Is a loyalty program right for you?

Some companies wonder whether their business model is right for a rewards program.

We’ve put together a list of questions you should ask yourself before you think about investing in a loyalty program.

You should think about the following:

• Are you looking to make add-on sales?
• Do you have a business model that lends itself to repeat purchases?
• Can you find a way to make it easy for the customer?
• Can you be consistent in who you reward?

Are you looking to make add-on sales?

Rewards programs are great for people who are looking to make add-on sales. For example. If you sell books in your ecommerce store, you might decide to offer the third book in a series half price to those who have bought the previous two books from you.

Add-on sales are crucial to some companies business models. It’s where they pick up on extra revenue. A loyalty program is a great way to alert people to the add-on purchase opportunities.

Amazon offers add-on purchases:

Do you have a business model that lends itself to repeat purchases?

If your ecommerce store sells things that people buy once and there are no accessories they can also purchase, then a rewards program might not be for you.

If you only sell expensive luxury watches, it’s unlikely people will return month after month to buy a new one.

If you still want to implement a rewards program but have the problem of your items not lending themselves to repeat purchases then there are two things you can consider:

• Start creating/selling products that compliment your main product. If you sell leather products, produce or resell a leather cleaner, for example.
• Find other ways to reward loyalty that goes beyond the money people spend. Perhaps customers who are continually engaged with your brand get a present or reward to say thank-you.

Can you find a way to make it easy for the customer?

Rewards programs provide great ROI for your business. However, if they’re not managed properly they can cause more problems than good.

If you’re thinking about whether or not a loyalty program is right for you, consider who will be in charge of the loyalty program.

It should be easy for your customers to join and take part in your program. If you don’t think your company is capable of doing this, then there are other ways you can keep your customers engaged.

Can you be consistent in who you reward?

Oftentimes loyalty programs don’t do well because ecommerce companies are not consistent in who they are offering rewards to. You should only reward the loyal, and never the disloyal.

This level of inconsistency will confuse those customers who are actually eager to win the rewards in the right way. As well as this, rewarding the disloyal will have a negative effect on your business.