silverpop.com © 2012 Copyright Silverpop. All rights reserved. The Silverpop logo is a registered trademark of Silverpop Systems Inc. PAGE 1 7 Tips for Creating an Effective Modern-Day Loyalty Program When you think of loyalty programs, does your mind conjure up visions of antiquated punch cards and endless discounts that eat into precious margins? If so, perhaps it?s time to reassess.Today?s sophisticated marketing technology platforms enable you to take advantage of the advances in mobile, social and marketing automation to create personalized loyalty programs that address buyer needs, build affinity for your brands, and encourage your enthusiasts to spread your message far and wide. As a result, it?s the perfect time to renew your focus on making your best customers even happier.And with the right approach, you can create unique loyalty programs that delight your customers without relying exclusively on discounts that reward the wrong kinds of behaviors. By following these seven tips for building a top-notch loyalty program, you?ll be on your way to boosting retention rates, upping the number of new customers you bring in via word of mouth, and increasing overall revenue. Let?s get started. Silverpop 1Open your social eyes. With Facebook charging toward a billion users, Twitter cruising past 500 million and new sites from Path to Pinterest tallying millions of users, the digital world has never been more social. For businesses, all that social sharing has a lot of monetary value, with studies estimating the worth at $0.50 to $1.25 per share1 . For companies with loyalty programs, this means transi- tioning to a system that places social advocacy on the same playing field as item purchases when evaluat- ing customer engagement. If you?re not already, begin using tools likeTwitterAdvanced Search and Radian6 to monitor social buzz and identify key influencers and advocates. When crafting your loyalty programs, remember that your biggest brand enthusiasts are probably the people most likely to share your stories ? and the ones most likely to have friends who could be prospective customers.With that in mind, it?s worth the extra effort to provide them with extraordinary experiences that encourage them to share with their social networks. Bottom line? Buyers respond positively to more engaging relationships.We?re social beings who like being recognized, and loyalty programs ? when done right ? enable you to connect on a more personal level. 2Build programs based on affinity. Would you give your best friend a gift they had no interest in? Hopefully not, so why would you create a loyalty program with rewards aligned to the products, services and buyer actions you?re interested in promoting and facilitating rather than those your customers care about? As with your general email and social media efforts, relevancy is key to a successful loyalty program. Focus on delivering rewards your customers will find fun, helpful and engaging instead of providing ?prizes? that serve company goals but do little for the customer experience. A good first step in this process is to spend some time thinking about buyer personas.Ask yourself what your customers are trying to do and what they want to achieve ? and then consider how you fit into that picture. Once you?ve got that down, think about what loyalty program rewards you can offer that solve their prob- lems and address their needs.Get creative and look beyond what your company does and sells, perhaps tapping partnerships to deliver a wider range of super-cool perks to your best customers. (See tip #6 for more on this.) 3Go deep on mobile. The dominance of the smartphone has arrived: Droids, iPhones, BlackBerrys and other related Tweet This! silverpop.com © 2012 Copyright Silverpop. All rights reserved. The Silverpop logo is a registered trademark of Silverpop Systems Inc. PAGE 2 models now outsell regular cell phones in theUnitedStates2 , and smartphone sales are expected to top 1 billion worldwide in 20143 .Given the growing omnipresence of these devices, the time is now to create a loyalty program that lives on your customers? phones. Some companies are wary of the cost of building a smartphone app that would house a loyalty program. But depending on the size of your customer base, it may be much less costly to design an app then print and mail physical loyalty cards. If you decide to go the app route, an evolving best practice is to contain the loyalty program transaction within the app rather than redirecting customers to a website, which can make for a more cumbersome user experience.You can (and should) still provide access to loyalty program accounts on your website, allowing participants to log in to check their program ?points? and update contact information. What if you have an older client base for which smartphone use isn?t as prevalent? In that case, you may want to offer participants the option of using a traditional physical card that?s swiped or punched versus going the mobile-only route. Once you?ve launched your app, don?t forget to use mobile (along with email and social media) to drive participation in your loyalty program. In-store signs, print ads, physical receipts and paper catalogs can includeQR codes or texting options that customers can use to enroll.Another option is to use in-store tablets to collect opt-ins, provided your marketing platform enables you to easily sync this info with your database. 4Factor in location. Among all the things customers may choose to tell us, few are more relevant and actionable than where they are right now.Today, with more than 200 million people using services such as Foursquare and Facebook to ?check in? at specific locations and share where they are with their network of friends and family, marketers have a golden opportunity to harness this information to deliver highly relevant content. Using sophisticated location-based marketing platforms such asSilverpop?s PlacePunch ? as well as the free, more basic tools Foursquare offers ? you can create loyalty programs that reward customers for frequently checking in to your location using Facebook and Foursquare. For example, you might offer users a reward at sign-up (e.g. ?10% off next purchase? or ?Free latte?) and then deliver additional awards at various intervals. These programs boost store traffic and delight customers, and as an added bonus, they provide valuable geographic and behavioral data on your most frequent visitors that you can use to more strongly engage them. Furthermore, the social aspect of Foursquare and Facebook check-ins translates to increased message reach, and you can spread the word even more by socially thanking customers who check in, such as responding to a check-in that?s shared onTwitter with a Tweet of your own. As with other aspects of a loyalty program, make sure these new promotions are communicated to local store staff members and that they?re trained on how to fulfill these special offers. Few things can take the shine off loy- alty programs like having employees respond with a blank stare when customers try to redeem rewards. 5Incorporate scoring into your loyalty programs. Just as B2B marketers score leads, consider setting up a scoring system that would help you rank customers based on their level of engagement with you.You can start by defining 10 to 15 trackable user actions that indicate deep interactions with your brand. These will obviously differ by company and industry, but as a general rule, stick to natural customers actions ? not what you want them to do. Examples might include watch- ing videos on your site, attending an event, redeeming an offer, sharing a piece of content to a social network, or checking in at your store. Setting up a scoring system is a savvy way to discover cus- tomers who are insanely engaged with you.You can then use marketing automation to segment your customers by level of engagement ? based on either task completion or overall score ? and then send different segments content customized to their group.Or, you can set up triggered emails that are automatically sent when an action is taken or a score rank is reached. This can all be done behind the scenes.Your customers may not know whether they?re ?top ranked? contacts, but they?ll appreciate the privileges you bestow upon them as a result of their lofty status. 6Work with other brands. Want to take your loyalty program up a notch? Partner with our companies and brands to offer rewards to your customers. If you select partners and products who match your customers? needs (see #2), you?ll delight your loyal advocates by giving them more ways to use rewards. And who doesn?t like to have more options regarding products and services that are relevant to them? 7 Tips for Creating an Effective Modern-Day Loyalty Program Tweet This! silverpop.com © 2012 Copyright Silverpop. All rights reserved. The Silverpop logo is a registered trademark of Silverpop Systems Inc. PAGE 3 Working with other brands has benefits for companies beyond just increasing customer satisfaction. Joining forces with others can help spread out costs, as well as enabling you to gain valuable information about customer habits beyond your product line that might be challenging to collect otherwise.You can use this data to inform future programs, products and partnerships. Proceed carefully, as it can be tough to harmonize these programs across companies. But used judiciously, the benefits of partner reward programs will often exceed the potential drawbacks. 7Go beyond the discount. Relying exclusively on monetary discounts for your loyalty program rewards can have several undesirable effects: ? Customers become conditioned to expect discounts on products they would have paid full price for ? ?X% off? loses its luster after customers see it for umpteenth time ? The discounts cut into already-thin profit margins But since everyone likes to save some money or score a freebie, what can you do?The answer lies in getting creative and mixing discounts with rewards that are fun and valuable to customers but don?t cost you money (or cost less than a discount).Think of Delta offering free check-ins forAmerican Express customers.Though technically a ?discount,? this was a service that Delta was offering for free until recently. Other non-discount examples include early-access shop- ping days, complimentary services, guided tours with the owner, invitations to exclusive events, even off-the-wall stuff like the chance to work with a head chef to create a special menu item. Give your best customers a unique experience and they?ll never forget it ? and they?ll likely spread the word accordingly. As you?re brainstorming ideas, remember to make your pro- motions unique, but not needlessly complex. Requiring five rule sets to be met to score a reward, for example, might lead to confusion and reduce participation. Finally, make sure the special rewards you give to your best customers really are special. Doling out the same 10 percent discount that every visitor to your website gets will take the luster out of reaching ?preferred? status. For more tips on loyalty programs and all things digital marketing, check out our blog and Resources page. Like our content?You?ll love our product. Contact us for a demo. Footnotes 1-Mashable, ?How MuchAre Social Media SharesWorth,? Oct. ?10 2-Nielsen, ?In US, Smartphones Now Majority of New Cellphone Purchases,? June ?11 3-Reuters, ?Smartphone sales to touch 1-billion unit mark in 2014:Credit Suisse,?April ?12 7 Tips for Creating an Effective Modern-Day Loyalty Program Tweet This!