For run specialty stores, there are compelling reasons to offer a loyalty program, especially in these pandemic times.

According to a recent report by CFI Group and Radial, retail loyalty program members are 12 percent more satisfied, 10 percent more loyal and 13 percent more willing to recommend a retailer compared to other customers. Those figures translate into real bottom-line boosting results, including heightened traffic and more frequent purchases as well as a path to ongoing communication with customers and enhanced marketplace buzz – all positive elements given the punch the COVID-19 pandemic delivered.

“A loyalty program isn’t just a nice-to-have anymore,” says Lory Ajamian, VP–marketing for Lightspeed, a leading point-of-sale (POS) system provider. “Shoppers have endless options to choose from, from your competitors down the street to retailers online. They need a concrete reason to choose your brand and it starts with rewards and incentives.”

Yet more, loyalty programs compel stores to focus on customer retention as opposed to simply customer acquisition, which is far more costly, reminds Ya-Bing Chu, VP– product at Formation, an artificial intelligence-powered marketing platform.

“Loyalty programs allow retailers to retain those who are most engaged with the brand [and those] customers will have a major and compounding impact on long-term sales,” Chu says.

Loyalty program basics

At its most fundamental level, a loyalty program provides a customer incentives to continue visiting and purchasing goods from a specific retail shop.

“Rewards and discounts keep shoppers engaged with your brand and increase the chance of them becoming repeat customers,” Ajamian says. “If a customer knows that buying their running shoes from you means they’ll earn points or get a reward, they’ll think of you first when they’re ready to buy.”

However, those rewards must carry enough weight to matter. The CFI Group and Radial report found that one-third of customers generally avoid participating in retail loyalty programs because they do not see enough value to justify joining.

“At the most foundational level, the rewards offered by loyalty programs need to be something that consumers value,” Chu says.

On top of that, Chu continues, any promotions or actions tied to earning those rewards need to be challenging, but not frustrating, something particularly common with tier-based programs.

“If consumers look at the tier structure and don’t believe they’ll ever be able to reach the bar for even the first tier, those customers likely won’t engage with the program,” he says.

Beyond a points-collecting and reward system, effective loyalty programs typically include some type of customer-facing portal – oftentimes, a website or branded app – that customers can consult to view their rewards progress as well as built-in, no-fuss marketing tools for the retailer to use on the back end, such as a drag-and-drop email builder, SMS sender and a consumer insights dashboard.

“The points system is the basis for a traditional loyalty program and tiered rewards give your customers something to chase,” Ajamian says. “Easy-to-use marketing tools help you reach out to customers in professional-looking, targeted emails so they remember to check out your sales and use their points.”

But for those retailers new to the loyalty game, RICS Software CEO Jason Becker suggests starting small. Get a loyalty offering to work effortlessly for both customers and staff and then add the bells and whistles.

“We see many retailers spend a lot of money, time and energy on creating or implementing [programs] that don’t ultimately get used because they’re too complex or didn’t solve a problem for customers,” Becker says.

Going next level

Emboldened by functionality embedded into various POS systems or an external provider, many independent retailers offer a loyalty program that hits on the basics — yet stops there. As a result, the loyalty program supports the business, but not as well as it could or should. To increase the effectiveness of a loyalty program, the experts offer these four tips:

  1. Keep in touch.

Ajamian urges running retailers to “create an ecosystem” with their loyalty program, which means setting up a system that enables easy, if not automated, communication with loyalty program members. She cites one independent retailer on the Lightspeed platform who invites loyalty program shoppers back into the store with SMS alerts tied to points levels. When customers earn a $10 off voucher, a text reminds them.

“The automatic communication creates a loop where the shop always remains on [the customer’s] mind,” Ajamian says.

  1. Segment customers.

As best they can, running retailers should segment their customers, especially if they sell categories beyond running. Running customers, for example, wouldn’t be interested in an alert touting “double points” on volleyball or wrestling purchases. By segmenting customers, stores can get the most relevant information into the right hands.

  1. Dig into customer data.

Even the most basic loyalty programs allow retailers to better understand their customers, providing stores the wherewithal to create more individualized experiences for customers. So, ditch the one-size-fits-all offers and focus instead on personalized engagement rooted in customer data such as past purchases or birthdays. Then, test and iterate.

“Retailers need to understand not just what a customer has purchased in the past, but also the larger picture of who they are and what motivates them,” Chu says. “They then need to be flexible enough to personalize and adjust to build loyalty with customers as individuals.” 

  1. Mix it up.

According to Becker, robust loyalty strategies provide escalating rewards that are both meaningful and easy to redeem. He suggests retailers think critically about their own personal use of loyalty programs, whether it’s the grocery store, a favorite restaurant or an airline, and reflect on what they most enjoy.

“It’s almost always the case that it’s for status, exclusive perks, redeemable points and other monetary perks,” Becker says. “Retailers need to think about things they can offer loyal customers that goes beyond a simple discount and offers exclusive experiences, access and offers.”