as a customer is often just as important.
Stand out from the crowd and differentiate your offerings from those of your competitors;
Treat the loyalty program as a long term relationship-building strategy rather than a short term promotional tool; and
Ensure you are maintaining a good margin on your product ranges when the program is applied. If providing discounts or points, you may restrict where clients can apply the discount or on what items they can earn points on and redeem those points.

How to create your Loyalty Program:

Creating a loyalty program isn't that difficult. With a few guided steps you'll be well on your way to loyal customers.

Decide on your program:
Read the information above and decide on the type of program you are going to run. Write down exactly what the program will and won't include.
Decide how you are going to track the program:
If manual, create spreadsheets or a range of forms to track the information. If using Swim jewellery software, see the quick tips below on setting up the different types of programs in Swim.
What information about the customer do you need?
At the very basic you need the customers name and phone number. Ideally you will also record the customers address, email, phone, mobile, birthday and anniversary. Additional information you can record are gold preference, finger sizes, brand preference, hobbies, children's names and spouse details. You computer system should be able to track this information for you. If you don't have a computer system, create customer cards that can be filed with this information. You can ask customers for this information as part of the loyalty program invitation or when they sign up to the program.
Loyalty Card:
Decide if you are going to give the customer a loyalty card as part of the program. Loyalty cards are generally plastic cards, the same size as a business card, displaying information about the program. You can have cards created specially for your store with your company logo and the details of the program. On the back of the card a barcode can be included, and used to scan the customer into the computer system rather than asking for their name. TJS creates customised loyalty and gift voucher cards for jewellery stores. See contact details below for further information
Signing customers up to the program:
Firstly determine who you are offering the program to. Are you going to offer it to existing customers, new customers or a particular type of customer. Once you determine who, then work out how they will sign up. If you already know the customers you want to join the program then you can send them out a special letter of invitation telling them about the program. Alternatively you could send a letter to all existing clients letting them know about your new program and tell them in the letter how they can join the program. You may want customers to come into the store to join, as it is another way to bring them in. Alternatively you may let them join on your website, by email or reply mail. Promote the loyalty program in the store. If a customer fits the criteria, ask them in store if they want to join the program. If a customer doesn't fit, you may mention the program and let them know what they need to do to be eligible.
Running the program:
Communication is the key to any successful loyalty program. Customers want to be informed about what is happening in the future, as well as what they have received in the past. If you are running a loyalty point program, then it is recommended that you send a monthly loyalty points statement each month. You can include special offers, and suggestions on what to spend their points on in the statement. Examples of loyalty point statement are below.

Pre-Launch Checklist:

Launch date set
All cards, letters, invitations etc printed and ready to go out
Procedure set on how to sign up customers, record their information and track the loyalty program
Staff trained on procedures (both between customer and staff and on the computer system (if used))
Have set plans on how and who will maintain and monitor the program
Have set how you are going to measure the effectiveness of the program and at what intervals (I.e Are you going to report on customer retention, sales % increase, gross profit % increase, number of new referrals, increase in average sale, increase in the average number of times the customer comes in during the year etc)
Have pre-planed surprises or special moments for customers

Loyalty Programs in SWIM:

To find out how to set up and utilise Loyalty Programs in SWIM, be sure to check out

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