Developing a loyalty program for your business can be a great way to increase customer retention, drive repeat sales, and generate word-of-mouth marketing. However, creating an effective loyalty program takes thought and planning. You need to structure your program in a way that incentivizes customers to engage with your brand and offers rewards that align with your target audience.
Follow these tips to create a loyalty program that attracts new customers and increases loyalty among existing ones
Choose a Name That Resonates with Your Audience
Your loyalty program’s name will make a first impression on customers, so choose one that fits your brand identity and appeals to your target audience Stay away from generic names like “Rewards” or “Points”—get creative and brainstorm names that will connect with customers on an emotional level
For example, Sephora’s loyalty program is called “Beauty Insider” which reinforces their image as a beauty expert. Starbucks calls their program “My Starbucks Rewards” which is simple but effective.
Create Deeper Meaning Behind the Program
The most successful loyalty programs have an underlying mission or purpose beyond just encouraging repeat purchases. When you give your program deeper meaning, customers are more likely to engage with it on an ongoing basis.
Your loyalty program’s mission might be about:
- Rewarding loyalty
- Providing excellent customer service
- Creating a community or exclusive access
- Supporting a social or environmental cause
Clearly communicate the deeper meaning behind your loyalty program in your branding and marketing. Feature it prominently on your website and reinforce it through messaging and employee training.
Reward a Variety of Customer Actions
The best loyalty programs reward more than just making purchases. Look for different actions you want to encourage from customers and provide rewards for each. Here are some examples of activities you can incentivize:
- Making an account
- Joining your email list
- Following your social media
- Referring friends
- Leaving reviews
- Completing a survey
- Redeeming rewards
Rewarding a variety of actions gives customers more opportunities to engage and earn—leading to greater satisfaction. Just make sure you remain profitable by balancing reward values appropriately.
Offer a Variety of Reward Choices
Providing flexibility in how customers can redeem their loyalty points keeps your program enticing. Offer rewards like:
- Discounts on future purchases
- Free products
- Exclusive access or experiences
- Early access to sales/events
- Donations to charity
- Coupons or gift cards
- Entries into contests/sweepstakes
Ideally, include a mix of immediate, practical rewards like discounts and aspirational rewards that build affinity like VIP experiences. Also consider adding tiers so customers can choose bigger rewards as they accumulate more points.
Make Your Points Valuable
For your loyalty program to drive behavior, your points need to hold tangible value for customers. Make sure your points:
- Translate into meaningful rewards
- Don’t expire too quickly
- Are easy to accumulate
- Can be earned through multiple actions
If your points feel insignificant or meaningless, customers won’t be motivated to keep collecting them. Evaluate whether your earnings rates and required totals make sense.
You want customers to feel like their activity is being rewarded, without giving away too much. Getting this balance right may take some trial and error.
Structure Non-Monetary Rewards Around Customer Values
While discounts and free products are impactful, non-monetary rewards can also excite loyal customers—when structured around their values. Identify values that resonate with your audience like:
- Recognition
- Belonging
- Achievement
- Self-expression
Then create rewards that align. Examples include:
- Birthday gifts or shoutouts
- Exclusive member experiences
- Status levels and badges
- Opportunities to showcase loyalty
These types of emotional, value-driven rewards strengthen how customers relate to your brand.
Provide Multiple Enrollment Opportunities
Don’t just expect customers to sign up for your loyalty program—make it easy for them to enroll at different touchpoints.
On your website, promote your program visibly and allow instant signup. In your store, have employees mention the program and help customers register on the spot. You can also run special promotions like giveaways and contests to incentivize signups.
The more opportunities you give customers to join, the higher your program’s reach will be. Consider making signup a default part of transactions to capture new members.
Track Metrics and Optimize
Once you launch your loyalty program, track metrics like:
- Signup rates
- Active membership
- Purchase frequency of members
- Percentage of spending by members
- Redemption of specific rewards
Use this data to identify what’s working well and what needs improvement. Test changes to your program structure and rewards based on insights from the numbers. Be willing to evolve your approach for maximum impact.
Make It Personal
Personalization makes a big difference in how connected customers feel to your loyalty program. Options include:
- Automated birthday rewards
- Tiered levels with exciting names
- Personalized purchase offers
- Customized product recommendations
- Recognition by name in marketing
When customers feel acknowledged individually, it strengthens their relationship with your brand and loyalty program.
Leverage Technology
Technology like loyalty management software removes friction from your program administration so you can focus on optimizing value for customers. With the right system, you can:
- Centralize program information and points balances
- Automate enrollment
- Track omnichannel customer activity
- Manage complex rewards and tiers
- Provide easy self-service account access
- Capture member data and purchase history
The technology supporting your loyalty program should enhance both the customer experience and your ability to coordinate program strategy.
Promote Across Channels
Don’t expect customers to discover your loyalty program on their own—actively promote it across channels. Spotlight the program:
- On your website with banners and popups
- In targeted emails and newsletters
- On your social media accounts
- In in-store displays and signage
- Through direct mail
- Through employee mentions and word-of-mouth
Remind customers of the value your program provides. Include program messaging in every customer touchpoint to boost visibility.
Engage Long-Term Members
Members who have engaged with your loyalty program for an extended period deserve special acknowledgement. Look for ways to surprise and delight your longtime VIPs like:
- Send anniversary gifts/messages
- Grant special status and privileges
- Give exclusive bonuses and rewards
- Invite them to special events
- Spotlight their loyalty publicly
Making loyal customers feel appreciated helps ensure their relationship with your brand remains strong for years to come.
Link to Additional Value
For maximum impact, link your loyalty program to other value you provide customers. Integrate it with:
- Your CRM database to improve personalization
- Email marketing to directly engage members
- An online community customers want to be a part of
- Cause-based marketing customers care about
- Special financing or payment options
When your loyalty program strengthens other reasons to love your brand, it becomes more embedded in the customer experience.
Make It a Part of Your Culture
Your loyalty program will be most successful when it’s supported across your entire company. Provide training so:
- Sales staff understand program details
- Service staff know how to engage members
- Marketing incorporates it in campaigns
- Executives factor it into strategy discussions
Promote your program internally so employees view it as an integral part of your brand identity and culture.
Creating a standout loyalty program requires thinking through both your ideal structure and optimal execution. By getting creative with your approach and aligning with customer values, you can develop a program that feels like a true representation of your brand. Use the tips above to build loyalty that goes beyond one-time discounts and starts meaningful relationships with your very best customers.
Choose a program type that aligns with the brand
With myriad ways to incentivize existing customers — like discounts, money back, freebies and more — organizations should choose a loyalty program that aligns with their business offerings. Rewards should incentivize and appeal to customers.
Common examples of loyalty programs include the following:
- Points-based loyalty programs, which reward customers based on actions like referrals, repeat purchases and subscriptions.
- Tiered loyalty programs, which offer customers different benefits based on their spending.
- Paid loyalty programs, which have customers pay a fee to receive specific benefits.
- Value-based loyalty programs, which showcase a brands values and donate a portion of sales to specific charities or causes.
- Coalition loyalty programs, which is a loyalty card program that incentivizes customers of multiple businesses to share their data.
- Gamified loyalty programs, which offer games or challenges to keep customers engaged.
Create incentives through referrals
Organizations that use their customer base as a referral source can encourage new sales, growth and engagement. If customers have good experiences, then organizations can more easily request referrals from them, such as sharing content on social media, offering unique links or discount codes and requesting positive reviews.
In return for something easy for customers to do — which they may have done, anyway — the organization can reward them with gifts or offers, and it becomes a win-win for both sides.
When developed properly, customer loyalty programs can help organizations retain customers over time.
10 Innovative Customer Loyalty Programs (And How To Start Yours)
How do you create a customer loyalty program?
Explore the following nine steps to create a customer loyalty program. 1. Choose a program type that aligns with the brand With myriad ways to incentivize existing customers — like discounts, money back, freebies and more — organizations should choose a loyalty program that aligns with their business offerings.
How do I choose a loyalty program?
Choosing a loyalty program should ultimately align with your brand’s identity, customer expectations, and strategic goals. You need more than customer loyalty software to start a loyalty campaign. A successful loyalty program requires careful planning that keeps your customers and business in mind.
Do you need a loyalty program?
Any organization that wants to sell more products or services to existing customers should create a loyalty program. No matter the industry or business vertical, organizations can reward customers for their loyalty with exclusive benefits, which can help differentiate themselves from competition.
What is a good example of a loyalty program?
Rewards should incentivize and appeal to customers. Common examples of loyalty programs include the following: Points-based loyalty programs, which reward customers based on actions like referrals, repeat purchases and subscriptions. Tiered loyalty programs, which offer customers different benefits based on their spending.
