Are you a small business leader looking to diversify your sales strategies? Looking to dip your toe into mobile marketing strategies? Then a loyalty reward app may be the next step you need to delight your existing customers and attract new ones.
In this article, we’ll explore loyalty reward apps, their benefits and challenges, how to set one up for your business, and the do’s and don’ts of using them.
Let’s get started.
What are loyalty reward apps?
Loyalty reward programs are programs sponsored by a business to incentivize customers to become repeat, and ultimately loyal, customers. Loyalty reward apps, then, are smartphone apps used to manage these programs on both the administrator (business) and end-user (customer) sides.
Here are some examples of brand loyalty strategies that businesses can use to incentivize their customers to use their loyalty reward app:
- Reward app users earn points for each purchase that they make with a business. These accumulated points can then be used for future purchases instead of cash.
- Reward app users are granted early access to new products or special events.
- Reward app users are given special perks like free shipping or gifts.
- Reward app users enjoy special members-only discounts, like 10% off of every purchase.
Loyalty programs, of course, have been around since before the age of smartphones and mobile apps. In the past, these programs typically came in the form of a loyalty card with member activity tracked in a computer database. However, now that most people organize their lives through their smartphone, businesses have wisely turned to apps to implement loyalty programs.
Through these apps, customers can typically purchase products, track their accumulated points, and redeem points for discounts and rewards, creating a virtuous cycle for the business and customer alike.
How do loyalty reward apps fit into an SMB marketing strategy?
In today’s competitive marketplace, customer loyalty is crucial to business growth. It’s much harder to find a new customer than it is to retain an existing customer. (Remember the old saying about a bird in the hand?) Restaurants, retailers, grocery stores, salons, fitness centers, and more depend on loyal customers and repeat visits.
In addition, regular customers are more inclined to spend more per visit and sign up for upgraded services, because they already trust your business and are comfortable spending with you. And while this earned goodwill may insulate your business from the occasional slip-up, you should never take loyal customers for granted, as a pattern of disappointing experiences will likely cause them to take their loyalty, and their spending, to one of your competitors.
Using an automated rewards app is one of the most efficient ways for small business owners to reward long-term customers. For example, you can offer discounts, coupons, referral programs, rewards points, cash back, gift cards, loyalty points, birthday gifts, and more, all through a single app.
In addition to loyalty rewards, providing a high-value product or service and creating a unique, enjoyable customer experience are also good strategies for increasing customer retention.
Benefits and challenges of loyalty reward apps
One major benefit of using an app to track and implement a loyalty program is that apps are malleable. Should you want to provide a new perk or benefit for your loyal customers, you can create that quite quickly and communicate it to your base via push notifications or through your email database.
Of course, like with any technology, loyalty rewards apps do present challenges. It’s imperative to test your app before releasing it to the public. Any hiccups or glitches must be fixed while in the beta testing phase so that the wide release goes smoothly. This is why it’s so important to create an app that is easy to use and fits your business’s needs.
If you create a robust but overly complicated app, you risk ending up with an app that has too many unnecessary features, leading users to become frustrated by the experience and abandoning it altogether. Alternatively, if you create an oversimplified app that lacks integral features like menus and navigational assistance, your customers may give up on it for not providing a bare minimum experience.
Finally, like any element of your marketing strategy, you cannot let your loyalty reward app go stale. Both the infrastructure of your app and the content (in this case, rewards and special promotions) need to be updated regularly to ensure both security and to keep users coming back for more.
A good example of a winning customer loyalty app is the Starbucks app[1]. The company pivoted its strategy during COVID-19 so that customers could purchase their drinks ahead of time, walk (or drive through) into the store, and pick up everything quickly without a wait.
Through extra perks like double points offers, free products, games, birthday gifts, free refills, and more, Starbucks has created a loyalty reward app that truly rewards loyal customers and keeps them coming back for more.
How to set up a small business loyalty reward program
When starting a new loyalty reward app program, there are several critical steps that you must account for, whether you’re working with a mobile app developer to create something customized specifically for your business needs, or using a templated option from a software vendor to save some time and money.
1. Decide how customers can earn points
The most common way for customers to earn points as part of your loyalty rewards program is by simply making purchases with your business. This can be set up through a tiered method (i.e., every $10 spent equals one point), or a dollar-for-point method, or you could set it up so only certain products earn points (for example, customers earn a point every time they purchase a coffee, but no points if they purchase a bottle of water).
However, there are other creative ways that your company can reward customers with points, including:
- Surveys. This method allows you to reward customers with points for completing customer satisfaction surveys. This method offers the added bonus of giving you valuable customer data that you can use to improve customer satisfaction.
- Reviews. You can also reward customers for leaving reviews online. While you shouldn’t incentivize positive reviews specifically, the more reviews you have the more trust you can build with future customers.
- Referrals. By using referral codes[2], you can reward your customers with points for becoming brand ambassadors and recommending your business to their friends and family.
- Points per visit. If you’re simply trying to increase foot traffic into your brick-and-mortar location–for example, if your business is a car dealership or other high-end retailer with a sales staff–you can reward customers and potential customers with points just for stopping by. Just make sure not to gate the points behind a lengthy, high-pressure sales pitch or you could permanently turn away the same customers you’re trying to attract.
2. Decide how customers are rewarded
Now for the fun part. While it’s important to determine how customers accumulate points, you can get as creative (or as basic) as you want when it’s time to decide how to let them redeem those points.
- Points for cash. Letting customers exchange accumulated points toward future purchases is probably the most straightforward approach to your rewards program. Just make sure you adjust the points-to-cash ratio as necessary if you find that your ratios are either too stingy or too generous. You won’t exactly delight your customers if you reward them with $1 for every $250 they spend with you.
- Free products. A simple alternative to rewarding customers with cash toward future purchases is to choose the products they’ll receive for them. For example, buy six cups of coffee, and get your seventh free. This also allows business owners to encourage sales of specific products.
- Sweepstakes. This method is a little more complicated but can generate a lot of excitement with customers. You just need to choose a high-value prize–like a car, an all-expenses-paid trip, or a meet-and-greet with a celebrity–and then let customers exchange points for entries into a raffle (10 points for one entry, for example).
- Free shipping or delivery. A spin on the free products reward, letting customers exchange points for free shipping or delivery encourages future purchases and can increase the use of these services among existing customers.
- Access to exclusive sales or events. Letting rewards program members exchange accumulated points for access to exclusive products or in-store VIP events can make them feel special and really increase loyalty.
- Charitable donations. Perhaps some of your most loyal rewards program members have accumulated more points than they know what to do with and don’t need any more free cups of coffee. By partnering with local charities, you can let these members exchange their points for cash donations to worthy organizations. This approach can generate goodwill with your most loyal customers and show potential customers that your business is socially responsible.
3. Design the mobile app, test, and release
If you work with a big-box eCommerce site (like Shopify or Squarespace), then you likely already have access to a customer loyalty app through an integration or add-on. The best way to figure out your options via this approach is to contact your client success representative and let them know that you want to set up a loyalty rewards program.
If you’re starting from scratch, or you want to work on something a little more customized for your business, you can contact an eCommerce development provider.
Either way, here are some questions to ask during this process:
- Do you want a native (iPhone or Android) or hybrid (iPhone and Android) app?
- Do you want to update this app frequently?
- What security issues should you be aware of?
- Do you need to set up payments through the app?
- Do you want to set up communications (email and/or chat) through the app?
- How much will it cost to develop and maintain the app?
Depending on the complexity of your needs, you may want to outsource your loyalty app development to an agency or freelancer. You can read all about how to hire a mobile app developer here.
4. Track success
Even if your business has been successfully running a loyalty rewards program for years through a punch card system, there are special considerations that come with using a loyalty rewards mobile application.
Are customers using the app? Do they have any specific pain points when navigating it? Are they using some rewards much more than others? Are the redemption levels set too high or too low?
The built-in analytics in a modern loyalty rewards app should be able to answer all of these questions and help you track and adjust as necessary.
It’s also important to track against your specific business goals, whether it’s simply to get a lot of people to download the app, or if it’s more important for the app to drive a certain amount of increased revenue.
Do’s and don’ts of loyalty reward apps for small businesses
In this article, we’ve provided a roadmap for how to set up a loyalty rewards app for your small business. But here are some specific do’s and don’ts to be aware of as you create your plan.
- Don’t start this plan without a strategy! Every business should have a business plan that includes goals, priorities, and strategies (marketing and otherwise) on how to accomplish success. If your loyalty rewards plan does not align with this overall strategy, then it’s time to start over.
- Don’t create a reward structure based on a whim. Use evidence and research to confirm what your customers want, and create a structure around that. If you have trouble with this research, there are agencies ready to help.
- Do take the time to do it right. Yes, most of the major product brands have a loyalty reward app, so you may feel behind. But if you rush into releasing your app, it can fall flat, wasting money and losing customers in the process.
- Do track and adjust as necessary. Trends and technology constantly change. You may have created a loyalty reward app that is succeeding and creating breakthrough revenue for you. But if you do not evolve your strategies along the way, your results can quickly plateau and decline.
Go forth and reward your customers
Gone are the days of punch cards. You are now ready to implement your own loyalty rewards app program. But remember, if you ever need help, UpCity is here for you. Check out our picks for top mobile app development agencies in the United States and Canada.
Sources
- Starbucks Rewards, Starbucks
- What’s a Referral Code?, Inside Viral Loops