Should You Start a Loyalty Rewards Program?

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Loyalty programs have been around a long time and they’ve expanded into several business markets. What started as cents off the dollar for grocery chain members has expanded into frequent flyer miles and even banks that offer credit card holders a range of benefits.

When a market is saturated with choices, and loyalty programs abound, it’s very difficult to differentiate a business and create more frequent spending. Think of it this way – When you can easily get a loyalty card from any grocery store, the new “value” doesn’t seem like a value anymore. It’s normalized and just seems like regular pricing.

2 reasons loyalty programs may have a different appeal at your community organization

1. The value of experiences. The nature of your business is to encourage repeat and regular engagement. Swimming lessons are done in a series, members who use your fitness facilities do so because they are committed to a healthy lifestyle and families and children who enjoy your offerings come for the education, care and overall experience you provide. Long story short, people aren’t leaving your doors with bags of merchandise, they’re leaving having had an experience. Experiencing an activity brings people back.

2. The value of differentiation. While there are certainly other gyms, or art centers or outdoor organizations in your area, the market will be fairly limited. Saturation is not as much as an issue. Differentiating yourself with a loyalty rewards program could be a wise way to secure a larger piece of your potential market.

4 key considerations when building a loyalty rewards program

  • The benefits of your program must have a perceived value. Spend some time crunching the numbers to figure out how deep of a discount you can offer and still feel good about margin and revenue. Look at other gyms and community organizations to get a sense of their loyalty programs. Differentiate yourself, or better yet, beat their value.
  • Your hard core, loyal members are a profitable group. Take them seriously. There are many of them and they are frequent users. Keeping them engaged and on your “team” is critical to long-term loyalty.
  • Keep it simple and keep your communication simple, too. No member wants to have to work at this. A simple model such as earning points for every visit that can later be cashed in for rewards like a massage or month discount is a good way to start. Building community partnerships with other health organizations who can offer rewards (think massage therapists, dietitians, outdoor equipment retailers, etc.) only widens your pool of options.

Some research suggests that when it comes to retaining the members you have, more than half of customers would consider increasing the amount of business they do with you for a loyalty reward.1 With numbers like that, and a business that’s all about long-term community engagement, a loyalty rewards may be a great fit for your organization.

 

Source:

1 GrooveHQ Customer Service Statistics

 

Gina Calvert

Gina is the Senior Marketing Writer for ACTIVE Network, providing marketing and business resources for active lifestyle organizations across a range of markets, including government, nonprofits, YMCAs, Parks & Recs, camps, schools and endurance events, for almost 7 years.

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