How To Create a Loyalty Program in 5 Steps

How to Create a Customer Loyalty Program
  1. Choose a great name.
  2. Create deeper meaning.
  3. Reward a variety of customer actions.
  4. Offer a variety of rewards.
  5. Make your ‘points’ valuable.
  6. Structure non-monetary rewards around your customers’ values.
  7. Provide multiple opportunities for customers to enroll.

Loyalty programs have demonstrated to be one of the most successful strategies for boosting sales and fostering customer loyalty. Up to 84% of consumers claim they are more likely to stick with a brand if it has a loyalty program. Furthermore, 66% of consumers claim that the possibility of earning rewards influences how much they spend.

10 Innovative Customer Loyalty Programs (And How to Start Yours)

Why consider a loyalty program?

The likelihood of customers returning to your store is the main advantage of establishing a loyalty program. Many companies follow a customer-focused business model, and a loyalty program gives your customers real rewards.

Listed below are a few benefits of launching a loyalty program:

What is a loyalty program?

A customer loyalty program gives your clients ongoing rewards for their ongoing patronage. This may take the form of immediate benefits like cash back or free goods or bonus points for future purchases. Customers who sign up get special benefits aimed at piqueing their interest in returning to your store. If existing participants encourage their friends and family to enroll, loyalty programs can result in steady cash flow and new customers.

How to create a loyalty program

Regardless of the type of rewards you provide or the type of business you run, there are a few steps to creating a loyalty program:

1. Get to know your customer

Your loyalty program should prioritize the needs of your customers. To learn what would encourage them to return, pay attention to what they say to you in conversations, surveys, and trends. Design your loyalty program, if at all possible, around desirable products or services, such as offers for discounts on your most well-known brands. People sometimes prefer your brand’s customer service or your values, so you might offer incentives for in-store purchases or donate sales to worthwhile causes.

Decide what type of customer behavior you are rewarding. This could be store visits, dollars spent or referrals made. This should align with your customers existing behavior.

2. Decide what type of loyalty program is best

Once you have identified the factors that will keep customers coming back, integrate them into your long-term business plan. Make sure you have the technology and tools necessary to start and run a successful program. For instance, punch card systems may be simpler to implement than common points programs for tracking purchases. If you want to expand your reach right away, partnerships or value-based programs may be helpful. However, tiered programs may be advantageous if you want to encourage exclusivity, higher spending, or more frequent visits.

3. Create excitement

You want to generate interest in a new business campaign when it is launched. You might incorporate:

Talk to customers who may have provided feedback that influenced the program’s development about the new initiative. If you’re providing a paid or subscription-based loyalty program, you might be able to offer a free or discounted trial period.

4. Prepare for the launch of your program

Make sure you have systems in place to securely manage customer data as well as ways to collect and keep track of this extra information. Whether you need individual punch cards, sign-up forms, or tools to calculate discounts, make sure everything is prepared and tested before going live. Some businesses might provide barcode-required membership cards or other identifiers for more complex loyalty programs.

5. Grow your loyalty program

Once your current clients have signed up, think about how you can use the loyalty program to attract new clients. Partnership loyalty programs can bring in new clients, or you could add a referral-based incentive that rewards customers with free or discounted goods or services for each person they refer to the business. Rewards for each referral could improve your relationships and grow your business.

Examples of loyalty programs

Depending on how a company sells its goods or services and on its marketing and advertising tactics, loyalty programs can change. Here are some examples of loyalty programs:

Point-based loyalty program

The point-based system, one of the most popular types of loyalty programs, awards customers a certain number of points based on money spent or purchases made. Upon reaching a certain threshold of points, you are given a reward.

For instance, a clothing retailer might give five points for each dollar spent. Gaining 100 points entitles you to 25% off your subsequent purchase. Customers can feel like they are playing a game, so it is effective. To ensure simplicity and maintain customer interest, make sure the points system is simple to understand and that customers can always access their point balance.

Punch cards

You might provide a punch card system for smaller businesses like coffee shops. With each purchase, customers receive a punch or stamp for their punch card. A customer receives a reward when they reach a predetermined number of punches or stamps.

Customers may need to purchase 10 large coffees at the coffee shop in order to receive a free beverage. Like the points system, this ensures that a customer must make a certain number of purchases before you give them a free item and turns their shopping experience into a game.

Tiered programs

Tiered loyalty programs offer more exclusive benefits to customers who spend more money. You can make a chart that details the advantages of each tier so that the client is aware of the advantages available within each tier.

This can be combined with other loyalty programs, like a points system, by businesses. One point per dollar spent at a lower tier but three points per dollar at a higher tier, for instance, might be offered by a clothing store. By doing this, you can reward your customers’ loyalty and make sure they will spend more money before you give them free or discounted goods or services.

Paid programs

Customers may enroll in a paid loyalty program for a one-time or annual fee. Companies might want to provide ongoing benefits, a unique sign-up benefit, and privileged coupons or discounts all year long. For illustration, a bookstore might provide the advantages listed below as a part of a paid loyalty program:

Value-based or charity programs

You may choose to align your rewards program with the values of the customer rather than using money or tangible rewards. For instance, a cafe might wish to highlight its dedication to sustainability, a cause that its patrons support. The cafe offers reusable cups for sale, and for each cup purchased, it promises to donate $1 to a neighborhood recycling program. Building relationships with customers, enhancing their values, and increasing customer loyalty are all excellent ways to improve your company’s reputation.

Game-based programs

Although punch cards and points may resemble games, a business may provide actual games to entice customers to return. You could, for a food company, include alphabet letters with each order. A customer may receive free goods or a free meal if they collect the letters to spell out words or phrases. This is a fun way to interact with recurring customers.

Partner-based programs

A partner-based loyalty program brings together two or more companies to work together to reward customers for making purchases. By extending their reach to customers who may not have previously done business with them, this can be mutually beneficial for both businesses. For instance, a cable provider may decide to collaborate with a television manufacturer and provide free premium channels to customers who buy that model of television.

Subscription programs

Subscriptions are like paid loyalty programs, but payments are recurring. Companies may employ this strategy for goods that need to be replaced frequently, such as dog food, cosmetics, and toiletries. Members may receive exclusive benefits, like free shipping, and discounts.

FAQ

How do you create a loyalty program in Excel?

5 Criteria to Make a Program Great
  • High perceived value of your program currency. …
  • High perceived value of your reward options. …
  • A compelling “earn velocity. 40% of consumers cite “benefits took too long to earn” as the main reason for leaving a loyalty program, according to Maritz’s 2016 Customer Loyalty Study.

What are the five criteria for a successful loyalty program?

In essence, a customer earns a certain number of points for every dollar they spend. Up until the customer can exchange them for a reward, these points accrue. The amount of points awarded per dollar is typically fixed and does not vary depending on the customer or the purchase.

How does a loyalty program make money?

Different Types of Customer Loyalty programs
  • Point Programs. Due to their simplicity, point programs are the most popular in the world of commerce.
  • Spend-Based Loyalty Programs. …
  • Tiered Programs. …
  • Paid Programs – VIP member club. …
  • Value – based Programs. …
  • Partnered Program. …
  • Game Program. …
  • Hybrid Loyalty Programs.

What are 3 loyalty programs?

Different Types of Customer Loyalty programs
  • Point Programs. Due to their simplicity, point programs are the most popular in the world of commerce.
  • Spend-Based Loyalty Programs. …
  • Tiered Programs. …
  • Paid Programs – VIP member club. …
  • Value – based Programs. …
  • Partnered Program. …
  • Game Program. …
  • Hybrid Loyalty Programs.

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