I've long said that you need to build your email list and then segment that list according to previous sales for your targeted advertising. List building and segmentation both contribute to your customer retention efforts.
Loyalty reward programs are another common customer retention tool used by retail stores. Some local businesses are still using business card size loyalty cards that need to be hole-punched or stickered after every purchase. I find these low-tech cards are still used by small businesses and specialty shops that don't otherwise have a way to track customers through a computer.
Many have moved into the digital age with a computerized tracking during checkout. That tracking is based on a membership ID and it's either associated with an email address, phone number, or a physical card that is carried around. My own keychain has loyalty cards for 5 different grocery stores on it, although I could replace all of those with the Key Ring app if I wanted to.
There's a new class of loyalty programs now available as smartphone apps. Another app I have, called Belly, allows me to connect with local businesses socially. Local businesses can activate an account with Belly and create a reward program based on my check-ins at the store. Your loyalty points are earned when you check in on Facebook, write a Facebook review, or write a Yelp review.
Every business can set their own reward levels and even make it more fun beyond just earning points towards a future reward. A bakery near my house in Totowa, NJ offers a private baking lesson to anyone with 425 points. At the 500 point level, you can throw a pie at the owner! Sadly, there aren't many businesses participating on Belly, even though it's been around since 2012.
The downside to this social loyalty program is that people must remember to check-in. Belly was founded during the waning of the location based services check-in craze of 2010-2013, which is probably why it hasn't been widely adopted.
A non-obvious trend I've noticed recently is how some companies are now computerizing their customer loyalty programs in such a way as to give customer reward choices. For example, for one large nationwide retailer I could choose to build up loyalty reward points 3 times faster for a specific department in the store, say mens clothing, or I could just stay with the general reward program. By taking advantage of this specific perks program, I can more quickly build up points towards future mens clothing purchases, which motivates me to shop at that store first.
Discover card has a similar perks program where they ask you to opt-in every 3 months to their latest cashback bonus. Cashback bonuses are nothing new for Discover Card, but the format of their program now forces you to opt-in to different types of bonuses every 3 months. As I write this, the current bonuses are 5% cashback for purchases at gas stations and ground transport. In April, the bonuses will be from restaurant and movie purchases.
The perks method is similar to segmentation, in that I am given offers for something specific that motivates me. Even though I have another credit card that offers 1% cash back on gas station purchases, for the last 3 months I've been buying gas with my Discover Card. Next month, I'll be motivated to use it at restaurants and movies. I already know that the Discover Card rewards for October - December 2016 will be all purchases on Amazon.com. Can you guess where I'll be doing all my holiday shopping this year?
I'm not usually motivated by coupons or shopping when there's a sale. I typically buy things I need when I need them. Even though I've signed up for many loyalty programs, I rarely pay attention to what they offer. Grocery stores always seem to promote discounts on new product that I simply will never buy; come to think of it, my CVS/pharmacy loyalty reward coupons are usually worthless to me because of their limited time offer.
Convert to Perks
It's time to rethink your current loyalty program. Can you track how often your customers use it and how effective it is at customer retention? Instead of offering a reward based on all store purchases, you could offer specific rewards for different categories of items.
For example, when someone signs up for the reward program they'd have to select if they want reward points for a single category of items, like rings, bracelets, earrings, pendants, etc. You'd then have to create a very attractive reward program, like 5% or 10% off every purchase in that category. The reward offer needs to be large enough to make someone think twice before they make a similar category purchase at one of your competitors.
Perks and Personalization
I've been reading a lot about personalization recently. It seems to be a hot topic this year, and I even weighed in on mobile personalization. Perks are just another layer of personalization, especially when you can allow your customers to choose what category of products they want to apply their loyalty program to.
I realize that there's not a lot of existing software out there right now that can implement these types of perks and personalizations for small businesses, but it's coming. Look for it as a feature in the new software you are considering, and ask your current software vendor if they are planning on adding the feature. Personalization is where all internet technology is heading, and perks are an easy way to offer personalization today.