Never Ignore These Fact Points on Your Loyalty Rewards and Referral Program

Human purchase behavior deeply depends on the emotional drive that they have towards the brand and the product that they are going to purchase. As a tendency, to relate with a brand you need to have a sense of belonging and connectivity, which of course is a two-way process.

Loyalty Rewards and Referral program is one of the best and key steps that a brand can take toward maintaining this relationship with the customers. Timely rewards for customer loyalty is no longer an add-on service part, but is now expected as a part of customer retention plan.

This blog will discuss the key reasons for having a strong Loyalty Rewards & Referral strategy, as well as the best practices to achieve the same.

To begin with we first understand the concept of both Loyalty rewards and Referral program in a nutshell.

What exactly is Loyalty Rewards and how does it impact the customer sentiment:

To make it very simple, it is an approach to make your customer feel special about the association that he has with the brand. It is an incentive for a continued and consistent long term investment in a brand by a customer.

This keeps the customer hooked to the company/brand because there has been an involvement of a good amount of time and money. To get the same kind of benefit from a different brand would mean again investing almost the same amount of time and money, which would not be sound thinking from the customer.

However, in the absence of such loyalty rewards, the possibility of customer churn rises higher, as now there is no psychological or emotional deterrent for the customer to move out of the association for a better rewarding association.

So it’s a no brainer to have a customer feel valued and rewarded with introduction of these Loyalty programs and also to make them aware about the same.

Understanding Referral Program Principle and its Importance in Customer Advocacy

A similar approach but a more business expansion-oriented approach is to have a referral program. This also provides a reward to the customer and along with that it provides a lead or sales to further expand the brand business. 

These are very much needed during the early days of business setup, once you have acquired and serviced few customers. Customers are the best advocates for your product, so why not make them publicize it with an incentive offer.

3 Reasons or benefits for the need to have a Strong LR strategy

Increased Customer Lifecycle Value: The longer the customer stays associated with the brand, it automatically increases the probability of returning as a higher CLV. The number of purchase events go up and so does the average order value.

Stable balance sheets: For any brand to grow and scale up the sales & operation activities, they require sound balance sheets. This can be possible only through sustainable efforts like ensuring stable customer revenue inflow, with the help of consistent customer retention.

High customer experience value:  We all know the impact of customer experience in any aspect of a company growth model. The customer lifecycle is incomplete without a sound loyalty reward program as it gives a lifetime customer experience to make things more satisfactory.

3 Reasons/benefit for maintaining healthy referral practice.

Let’s find out the top 3 benefits of having a good referral program in place:

1. Business Growth: You can get referral based leads, by investing in your existing customers base. This can be very cheap, compared to investing in other sales measures like affiliate marketing.
2. Customer Engagement & Retention: This also increases the engagement between the brand and the customer and keeps everyone involved in each other’s growth. Ultimately this results in a higher retention rate by making the existing customer feel valued with rewards.
3. Better relevant leads and sales: Getting quality leads and customers as they come through the right channels. There are higher chances of the brand reaching wider industry circles or forums through referrals.

The best practices that you can deploy for Loyalty Reward Program

1. Maintain your customer profiles appropriately as per their choices and affinity. Create customer categories, profile them accordingly with personas. 
2. Special focus on your high paying customers, or the customers through whom you get your majority of revenue. Making them happy through rewards and incentives works well to ensure a good relationship with them. 
3. Allocate budgets for your referral programs , be it the gifts, vouchers, campaign investment, tie ups, all of these need monetary resources to be available. A sound and planned financial budget can make the program run smoothly without monetary supply disruptions.
4. Encourage the customers to opt more and more for joining your rewards program. You can have monthly, quarterly or annual rewards plans for them to claim as per their convenience and need.
5. Get feedback on your rewards collection. What a customer would like to have as a reward should majorly depend on their feedback. It is them, who are going to claim the rewards and continue staying with the brand. What excites them and what makes them happy, should be of top priority for the brands.

The best practices that you can deploy for Referral program.

1. Dual Sided Rewards: This is a win-win situation for everyone. The brand gets a lead, the referrer gets a reward and the referred one also gets a reward.
2. Milestone based Rewards: Create stepwise programs for milestone achievement. Increase the reward value, once a customer reaches a significant referral count.
3. Fun activity-based Rewards program: Make the Referral relay more engaging by deploying gamification in your campaign communications.
4. Try innovations in referral incentives.
5. Make it big on Social channels: Let the referral scheme reach the audiences where they spend most of their time. The social media channels like Facebook, Instagram , Youtube can actually reach a wider pool of referrals and increase your lead base

Cautions to be practiced

1. Avoid cash only rewards, customers may not always desire that. All we have to see is giving something valuable to them, which can relate to their cause and bring excitement for them.
2. Make the voucher delivery process more secure and safe to avoid any fraudulent consumption.
3. Keep tabs on the rewards allocation process along with system monitoring. Never over spend on these programs misappropriately, as it can lead to serious cash crunch situations.

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Conclusion

An Ideal Loyalty Rewards program can bring smiles for your customers and your brand, there are many innovative examples that can help your business use case. A lot depends on how dynamic is your strategy to adapt to customer demands and feedback. We can discuss some interesting facts and tips in our next blog.

For Rewards through Referral, again a lot can be done to increase and grow your business and customer base, provided you follow its protocols. We can discuss some use cases in our next blog too.