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It may come as a surprise to you, but I have never dealt crack cocaine. But after starting a loyalty program at my practice, I think I might know what it’s like. Loyalty programs can be found in almost any business these days, from restaurants to retail stores to marijuana dispensaries. What’s all the hype about? Customer retention. It’s a big deal.

Why loyalty programs work

Loyalty programs work for a variety of reasons. Let’s explore a couple:

Endorphin release— When you get a reward, dopamine and oxytocin levels surge in your brain. These are the same hormones that increase when you get a compliment, hit the slot machine at the casino, or pop out a baby. The purpose of these hormones is to increase trust and bonding. It’s the body’s way of saying, “This is a good thing. Let’s do more of this.” When customers get rewarded for spending money, the positive hormone release influences their decision about the purchase, which keeps them coming back for more.

Fear of missing out (FOMO)— The fear of missing an opportunity to save yourself some money, get something for free, or have a better outcome is a powerful feeling and one that can be leveraged in a loyalty program. If you have ever been shopping online and realized that if you spend $15 more, you’ll get free shipping, and then find yourself adding a $50 item to your shopping cart that you didn’t even need, you have FOMO’d. You feel like you beat the system, but in reality you just made a purchase you didn’t mean to make. Don’t feel bad. It happens to all of us, and we justify the action with the thought, Well, I was going to buy it anyway… Someday.

5 rules for creating a successful loyalty program

Don’t be fooled, though. Not all loyalty programs are created equal, and if you aren’t strategic about it, you can easily build a fancy discount program. When it comes to creating a successful loyalty program, be sure to follow these five crucial rules:

#1: Keep it simple.If your customers don’t know or understand your program because it’s too complicated, they won’t engage with it. A good rule of thumb is that if you can’t explain your program in 15 seconds, it’s probably too complicated. The simpler, the better.

#2: Be universal.Creating a program that targets your entire customer base will be more successful. Everyone will want to play, whether they own a 6-month-old golden retriever or a 16-year-old hyperthyroid cat. Programs that only focus on a particular segment of the customer base don’t have as much impact as programs that target everyone.

#3: Make it attainable.If your customers do everything you ask, they should get the reward in a reasonable amount of time. If the goal is too hard to reach, or has too many blackout dates and exclusions, your customers will wonder why they should bother and their behavior won’t change.

#4: Make it desirable.The reward needs to be something everyone wants. Admittedly, this is a hard one. If you are like a normal veterinarian, you will likely experience some anxiety when you think about giving a cash reward (recommended as a credit toward a future visit), but what you must realize is that people don’t actually want a free T-shirt with your logo on it or a free gift basket of dog toys or a free wellness exam. The clearer the value of the reward is, the more excited your customers will be to participate in your program.

#5: Gamify it.When the customer is required to play a game or take action to participate in the program to “unlock” the reward, it has more value to them because effort was required, and it feels more special. This is a big differentiator between rewarding and discounting. Creating a feeling that the customer earned the reward by following the rules and winning at the game will keep her coming back for more.

As our industry faces declining visits and competition from online providers and big-box retailers, adding a loyalty program can be a strategic move for your business. Plus, it’s just plain nice. There is quite a bit of joy in giving back to clients who take the best care of their pets. Your existing customers have significant potential to spend more with you. A lot more. It’s just up to you to capture it.