It’s common knowledge that selling to an existing customer is several times cheaper than acquiring a new one. Meanwhile, many companies still don’t use the potential of loyalty programs. Why does this contradiction exist and how to deal with it?
Here are some typical blockers of implementing loyalty programs:
Difficult to predict customer needs
What best motivates your customers to purchase again? Determining it can be very expensive and may require a number of quantitative and qualitative research. The necessity of conducting market research effectively deters from going into loyalty programs. However, you can benefit from the experience of companies such as ours. We’ll show you how loyalty programs designed for the same target as yours work. We know not only how and what to count points for, but also how to exchange them for bonuses optimally and what the bonuses should be like. We run ready-made, proven mechanisms first and then optimize their performance.
Difficult stage of analysis and design
You also need to reach consensus within the company between sales and marketing departments (additionally, often also between franchise and sales network management departments). If you add eCommerce to the above, you will realize that you need to talk with several people and persuade them to reach common ground. Loyalty programs are often designed by specialized consulting companies, charging tens of thousands of euros for helping to reach consensus. Meanwhile, you can suggest everyone to take part in one workshop where you will present ready-made software, already operating on the market. This will facilitate reaching consensus – a discussion on what everyone sees instead of an abstract conversation.
ROI difficult to estimate
If you conduct a dedicated analysis and design stage, you will need to create dedicated software. Then, you need a minimum of several months of work and a minimum of tens of thousands of euros – it’s another effective blocker. It is difficult to assess ROI of a program before it starts, so it’s difficult to justify expenses for implementation. The wisest thing to do would be to reverse the process – to start a loyalty program quickly and cheaply and see what benefits it generates in the basic version. It is much easier to develop a program that already brings profits.
Extensive loyalty programs require full integration of all systems. We often write about this in relation to the data bus. It is, however, another blocker for dynamic managers. What can help you in this case? We have developed some interesting ways of onboarding and calculating points. Most of them don’t require integration or require only minimal integration. No need for changes to POS or ERP systems is of great value in this approach. Contact us to arrange a presentation of our ideas for bypassing integration.
Difficult to develop logistics and financial processes
The nightmare of every manager (or even Board) is creating new processes in several departments of the company at the same time.
You probably don’t want to create new logistics and financial processes in your company unless it’s really necessary – most of our clients don’t. Therefore, we propose two solutions: 1) adjusting your loyalty program to existing processes (e.g. using eCommerce as a platform to receive bonuses), 2) full outsourcing of the loyalty program – along with logistics and even suggesting prizes.
Published August 4, 2016