Most traditional loyalty programs are generally structured in one of two ways– Spend-Based or Visit-Based. So what are the differences, and which model is best suited to grow your store’s bottom line?
Spend-Based vs. Visit-Based
- A visits-based model rewards points each time a customer patronizes the business, or after a visits milestone.
- A spend-based model rewards a value for each dollar spent, which can then be redeemed for in-store purchases.
A visits-based model rewards both big and small spenders equally for each visit, where a spend-based model rewards big spenders proportionately more.
Rewarding for visits is the traditional structure for customer loyalty programs in retail. This is because a visits-based model is essentially the same centuries-old punch-card system that seems to have been working at both big and small businesses alike. But adopting this system can be toxic to ROI and the bottom line of a retail business.
This is because a customer’s purchase habits at most retail stores, especially small businesses, are not likely to change drastically. The average purchase amount generally remains the same over time. At a coffee shop for example, people tend to pick their preferred drink and stick with it only switching it up occasionally.
If the whole point of a loyalty program is increasing the satisfaction of your biggest spenders and encouraging them to come more often, you should be rewarding more spending at a higher rate than the low-spending customer.
This is not to say you should focus only on your VIP members. In order to give all of your customers an opportunity to participate in your loyalty program, increment rewards at various spending levels. This rewards everyone, even low spenders for their business but gives incentives to motivate people to earn greater rewards.
No matter how good the structure of your rewards model is, it is only as effective as the digital communications platform used to connect you and your customers.
A remarkable 69% of customers feel disconnected if they cannot access rewards points on a smartphone.
The best way to do this, especially for a small business, is with automated text messaging. Some think a dedicated smartphone app is a better choice, but push notifications are actually inferior to text messages because they are usually ignored at a much higher rate while SMS messages are opened 99% of the time!
Customer Loyalty Accelerator’s (CLA) text message marketing platform is nothing like an impersonal text-blasting engine. Personalized SMS messages notify your customers when they’ve hit a new reward target, remind them to visit your store to redeem, and notify when rewards are about to expire. All you need is a phone number, which is then permanently tied to that customer’s unique CLA ID.
Spend-Based Models Increase Brand Loyalty
Customers who find a product or service they like at your location will visit frequently. But once they’ve established your location as their go-to place, what’s motivating them to buy more of that product (or try new ones) with each visit?
If you only reward points for a visit, nothing!
With a spend-based model, you can create promotions offering more rewards the more you spend. Customers will visit in order to find their favorite item and also try to spend as much as possible on that visit – because they are being rewarded for each dollar they spend, not just for just showing up.
Customer Loyalty Accelerator (CLA) is a groundbreaking loyalty program, using the power of spend-based store credits to motivate and reward return customer visits and higher spending. CLA’s innovative, “spend-based” approach rewards customers that spend more with targeted incentives for return visits and even more spending.
CLA is super easy to set up and even easier to use. See for yourself – risk free – for 60 days! Then, it’s one plan for one low price. To learn more, click here!