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The Pros and Cons with Loyalty Programs

Customer loyalty programs clearly offer benefits to both your customers and your business. Keep in mind that there is not one loyalty model that should be used for each business; your store is different and unique. Find out what your customers will respond positively to and which will lead you to higher customer retention. In that way, you will be able to determine whether or not a loyalty program is right for you.

FACT: Loyalty Programs are an investment.

Pro: If discounts are balanced and your program is effective at increasing repeat purchases and average purchase value, you will quickly see the return in your investment.

Con: Unfortunately, loyalty programs are not free, and discounts affect the bottom line. You must take this into account when looking at MSRP’s, margins and discounts given.

FACT: Data is collected through a reward program software.

Pro: You are able to track and gather valuable customer and shopping trend data. When used appropriately, you can buy merchandise, plan events, and drive sales based on trends.

Con: Most people do not utilize the data the software collects. There is a difference between HAVING a rewards program and USING a rewards program. In your business, in order to be successful, you must be active and proactive. If you have something that can better your business, USE it.

FACT: Reward programs allow for direct communication with customers.

Pro: Having the ability to email, text or call people with valuable information that they care about is important. Contrary to some beliefs, people want to hear from brands they like (not to be confused with saying that they like to be sold to all the time). Curate content and information that directly benefits the individual. According to SaleCycle, 59% of respondents say marketing emails influence their purchase decisions daily. Texting is something you should be looking into also. You never want a customer to forget who you are or become that “one place they shopped at that one time.”

Con: Monitoring the number of times the program sends emails, texts and updates will be important. Contact daily will be overbearing, causing customers to leave the program. On the other hand, inconsistent contact or no contact at all will hurt you as well. Once or twice a week is plenty, depending on your promotion schedule.

FACT: You will have one of many rewards programs out there.

Pro: Since there are so many programs out there, you already have a pleth- ora of examples to look at. You have the opportunity to look at companies like Sephora, Amazon, REI Co-op, Virgin Atlantic Sky Club, etc. Each of these busi- nesses are successful with their different offers, discounts or GWP’s tailored to their customers.

Con: You might be so worried that your loyalty program will fall short in comparison that you don’t take action. However, you know your customers the best, and you are the best person to know what should be implemented and how it should be presented.

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