If you are thinking about setting up a customer incentive program, but are not sure whether it is worth it or not, then you have stumbled upon the right article. In this article, you are going to find everything you need to know about a customer incentive program.
What is a customer incentive program?
A customer incentive program is a kind of campaign that is run by a company to reward its loyal or frequent customers. These rewards may be in the form of freebies, discounts, or rewards points and the sole purpose of this program is to keep the customers attached to your business. This results in an increased sale, and your business will set to unlock its next goals.
A good incentive program needs to provide excellent customer service, and customer satisfaction must be your top priority.
Why is it important?
All the companies need to launch their customer incentive program because their loyal customers are the ones who generate the most revenue. And if you provide them with attractive rewards, they will surely come for more. Moreover, happy customers always refer to the products/services to their friends which will result in even more profit.
Customer Incentive Program: Advantages
The incentive programs come in different forms. You can offer loyalty points to your frequent customers, or you can give discount vouchers. Some programs also allow loyal customers to buy a particular product before they are open to general consumers.
Some companies even give their customers incentives for their referrals. No matter what shape the customer incentive program takes, we need to discuss the advantages that it offers to your business.
Customer Satisfaction and Loyalty
Everyone wants to be felt special. The key to having returning buyers is that you make them feel valued. If they think exploited, trust us, they are never going to come back.
Now offering your customers discounts and incentives will help to make them stick to your company. They get a feeling of satisfaction, and as a result, you end up having a loyal customer. You need to do the homework and figure out which product/service gives you the most profit and then design an incentive program for the customers of that particular product/service.
Data Collection
In this age of the world, data is the most powerful thing for your business. This is why most of the companies are in the race of collecting data. And the best way to do this is by offering customer incentive programs in the form of loyalty cards.
Many supermarket chains are offering loyalty cards to their customers and then track the purchases to the specific shopper. Now the thing is that many people, even loyal customers, would hesitate in sharing their personal information knowing that their investments will be tracked as well as recorded. But to make up for it, they are offered loyalty points and discounts.
The customers' satisfaction is achieved, and in the meanwhile, the company gets an insight into what customer is most interested in.
Revenue Increase
Studies show that loyal customers make more purchases than new ones. In the USA, almost 41% of the revenue is generated by returning buyers who only represent 8% of the visitors on all the online stores. You have collected the data; now is the time to use it and target the right audience at the right time.
Let's suppose; a customer makes his purchase mostly at the end of the month. Now using the data, you can offer him discounts on the products he might be interested in the fourth week of the month. As a result, the chances of purchases by that customer will increase.
Help Raise Money for Charity
Another benefit of a customer incentive program is that you can help raise money for a cause. Many companies offer incentives that enable the customer to donate money for charity. For instance, a store announces that they are going to give a percentage of their monthly sales to a specific charity.
What will happen?
Customers will buy products from a store that supports a charitable cause, and this will result in a boost in sales. It is a win-win situation for everybody. Customer will get the satisfaction that he helped someone, the store will make its profit, the charity will get their donations.
Types of Customer Incentive Programs
By now, you already know that there are different forms of customer incentive programs. Some businesses might opt for only one model, while some might use a combination of one or more. Now let us take a look at some of the types of incentive programs that will help you clear your mind about which one would be the best for your business.
Point Program
One of the simplest and the most commonly used incentive program is points program. In this program, if the customer will spend more, he will be awarded more.
Let's take an example.
A superstore has a point program. Now whenever a customer makes a purchase, he/she will be awarded specific loyalty points in return. Now the more he spends, the more points he will collect.
These points can then be converted into some reward. It could be in the form of discounts on purchases or credit that you can spend. This makes the customers pay more because they would want to collect more points to redeem their reward.
Tiered Program
This type of incentive program is one of the best ways to achieve an equilibrium between attainable and desirable rewards. A tiered program is based on rewarding initial loyalty and encouraging more purchases. To keep it simple, a tiered program comprises of different levels of reliability.
The new customers have rewarded points on their purchases, and as their score increases, they progress onto the other level. Higher the scale, the higher the rewards.
Paid program – a VIP club
In this type of program, customers spend a certain fee every month or every year to be part of a VIP club. Being the member, they get special services, discounts, and offers that are not available to ordinary customers. This is why your business paid program must offer great and exclusive benefits to the members; else, it will not be successful.
Value-based program
This is one exciting incentive program. To create such a plan, you need to make a loyalty program that's synced with the values of your customers. In this way, your customers will end up being your brand ambassadors.
But the real question is, how do we structure such kind of program. The very first step for this is to know your values. For example, you are the owner of a pet store.
Almost everyone is ready to play their part in animal welfare. What you can do here is create a loyalty program just like the point program, where the points are converted into money. And when a customer purchases something more than a $100, donate $10 to an animal welfare program.
Partnered Program
This kind of program is based on making a partnership with other brands to offer more value. It can be beneficial because you are providing customers with more purchase opportunities and in meanwhile, making new ties for your business that can help you grow — things to consider to make your customer incentive program a success.
Do Proper Research
For launching the perfect customer incentive program for your company, your business team would need to do thorough research regarding which plan to select. There are multiple programs available out there, and you need to do the homework and pick out the right one which will meet all your business requirements.
Put your business's goal or objective in front of you and figure out the size of your company or your campaign and then work on creating a program that will help you achieve what you aim for. Apart from the business's objective, you also need to consider everything that your customer expects from you and also take a deep dive into the present market needs.
To analyze your customer's behavior, make use of the data you collected, and then create a customer loyalty program.
This will not only help you achieve your goals but will also leave a significant impact on the customer because they will feel valued and will come back to purchase more.
Keep it nice and simple
It is always good to keep things simple. If you come up with a sophisticated incentive program, the chances are that it will not do good for your business as well as your clients. Complex models can make customers confused, and as a result, they will end up ignoring your program.
So, you need to come up with a program that is easy to understand and simple to use. The first and foremost step in launching a successful incentive program is to make the registration/signup for customers easy.
Keep in touch with your customers
It is essential and crucial to maintaining good contact with your customers after launching your customer incentive program. One of the easiest and the most effective way to do it is by sending regular emails to your program members. By emailing your customers, you can keep them posted with all the renewals and specials deals.
This will make them aware of what is happening and will result in the success of your program. Remind your customers about what this program is all about after a regular interval of time, maybe once in a week.
Give reward points
The rewards must not be only something that you can afford but also something that your customers wish for. It does not matter what kind of rewards you choose; what matters is that they give value to your clients.
Use Social Media
Social media has done wonders for small as well as big businesses. There are higher chances that your social media followers and email subscribers will end up being your customers. So, always try to give exciting offers via social media and email newsletters.
Using social media and tracking down the performance of your campaign is quite easy. Take advantage of it. Give your customers the right deals at the right time; make them feel special.
These customers will most likely tell their friends about your campaign, and you will start to receive organic reach.
Final Word
A study shows that 83 percent of customers think that a good loyalty program will make up their minds to pursue buying or not. So, if you are not having a customer incentive program for your business, you are missing a great business opportunity. We know that it requires effort in structuring the perfect loyalty program, but it is worth it.
A great loyalty program will not only help you to stand out the name of your business but will also help your business revenue in a very positive way.
This is really interesting! Didn’t know there was such thing.
This made me understand so much about incentive programs. Very interesting.
Incentive program seems better than the others, but is it still case by case basis?
Your articles never fail to impress me.
This is the only place where I’ve seen type of programs being explained in the simplest and informational way.
Finally understood the benefits of an incentive program.