Loyalty programs today


Should I use price reduction voucher system (where you give mass discounts) or a loyalty program (commitment system)?

 This was what I was asked yesterday about what sort of loyalty program would I recommend. The point is that our point of sale permits many loyalty types that are different. Note with us, they're not mutually exclusive you could utilize several together.

Here is my report

Firstly I actually do not like discount vouchers as they are an incredibly costly programs, see here for numbers.

Additionally what type of a person will you be attracting, those that like perpetual discounts. I have seen a report that people whose first purchase is induced by a price reduction are 50% less likely to want to make a second purchase. This I can believe as what your discount is doing is attracting consumers hunting for a bargain, this is scarcely prone to instil shop commitment.
Also it has no chance of reaching those people that do not buy in your store in the first place. If they have never ever purchased something in your store, just how will you provide them with a voucher? What you need to provide them with a voucher is some type of loyalty system. So we are back to a loyalty commitment program.

Lastly all good things may come to an end. With the best of intensions, you may have to pull the plug on a program. You do not want a bunch of angry customers if you do. It is very hard with Discount Vouchers to pull the plug. Once you pull the plug they are gone.


I recommended that if they go down this track that you use a loyalty program.
Customer loyalty programs do work.



However, it has to be done properly and it does involve some work. You do need to look at your demographics (gender, age, etc.), see your clients purchase history and use heavily your point of sale for crucial insights into sales. Our point of sale enables you once its set up to easily add a powerful, effective loyalty program without having to spend much and should encourage higher spending and repeat visits. It does allow you to keep in touch with your customers. Shoot them a "thank you" email to clients who make large purchases. It can let your customers know when your store is having a sale or a special promotion.

What you are trying to do is differentiate yourself while balancing revenue and costs, this only a loyalty program does.

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