Business, Marketing, Strategy
February 23, 2017
6 steps to a great customer loyalty program
6 steps to a great customer loyalty program

Customer loyalty in the business world is like the Holy Grail.  Everyone wants it, but not everyone knows how to get it. And when they do get it, they don’t know what to do with it to keep it. Yes, it is about relationship-building, but, as we’ve discussed before, your customers have so much information at their fingertips they can find out about your competitors with the swipe of a screen. A great loyalty program can help you both build loyalty and retain it over time.

A loyalty program is a strategy where you reward frequent customers for their continued support of your business.

Of course the foundation of any great loyalty program is to have a solid brand, product/service offering, and great customer service. But you need to do something to stand out even further from everyone else to catch and keep loyalty.

Here are six steps to help you build the best loyalty program for your business needs.

Step 1: Determine what you want to achieve

Your overall strategic approach to your loyalty program will set you in the right direction. Do you want higher-value sales? Do you want more frequent repeat visits? Are you looking to build your brand awareness? Whatever your goal, you need to be clear before you set out to build your loyalty program.

Step 2: Set an achievable customer goal

Here is where you can appeal to the human ego a little. It feels great to be able to say you are a gold level member – it’s like being part of an exclusive club. However, racking up thousands of points is also like a badge of honour. If your ultimate customer goal is quite lofty to achieve, consider having a tiered reward system where your customers can benefit from the loyalty program even in the short term while they are working towards a longer-term goal. It’s like having multiple finish lines to a race.

Step 3: Choose a customer reward

Your reward for loyalty needs to be of perceived value to your customer. So you need to figure out what they really want. They key here is that you don’t want to lose money. A great loyalty program is mutually beneficial for both the customer as well as the business. One way to start the discussion is to figure out what the value is of one customer. This will help you set up an appropriate reward. And don’t forget that your customers are customers because they are interested in what you have to offer, so offering your product or services as the reward should never be out of the question.

Step 4: Choose your loyalty program type

Your loyalty program type is often determined by what you have set as your overall business goal. For example, if you want to encourage higher-value sales visits, you should consider a points program based on sales. If you are looking for frequent repeat visits, consider a reward or points for each time a customer checks in at your location. If you are looking to build awareness for your brand, reward customers for posting on social media and for posting reviews. You could also consider a sweepstakes type of contest or even a VIP loyalty program where your customer pays a fee up front in exchange for multiple benefits when they use your services (a great example of this would be Amazon Prime).

Consider all of your options when it comes to how your loyalty program will be run. Options include app-based loyalty programs, swipe cards, email-based (through your POS system database), and the trusty old punch card.

However you decide to build your loyalty program, make sure the path to customer accomplishment is clear, attainable, and makes sense for what you have to offer.

Step 5: Give incentive to start

As with anything new, your loyalty program may take some time to catch on. It could be a few reminders before you get customers to buy into it. A great way to kick off the race to the loyalty reward is to start them off with an early start incentive. It’s kind of like getting a signing bonus on a contract. A great example of this is when you sign up for a new credit card with points they may have an offer to get 30,000 points upon signing. It makes people feel like they can achieve the reward faster, so they work to achieve it.

If you go this route, make sure it is clear why they are receiving the incentive bonus. Tell them it’s because it is their first time using your services (or buying your product), or perhaps it’s because you know they are already such a loyal customer.

Step 6: Make your success measurable

The best thing you can do once you start building a loyal customer base is to listen to what they have to say. Customer feedback should be your change-driver in business. If your customers aren’t happy about something, then you should consider changing it. A great way to hear what they have to say is to do a customer survey, simply have them rate your business, or perhaps indicate how likely they are to recommend you to a friend.

In addition to your customer listening, you also need to watch the data. Decide what metrics you will track to see whether your loyalty program is successful or not. Two of the major metrics to watch are your customer retention rate (how long customers stay loyal to you) and your negative churn (how often customers leave your business).

If you are looking to build a customer loyalty program, but you’re not sure how to get started, or how it fits within your overall marketing program, be sure to give us a call!

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  • Awesome post! Establishing customers’ loyalty is a great achievement of a company. Loyalty is the result of a great relationship. Having great customer loyalty program will not only show that you value your customers but also to ensure that they will remain loyal to your products or services.

    • Candace says:

      Thanks, Brooke! You are definitely right. A great loyalty program will keep your customers around in the long term!

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