You and I both know how important customer and affiliate loyalty is crucial… especially in this day and age. The economy isn’t doing very well. People losing their jobs. Customers look for the lowest price and affiliates now hunt for higher commissions. You get the picture.
I hate having to compete on price. You know, paying out more commission to your affiliates than your competitors or lowering prices to be the price leader. It depresses my bottomline and at the end of the day, I probably don’t make as much as I can. Plus, customers who price hunt are normally harder to deal with. They have higher refund rates. They have more complaints. They require more support, etc etc.
I don’t know about you, but I hate doing those stuff. So I looked for a way to increase customer and affiliate loyalty… so that they would stick with me, even when I’m not price competitive. Sounds impossible? Keep reading.
Giving them a headstart
One of my favorite ways to increase loyalty is by giving my customers and affiliates a perceived headstart. Here’s an example.
Ever get one of those “customer loyalty card” where you get stamps for ever $X spending? And once you’ve accumulated, say, 10 stamps, you get to discount or something? I’m sure you have. Now, let’s change the rules a little.
Instead of requiring 10 stamps before you give free stuff, ask for 12 instead. But tell them that because <insert whatever reason you want here>, they get a 2 stamp headstart. They still require an additional 10 stamps so there’s really no difference.
Joseph Nunes and Xavier Dreze conducted a study on it and they found only 19% of the people who were not given a headstart came back enough times to get the free stuff while 34% of the people who are give a headstart does.
That’s almost a 100% increase in loyalty. That means almost double of your current revenue.
Plus, people who were given a headstart took 2.9 days less to complete the program.
Applying headstart to affiliates
This also applies to your affiliates. When they first join your program, tell you are running a promotion and that they get $25 credited into their account right away. But of course, they can’t take their money out until they reach $100 (normally $75). That $25 credit, would motivate them to actually start promoting your product (If you’ve ever run your own affiliate program, you would know that 95% of the affiliates who join you don’t make any sale).
Guess what happens when you double your affiliate participation? It can more than double revenue.
Why does this work?
Giving people a headstart works simply because people don’t have to start from scratch. We all know starting anything from scratch is a big pain in the ass and we associate that feeling with any new program to complete.
Another reason is this: Have you ever ran a marathon? Or any sort of long distance run? You would go slow in the beginning… and then pick up your speed as you’re reaching your goal right? As effect here. Giving someone a headstart means they are cloer to their goal, and so they would exert more effort to get there faster.
It’s that simple. Can you think of other applications of the headstart concept?
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