Small business owners often struggle with the idea of how to design a loyalty program that really works to increase revenue and keep customers coming back for more. Unlike their larger competitors, many small businesses lack the resources to undertake a major customer loyalty program initiative.

Can ACT! Contact Management Software help with loyalty programs? The answer is a resounding “yes”. Here are a few things to consider when designing a loyalty program:

1) Define your loyalty program goals.

Sounds simple, right? You may be thinking that the main goal of a loyalty program is simply keeping customers. However, it is essential to drill more deeply. For instance, goals of your loyalty program might be to motivate additional spending by existing customers, to expand the existing relationship between your company and your customers, or to encourage upgrades or cross-sells. Each of these objectives would dictate a change in the basic structure of your loyalty program. So, to craft a cohesive strategy, you must prioritize your goals. Your ACT!CRM will help you to do this by providing valuable data about your customers and what they are looking for in terms of rewards or incentives.

2) Know When to Hold and When to Fold

The simple truth is that not all customers are created equal. ACT! CRM software allows you to see which customers are worth an extra investment. Realistically speaking, you will always have some once-and-done customers who purchase your product or service and never return for more. CRM helps you prioritize your customers according to their level of engagement with your company.

Armed with that analysis, you can craft your loyalty program to specifically target the customers most likely to spend again. These paying customers are the ones you want participating in your loyalty programs.

The concept of discarding potential customers may seem foreign, as standard marketing practice is to work a lead until there is no hope of engagement left. But remember this: loyalty programs cost money. And money spent to lure a customer unlikely to become loyal is akin to money squandered away. There is a fine line between reclaiming a straying customer and discarding a losing investment. The trick is to define that line, and understand when not to cross it.

Your CRM software can help you to do this successfully by segmenting your customer base into several categories like:

• the once-and-done customer
• the casual friend of your business
• the brand loyalist
• the brand advocate

Obviously, your loyalty program must cater to the brand loyalists and advocates. But it is also important to woo the casual friend of your business. With appropriate lead nurturing accomplished with the use of your CRM software, you can turn a casual friend into a loyalist.

3) Monitor Costs in Multiple Ways

When considering your loyalty program design, you must carefully count the cost of each component. For instance, if your loyalty program is based on discounts, at what point are the profits from loyalty program participants likely to be less than the costs of administering the program? CRM is not a crystal ball, and cannot predict outcomes exactly. However, the understanding you gain about your customers through an effective CRM solution will help you to make some solid assumptions and find a loyalty program that balances risks and rewards appropriately.

4) Have a Good Exit Strategy

As with any business initiative, loyalty programs carry their own particular brand of risk. Appropriately measuring the success of your loyalty program over time with metrics captured by your CRM software is essential to the effectiveness of the program itself and the profitability of your business as a whole.

Knowing that your loyalty program may one day outlast its usefulness as a tool to drive profitability, it is wise to build into your initial loyalty program blueprint an appropriate exit strategy. Here are some components of a well-designed exit strategy:

• Build a defined expiration date into your program from the very beginning. This keeps customer expectation in line with reality. If your program is wildly successful and profitable for your business, you can always extend the program deadlines with an upbeat “Good News” email campaign.
• In the event you decide to stick to your original program deadline, be sure to give your loyalty program participants adequate time to use their points, rewards, or discounts before program termination. This is another appropriate time to use your CRM automation features to send out a targeted email with informative content to your customers.
• Craft any exit communication in the best, most diplomatic way possible to avoid alienating loyal customers. Maintain a steady stream of upbeat, informative content to ease the transition. Utilize your CRM analytic functionality to capture and contain customer reaction.

Following these tips, you can craft a winning loyalty program utilizing the full potential of ACT! CRM software. If you would like to know more about how ACT! CRM can work for your business, please  contact us. We will help you get started with a 30-day free trial today.