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Customer Loyalty Programs: 5 Common Mistakes Businesses Make

It's important to market your products to new customers, but it's also vital that you encourage existing clients to keep coming back. Customer loyalty programs are now common for many businesses, but some of these initiatives fail to deliver positive results. If your loyalty program doesn't seem to strike a chord with your customers, consider whether you are making any of the following common mistakes.

The program is too complicated

Customers don't want to have to think too hard about how to use your reward program. If they need to use a plastic card, quote a password and pay at a special counter, they just won't bother. It's important to remember that most people don't have much time to spare, so it shouldn't take loyal customers any longer to pay than necessary. Focus on loyalty offers that are quick and simple to use, a point of sale system can track customer rewards to simplify your program.

You have too many restrictions

Restrictive reward programs alienate your customers. You may have sound businesses reasons for limiting the rewards you offer, but these issues won't sit well with the people you are trying to thank. Try not to restrict rewards to certain days or times of day. You can encourage customers to shop when it's not busy by offering discounts, but many people need to come into your store at peak times, and it's still important to show how much you value them. Likewise, if you want to offer something free after a certain number of purchases, try not to place lots of restrictions on what you give away. The idea will soon lose appeal if your customers don't have a lot of choice

The rewards aren't worthwhile

Reward programs have to mean something to your customers, so make sure the reward matches the amount of money the customer has spent. A free cup of coffee is a good idea to a customer who buys five other cups of coffee, but it won't mean much to somebody who just bought a car. Many loyalty or discount programs fail because it takes customers too long to earn the rewards. Find the right balance between making it worthwhile and not eating too far into your profit margin.

Nobody knows about the Program

There's no point having a reward program that nobody knows about. A lot of shops, bars or cafes have reward programs that only a handful of customers ever use. If you're going to go to the trouble of setting up the program, you should make a bit of a splash, and tell as many customers as possible. Put up a poster in your shop. Send customers an email and train your employees to mention it at the cashier's desk. Loyalty builds quickly through word-of-mouth, but people can't share what they don't know about.

You treat all customers the same

It's important to reward loyalty from all customers, but it's vital that your program looks after your big spenders the most. This applies equally to customers who have a lot of money to spend (high-net-worth) and those people who just spend a lot of money with you. Create tiers within your reward program, so high-value customers enjoy better rewards. This approach can also create excitement. If the best customers feel that they have something to work towards, they're even more likely to keep coming back.

Customers love businesses that reward their loyalty, but many programs fail to lure many people back. Develop a really strong reward program by avoiding the mistakes that many other businesses make.