Loyalty programs are generally designed to build a customer database and encourage repeat purchases in exchange for rewards such as points, discounts or value-adds. They can drive a deeper engagement between a company and members by increasing purchase frequency and the value of each purchase.

Data collected by the loyalty program can then be used to tailor communications, offers, products and services to further drive sales, increase member satisfaction and ultimately, provide a competitive edge.

Financial services and mobile payment provider, Square Australia, recently introduced a customer rewards program, Square Loyalty, that integrates with a retailer’s point-of-sale and customer directory.

Colin Birney, business development lead at Square Loyalty, believes loyalty programs are an ideal tool to engage with regular customers and acquire new customers, but businesses should remember – while you need to grow your customer base to increase sales, it’s even more critical to keep existing customers.

Another recommendation from Birney (for businesses looking to start a loyalty program) is to invest in digital rewards over paper cards.

“You’ve likely been the person behind the counter that gets handed a business card–size piece of paper with a stamp or a holepunch and some commentary around bringing it back to redeem points. But, how likely is it that the loyalty card actually makes its way back to the store?”

Birney cited Visa research that revealed 90% of consumers prefer a digital reward program. “It’s 2019 and everything is going digital, so why would your rewards program be any different?”

Another recommendation is using email marketing to promote new incentives, as well as updating website and social media platforms to highlight the benefits of doing business with you, as most consumers now conduct online research prior to purchase.

Square Australia offers business point-of-sale systems that collect information using individual buyer profiles, such as a customer’s first visit, last visit, frequency of visits, total visits, average spend, and total spend. Valuable insights into these key retention metrics can be obtained through Square’s free data analytics tool.

“These metrics are critical for growing sales. Not only do they help gauge current customer retention rates, they can also offer insights into which incentives worked best with each customer. This information will help you make smarter decisions when planning your loyalty program rewards into the future,” he explained.

Achieving consistent customer engagement

Visa research shows that 78% of consumers say they are more likely to shop with a business that has a loyalty program over one that does not – meaning customers are actively seeking to establish relationships with brands.

Once your loyalty program is up and running, the next step is maintaining consistent member engagement, which can be challenging, as it requires constant innovation and evolution in order to remain attractive and relevant.

Square Australia claims that customers enrolled in Square Loyalty programs return and spend on average two times more than other customers.

Birney said while loyalty programs are a great way to engage with regular customers and make them feel valued, businesses need to ensure that the rewards provide something meaningful.

“Consumers are savvy — they won’t jump through too many hoops — so if your rewards are too gimmicky, hard to redeem, or low in value, you can expect those customers to find the value they seek elsewhere.”

He also said rewards shouldn’t hurt the bottom line and the loyalty program needs to be sustainable.

“Make sure you choose your incentive program wisely; if you can’t afford to reward customers per visit, think about offering a reward per spend or with a free item instead.”

Tracking loyalty points and being rewarded in a timely manner are common pain points for the end customer.

“Consumers want to know when and what they are getting in return for their loyalty. For example, they may not be willing to wait a year to be rewarded for frequenting your business, but they may be willing to wait one month. They also may not be willing to give you their business for a 10 per cent discount but be happy to spend $100 for a free item. Thinking through the logistics of how your rewards or loyalty program will benefit your customer, before it is implemented, is critical. Customers won’t return if they have a bad experience.”