Loyalty Programs and Puppies
This video by Coach John Davis offers advice on creating effective loyalty programs. He uses the analogy of holding a puppy – an emotional experience that doesn't cost anything – to illustrate the key principles.
Key Points:
Emotion: Effective loyalty programs tap into emotions. People are more likely to be loyal to brands they connect with emotionally.
Cost: Rewards don't have to be expensive. Small, thoughtful gestures can be very effective.
Examples of Emotional Rewards: Food, gifts, and even cash can be emotional rewards, depending on the context.
Variable vs. Fixed Costs: Consider the cost structure of your rewards. Variable costs are those that change with usage (e.g., the cost of ingredients for a free appetizer). Fixed costs are those that remain the same regardless of usage (e.g., the cost of printing loyalty cards).
Acquisition Cost: If your customer acquisition costs are high, it's justifiable to offer more substantial rewards in your loyalty program. The higher upfront cost is offset by the long-term value of repeat customers. Airlines, for example, often have high acquisition costs, so their loyalty programs offer significant rewards (free flights) to incentivize repeat business.
High-Margin Items: Consider offering rewards that are high-margin items for your business. These have a lower cost to you, making the program more sustainable.
Key Takeaway:
When designing a loyalty program, think about the emotional connection you want to create with your customers. Balance the cost of the rewards with their emotional impact and consider your customer acquisition costs. Focus on offering rewards that are meaningful to your customers and sustainable for your business. The "puppy" analogy emphasizes the power of simple, emotional rewards.
Subscribe for more videos. Visit https://johndavis.actioncoach.com for more information.
#repeatbusiness #customerloyalty #effectivemarketing