Loyalty programs are everywhere. I’m willing to bet you have several loyalty cards in your wallet. You may even have loyalty memberships you’ve forgotten about. Customers love them – and with good reason. There are so many benefits to using rewards/loyalty programs. Convenience stores have really jumped on the Loyalty Concept and customers earn free fuel and any items in store by using them.

Most custom auto or motorcycle shops sell parts, accessories, clothing and brand related items. A Loyalty Program can easily be created based on a customer’s purchases and help them to earn free or discounted items.

A well-thought-out loyalty program provides benefits to customers that can range from reduced prices for products – to giveaways for exclusive access to special events and offers. For your custom shop, they help with customer retention by incentivizing loyalty.

The trick, of course, is creating a loyalty program that does both. Give the customer a financial benefit and also keep the customer base that you have.  There are lots of different options, including referral programs.

So, with that in mind, let’s talk about loyalty programs. Should you create one? What benefits and features are best for your customers and you? Here’s what you need to know.

The Benefits of a Loyalty Program

Let’s start by talking about the benefits you’ll reap if you start a loyalty program that appeals to your customers. There are several that
make loyalty programs a must for any custom shop owner: 

1.  They can help you retain customers. One study found that a 5% increase in customer retention led to an average of a 25% increase in profits.

     2.  60% of loyal customers say they buy more frequently and make more purchases from the Custom shop brands that they love.

     3. Surprisingly, loyalty programs don’t cost companies as much as you might think. It costs far more to acquire a new customer than to keep an existing one. When you offset the cost of a loyalty program against the cost to attract new customers, it’s still a far less expensive option.

     4. Customers who participate in loyalty programs feel valued and that triggers a cognitive bias known as Reciprocity. That’s the instinct that makes us feel that we should return a favor when someone does something for us.

    5. Research shows that loyalty programs increase sales. According to one study, members of loyalty programs generated between 12% and 18% more revenue for businesses than non-members.

    6.  Loyalty programs can help you learn about your customers. It may take a bit of trial and error but creating a loyalty program allows you to collect valuable data about your customers and their buying habits. You can use what you learn to fine-tune your loyalty program and to create offers that will appeal to your most loyal customers.

Loyalty programs offer benefits to you as a custom auto or motorcycle shop owner, while also giving your most loyal customers a reason to return to your business, increase their purchasing, and recommend your business
to their friends and social media followers.

Features of a Successful Loyalty Program

What features should your loyalty program have? There’s no one correct answer, but there are some things that most successful loyalty programs offer. Here are the ones that you should seriously think about working
into your program:

n  A structure that incentivizes customers to purchase frequently and spend more money than they normally would. A great example is Harley Davidson’s Rider Rewards.  Loyalty members earn one point for each dollar they spend, and the points are transferred to a coupon for members to use for discounts at Harley Davidson.

n Early access to special offers and products. A lot of loyalty programs offer members insider status where they get first access to new offers and a heads-up on the release of new products. It’s a good way to make your loyalty program members feel valued and special.

n  Ease of use. Providing a frictionless experience is a must if you want members to participate in your program. It shouldn’t be difficult to join, and you should make it simple to accrue rewards and use them.

n  Personalization. It’s a great idea to create a mailing list for your loyalty members and personalize what you send to them.

n  Freebies. Customers must accumulate points to earn rewards, but there’s nothing wrong with offering them something just for joining your program. You could send them a small, branded item each year on their birthday, like a drink koozie with your shop’s name on it. It’s a nice reminder that they care about their customers – and who doesn’t like a birthday present?

n  Brand relevance. Finally, your program should be relevant to your brand and deliver what your customers want. “The key here is to think about your business, brand values, and customers and create a loyalty program that delivers on your customers’ expectations while helping your bottom line.”

Ideas for Loyalty Programs

Here are some suggestions for how to structure your loyalty
program in a way that makes customers want to participate.

n  Use a simple point-based system. I’ve seen some loyalty programs that are convoluted. Here again, Harley Davidson’s “one point for each dollar spent” is a role model. Nobody’s getting confused about how their system works.

n  Charge a fee for access. This option might seem counterintuitive but it’s often quite effective. You can charge a fee for lifetime access and pay dividends to customers based on how much they spend during the year.

n  Gamify your loyalty program. Everybody loves a game and there are lots of ways to make loyalty fun for your customers. Your loyalty customers can earn rewards including prizes and cash rewards.

n  Create a tiered system to further reward big spenders. It makes sense to give your most loyal customers – the ones who buy the most from you – additional rewards. Creating different reward levels (Gold, Silver and Bronze, for example) will incentivize people to buy more to earn the
extra rewards you’re offering.

Once you get your loyalty program going, track the results and use what you learn to fine-tune your structure and rewards. Your customers will let you know if something’s working – and your bottom line will reflect their increased loyalty.

I wish you luck creating your Loyalty Program and hope that you have fun with it! If you need assistance incorporating your program into your website – or with graphic design for cards or coupons, feel free to call us at Custom Shops Marketing: 303-993-0911.