Improve Customer Retention With This Loyalty Program Tip



Large companies like Marriott and Kroger have long offered loyalty programs that reward frequent customers for their business. 

These programs, in turn, help foster more loyalty and provide the businesses with valuable information on their customers’ needs and wants, so smarter business decisions can be made. 

Fortunately, today technology allows many small businesses to offer their own sophisticated reward programs. And today I want to share a tip that can help you take that loyalty program one step further.

The tip? Make the first purchase a customer makes using the program count a little more. 
Let me explain. 

Have you ever signed up for a new loyalty card program at another retailer and they’ve started you out with “bonus” points? 

Maybe it’s the local coffee shop. They tell you if you buy nine cups of coffee, the 10th one is free — but as an incentive for signing up, when you buy the first cup, they actually punch two spots on your card.

Well, it turns out there’s a reason for that. It’s called “endowed progress.”

Endowed progress is all about a consumer’s perceived progress toward a goal. When they perceive they are closer to reaching it, it can increase their motivation to actually do so. That, in turn, can lead to higher customer loyalty and shopper retention rates. 

In other words, feeling like they’re one step closer to getting something for free makes them more likely to make the remaining purchases in between that allow them to actually achieve it. 

This is true regardless of the actual number of purchases required to achieve the free item. 

For example, one shop might offer customers a free product after five purchases; while another offers a free product after six purchases, but gives customers a head start toward that goal by initially crediting them for two purchases. 

Both shops are actually requiring the same number of purchases before giving anything away for free—but the latter is much more likely to gain those additional sales. 

So, think about your loyalty program… how can you make customers feel a little closer to that end goal? Give it a try, and let us know how it goes. 


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