Many vape shops don’t set up their loyalty programs properly.
Furthermore, many shop owners miss out on opportunities to drive important customer behavior with their loyalty rewards points.
This post will serve as a great resource for vape shop owners that need help with their loyalty program, whether they are just beginning or trying to grow.
1. Awarding One Point For Each $1 Spent
Although this seems like the obvious starting point, it’s a common mistake to simply award 1 “point” for each dollar spent by your customers.
The reason is related customer perception.
When you award 1 point for each dollar it becomes painfully obvious to the individual how much they have spent at your shop. The points become an unofficial reminder of their spending habits. Some customers could suddenly realize how much money they are spending and become ashamed of their spending habits. This may sound counter-intuitive but it’s true.
Another reason is related to the perceived value of your loyalty rewards.
It’s recommended to award your customers at a 2% rebate based on customer spending. This means that for every $100 spent they receive $2 in rewards. So, if a customer has 100 points and is awarded a $2 “bonus” they can easily calculate the rebate rate of 2% – something that may make your rewards program appear less valuable.
It’s not that you want to trick your customers into a low-value rewards program, it’s that you need to re-think your points system altogether. See point #2 below.
We recommend awarding points at a 15-1 ratio. In other words, $1 spent is equal to 15 points. Here’s what customer spending would look like in terms of points now:
|Spending Level||Points Earned|
To learn more about pricing your loyalty program, watch our webinar replay >>>
2. Not Using Points Rewards To Encourage Customer Behavior
Customer should be able to earn points for way more than just purchasing product.
In fact, this might be the most under-utilized strategy when it comes to a vape shop rewards program.
You should come up with alternative ways to award points to your customers that also encourages certain behavior. Here are some examples:
- 5X Points On Clearance Items
- 100 Points For A Google/Yelp/Facebook Review
- 250 Points For Posting A Testimonial On Facebook
- 500 Points For Referring a Friend
My favorite use of awards points is to use it in place of a clearance sale. Rather than giving up margin on products you are trying to clear out, direct customer purchasing activity to these products by awarding more points for buying those products.
To learn more about alternative ways to award points, watch our webinar replay >>>
3. Not Creating Award Levels
Customers respond to clear goals. Award levels are a great way to give your customers point-earning goals.
By creating incentives to earn “X” amount of points, customers will be more likely to engage in point-earning activities.
Here’s an example award level tier that you can use for your shop. Note that the reward value increases with each award level:
|Spending Level||Points Earned||Rebate||Reward Value|
Another quick tip is to use creative names for your award levels. Here’s an example award level program with some silly names (feel free to steal these!)
- 750 Points – “Ohmbre”
- 3,000 Points – “Ohmer Simpson”
- 9,000 Points – “Ohmost Heaven”
- 15,000 Points – “Ohm My God”
Now that you’ve got names and award levels, it’s your job to come up with what they receive at each level. Use the reward table above to determine what the reward will be.
To learn more about award levels, watch our webinar replay >>>
4. Not Offering On-The-Spot Signup Bonuses
Getting people into your loyalty program is, after all, the entire point of this whole exercise. But what incentives work?
I’ll tell you what DOESN’T work…
“Would you like to signup for our rewards program? You’ll start off with 100 points!”
People don’t respond to that offer because points don’t mean anything to them.
So what DOES work?
“Would you like to take $3 off your order today?”
“Cool. Just signup for our rewards program and we’ll get you setup”.
See how that’s a better offer?
Customers respond to benefits that are both immediate and tangible.
To learn more about getting more people into your rewards program, watch our webinar replay >>>
5. Not Understanding Customer Lifetime Value
This one may seem out of left field, but it applies to just about everything in a vape shop, and loyalty programs are no different.
In our webinar “How To Price Your Vape Shop Loyalty Program“, we talk about offering a referral bonus of $10 to your current customer, and $10 to the customer that they refer.
This totals $20 to “buy” a customer. Why is a new customer “worth” $20?
Because when you consider the customer’s contribution to your business over their lifetime, a $20 investment now is a low risk business expense.
If you don’t know how to calculate LTV, watch our YouTube series here >>>
Jesse is the Digital Marketing Director at VapeMentors and Chief Technology Mentor. He is an ecommerce and internet marketing expert with a background in business and technology.