How to Establish Your Vape Loyalty and Rewards Program
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While you might think that acquiring new customers should be the number one goal for an online vape shop, you might be surprised to learn that maintaining your current customer base is far more critical. In fact, according to Harvard Business Review, “Depending on which study you believe, and what industry you’re in, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one.”
It’s so important to create programs that reward customer loyalty. Reward your customers for always choosing you over competitors, especially online, where a better deal is just one click away.
One way you can increase customer loyalty is through a customer reward program.
Table of Contents
- How does a loyalty and rewards program work?
- Point system
- Implement a tiered loyalty program
- Offer rewards for non-transactional activities
- Leverage your program through a referral system
- How To Measure if a Rewards Program is Effective?
- Conclusion
How does a loyalty and rewards program work?
A customer reward program works by rewarding customers for continued purchases or specific actions they perform that benefit your vape shop. The more the customer purchases or, the more actions they make that help your company, the more rewards they unlock. These rewards could be anything from free e-liquids, early access to new devices, or large discounts on all products offered at your vape shop.
Reward programs have been used as a marketing tool for many years because they create brand loyalty and customer retention. As customers earn more rewards, they become more invested in your brand and what you have to offer and are less likely to leave.
Loyalty reward programs have become increasingly popular in e-commerce because customers online are less likely to remain loyal. Nine times out of ten, they will Google the item they are looking for and pick the store that offers the lowest price- unless, of course, they are already members of a loyalty reward program.
Point system
There are many ways to create a loyalty reward program, but building a point system is the most common way. Point system reward programs are the simplest to implement.
With every purchase or action that benefits your online vape shop, customers get a certain amount of points they can then spend on a predetermined reward. The rewards you choose can vary from coupons to e-liquids, vapes, or even merchandise like t-shirts or hats.
Point system loyalty reward programs are the easiest to implement because they do not require you to segment your customers, and it’s simple to understand: more points equals more rewards.
Implement a tiered loyalty program.
Tiered loyalty programs are another type of loyalty program hugely popular and effective. Instead of just using points, these types of loyalty reward programs incentivizes your customers with the ability to move from tier to tier, or from rank to rank, with every purchase or action your customers make that benefit your vape shop.
The higher the ranks or tiers they achieve, the better the rewards. This program helps create customer retention by letting them get invested in achieving their next level, making them feel appreciated. Unlike a points system, after which they spend their points, sets them back to square one, with tiers, all of their purchases, whether small or large, are always rewarded.
Offer rewards for non-transactional activities.
Whether you use a point-based or tier-based loyalty reward system, it’s essential to reward your customers not only for their purchases but also for different actions. For example, subscribing to your email newsletter, leaving reviews on their favorite e-liquids, completing surveys, and leaving comments on your blog posts or sharing them on their social media should all be rewarded.
Leverage your program through a referral system.
You can also create a referral system that rewards current customers for bringing in new customers to your loyalty program. With a referral program added to your loyalty reward program, not only will customer retention grow, but you will also begin to attract new customers without lifting a finger.
Referral programs are compelling because people are more likely to convert or buy from your vape shop if someone they know has personally recommended your store. Imagine that you had incentives for every person your current customer recommends. You get a powerful formula to increase new customer acquisition.
How To Measure if a Rewards Program is Effective?
Probably the most important metric you should take into account when measuring a loyalty rewards program is the customer churn rate.
Customer Churn Rate
The customer churn rate is the rate at which customers stop doing business with a company. The churn rate is presented as a percentage and represents the number of customers who leave over time.
To calculate the churn rate, you take the customers at the beginning of the quarter (A) and subtract them from the customers' end (B). You take the result of this number and divide it by the customers at the beginning of the quarter.
(A - B) / A = Churn Rate
(100 - 80) / 100 = .2 or 20%
Ideally, you would want the churn rate to be a negative percentage since you will gain customers instead of losing them. If you have a churn rate of 20%, it will mean that 20% of your customers are leaving.
Conclusion
Although these are broad strokes about building a loyalty program for vape shops, we hope this blog gave you the stepping stones necessary to begin researching and implementing a plan of your own to increase customer retention and decrease the churn rate.
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