Customer loyalty programs make for a marketer’s secret weapon

Almost every company has a customer loyalty program. If you want your marketing scheme to be successful, you'll start one too.

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If you look around at the leading companies and brands in your industry, you’ll notice that just about every one has some sort of customer loyalty program in place. This isn’t a coincidence. If you want to maximize your marketing efforts, you need to have one as well.

The “why” behind customer loyalty programs

If your business has failed to invest in a customer loyalty program up until this point, you need to ask yourself a simple one-word question: why? Virtually every successful company has some sort of customer loyalty program in place, so what’s holding you back from implementing your own?

The benefits of customer loyalty programs are well documented. Let’s highlight a few of the top ones for your benefit:

  • Direct sales boost. The most obvious benefit is the direct sales boost. When you have a loyalty program in place, customers are encouraged to spend more in order to achieve certain rewards. This drives revenue and increases foot traffic (both online and in-store).
  • Fantastic market research tool. What you may not realize is that customer loyalty programs are actually great market research tools. When customers sign up for the program, they not only provide you with information on the front end, but they also give you a glimpse into their purchase behaviors. This is invaluable information that allows you to further shape your sales strategies.
  • Additional touch point. Any excuse you have to interact with customers is a good excuse. Well, with a loyalty program, you have permission to engage with customers via email, mailings and other promotional materials. This ultimately gives your brand more exposure.
  • Increased satisfaction. Finally, you can’t forget about the customer. A loyalty program provides customers with direct benefits. Whether they come in the form of discounts, free products or recognition, everyone loves rewards.

Dozens of other brand-specific benefits come with a customer loyalty program, but these four are pretty common across the board. And while you may assume loyalty programs are expensive, this couldn’t be further from the truth. In fact, retaining an existing customer is seven-times less expensive than acquiring a new customer. In other words, you can’t afford to ignore loyalty.

4 tips to make your program successful

Not every customer loyalty program is successful. Some fail to gain traction because they don’t follow simple rules and guidelines. If you want to increase your chance of success, then check out the following advice:

1. Use a simple point system

“There are a variety of options to choose from when it comes to the types of loyalty programs,” says Shad Stailans of Revel Systems, a leading POS provider, “but the key to success is choosing one that is easy for you to manage, is the most appealing to your customers, and provides the highest returns for your business.”

Ask any business that’s managed an unsuccessful program in the past what their biggest regret was, and they’ll likely tell you it had something to do with a complicated point system. One way to ensure your program is successful is to go with an extremely basic point system.

Complicated point systems do nothing but confuse customers and frustrate employees. A simple system, on the other hand, encourages transparency and keeps everyone on the same page. The simplest option is to award one point for every dollar spent – this helps to eliminate any misunderstandings. 

2. Ask for the right information

As mentioned, customer loyalty programs are excellent research tools. In order to make the most out of your program, you need to ask for the right information. This should include things like name, mailing address, email address, phone number (with SMS opt-in clause), and any other details that your company might find useful.

While you want to make the signup process easy, it may also benefit your brand to ask a few demographic questions. These include things like annual household income, shopping preferences, age, gender and more. This information allows you to better understand your audience.

3. Offer appropriate rewards

While much of the focus is given to onboarding customers, you can’t forget about the heart of the loyalty program: rewards and incentives. Without proper rewards, you’ll find it difficult to establish a sustainable program.

“There are two elements of a reward that need careful planning: when a reward is given out, and what the reward is,” says Yu-kai Chou, a leader in marketing gamification. “So, just as the timing of the reward is important, the nature of the reward is important. Ultimately, the goal of the reward is to maximize motivation prior to receiving the reward, as well as happiness after receiving the reward.”

Common types of rewards include rebates, discounts, free products, VIP experiences, name recognition, and special perks (such as free shipping). If you’re going for a tiered program, make sure you have a keen understanding of what customers value the most.

4. Partner with other businesses

If you aren’t sure you can launch and manage a rewards program on your own, consider partnering with a non-competing business to give your initiative a boost. For example, you may join forces with three or four other business in your area to create a joint-rewards program that gives customers redeemable points when they shop at each of the stores.

This is just one example of how you can get creative with your program. There are plenty of other options, so make sure you’re doing whatever it takes to establish loyalty in your customers.

Loyalty: the one thing you can’t buy

“The path to loyalty-building begins with customer knowledge,” says Chris Doherty, vice president of Daymond Worldwide, a consumer consulting firm. “Establish a means for identifying your customers at the point of sale. That provides a way for you to understand your customers, to learn what makes them unique and what motivates their behavior. You can then leverage that wealth of information to personalize your interactions and demonstrate that you value their business.”

Money can do a lot of things. It can secure inventory, pay for extremely visible advertisements and endorsements, help you land a modern office, and entice top talent to join your organizations. However, money cannot buy loyalty. Therefore, you need to invest in a program that naturally encourages customers to engage with your business in meaningful ways.

Launching a customer loyalty program isn’t easy. It’ll take some time to create a program that works. However, you can be certain that an honest investment will yield highly beneficial returns.

What kind of rewards will you glean from enacting a rewards program?

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