All businesses have one goal in common: to persuade customers to become repeat buyers. Of course, achieving this goal isn’t easy. Shoppers need a reason to revisit your brand. Offering the best, most appealing products to boost customer acquisition helps but won’t generate consistent interest.
So, what’s the answer? In this guide, we’ll explore how to create a customer loyalty program. We’ll show how, in eight simple steps, you can get shoppers flocking to your business.
What is a customer loyalty program?
A customer loyalty program is designed to reward regular customers. After buying a certain number of products, a customer might be offered a freebie or a discount on their next purchase.
It’s a tactic you’ve probably encountered for yourself. Most brands offer a loyalty program of some form. A common example is a coffee shop offering stamps on a loyalty card each time you buy a coffee. When the card is filled, you get a free drink.
Another popular approach is to use a ‘points-based’ loyalty system. After completing predefined actions such as purchasing products or joining referral programs, customers receive points. These points can then be redeemed for in-store credit or to buy new products.
There’s a reason why the tactic is so popular. As many as 76% of customers feel positive about brands that offer unconditional discounts. That said, loyalty programs need to be handled carefully. It’s easy for shoppers to view your program as a cash grab and be dissuaded from buying products.
8 Steps to create a customer loyalty program
Are you wondering how to create a customer loyalty program? Follow the eight steps listed below to create a winning strategy.
Step 1: Establish clear goals for the loyalty program
A common mistake is to start a loyalty program without having a clear roadmap to guide your strategy. Your program should begin by asking some clear and simple questions. For instance:
- How many extra sales should my loyalty program generate?
- How can I assess whether my program meets the needs of my target audience?
- What percentage of customers do I need to sign up?
- How can I measure the success of my program against my competitor’s efforts?
Asking questions such as these can help you find a clear set of goals for your program. Make sure that each objective is measurable and linked to a metric. For instance, to measure whether your program meets customer needs, you could look at the customer satisfaction score (CSAT).
Step 2: Study customer preferences and behaviors
To build a successful loyalty program, it’s essential to know your customers and your business. This means more than conducting simple market research; you need to examine your own business and customer data to understand your unique position.
Luckily, modern businesses already tend to collect a lot of data from sources such as websites, sales and inventory data, customer support, email campaigns, etc. Data can be gathered from internal sources and wherever customers interact with their business to gain a full picture.
Enterprise resource planning (ERP) tools can be particularly useful here. They centralize your data, providing you with the holistic view you need to identify customer preferences, plan your loyalty program, and monitor the impact on your sales and customer relationships.
When monitoring your data keep an eye out for the following information:
- The kinds of exclusive offers that will attract customers.
- How customers currently interact with your business.
- Which products are the most and least popular.
- What customers are saying about your products online.
- The average demographic of your shoppers.
Alongside gathering data, it can be useful to get in touch with customers directly using online customer survey tools. A simple survey can help you understand shopper preferences first-hand. You can ask about the kinds of loyalty programs they’d like to see enacted by your business.
Step 3: Customize loyalty program for the customer base
Image via Segment
Hopefully, you now have a strong understanding of what your customers want. Using this information, it’s time to build your customer loyalty program. It’s best to customize your offering to each customer. Studies show that personalized experiences influence as many as 56% of consumers to become repeat customers.
Luckily, there are plenty of ways you can customize your program. Start with the basics and make sure that every interaction with customers is personalized. Addressing customers by their first name instead of a generic ‘dear customer’ helps build stronger customer relationships.
You might also highlight specific discounted products that customers might like based on buyer history. You could also send regular reminders to loyalty program members about the ‘good times’ they’ve had with your brand. For example, you can send a personalized calendar of purchases throughout the year.
Personalization becomes much easier with the right tools. A customer loyalty personalization platform can provide real-time insights to help deliver the best customer experiences. It also provides a space to track data so you can see how personalization is impacting your program.
Step 4: Select rewards that provide value to customers
What’s the best way to reward your customers? Again, this will depend on the preferences of your customer base. Earlier, we discussed one example, the points-based system. Alongside this, there are three other options, let’s look at each:
- Paid loyalty programs – Customers pay a subscription fee and receive exclusive benefits immediately.
- Value-based programs – Similar to a standard points-based program, but assigns points based on the value of a purchase.
- Tiered programs – Customers get different benefits depending on their tier. This could be determined through subscription packages or engagement with a brand.
The model you choose will help you dedicate the rewards you offer. A paid loyalty program, for example, might offer free shipping on all products. A value-based loyalty program, on the other hand, is more suited to providing customer credit. Think about the special rewards that your customers are most likely to want, and choose a model that aligns with them.
Step 5: Clearly outline program rules and terms
Whilst it’s always important to offer flexibility in your rewards program, a clear set of rules is essential. Are certain products exempt from your program? Can a customer redeem their points as cash or only in-store credit? Establishing these points from the get-go is important to avoid disappointing customers.
Your rules and terms are a chance to provide yourself with a little wriggle room. You can establish that certain offers can change. For example, you might offer double points on specific products during certain weeks. Or, you can reserve the right to remove an offer without notice.
Just remember, while it’s useful to add some room for maneuvering, customers will notice if you’re trying to avoid clarity. Provide enough information for customers to understand how your loyalty program works.
Lastly, outline any data collection that will take place as part of your loyalty program. Give customers the option to reject certain tracking and cookies. Overlooking this can lead to painful fines from data privacy legislation.
Step 6: Choose a platform fit to your business needs
Building a customer loyalty program is much easier with the right platform. Customer loyalty software provides you with all the tools you need to meet your vision. When choosing your solution, look for the following features:
- Easy-to-use interfaces that help customize loyalty programs to your needs.
- The ability to set up paid membership options to join your loyalty program.
- The ability to segment data and get reports on customer behaviors.
- Integrations with other marketing and data analytics tools.
- The ability to support different types of special rewards (in-store currency, discounts, etc).
Step 7: Use multi-channel and creator marketing to promote the program
The modern customer doesn’t tend to just stay on email or social media. They’re present on many different platforms and switch between each regularly. The more you widen your net, the more potential customers you’ll reach.
Multi-channel marketing, as the name suggests, means utilizing different platforms to advertise your program.
You might create your own content for your website and use brand-aligned influencers to post videos on YouTube and generate social media engagement. The idea behind this is simple. The more you remind customers about your loyalty program, the more likely they are to sign up.
It’s also helpful to know which platforms your customers aren’t using. This way, you can dedicate resources to channels where you’re confident you’ll reach customers. This is why creator marketing can be particularly effective, as influencers are already reaching your perfect, captive audience.
Step 8: Monitor and evaluate campaign ROI and performance
Knowing the return on investment (ROI) of your campaign is critical. You’ll want the assurance that you’re getting more out of your campaign than you’re putting in. That’s why it’s important to monitor data regularly.
Online accounting software can quickly provide real-time insights into your business performance and stock management and provide the financial data you need to monitor your campaign’s success and ROI. You can customize reports to track the metrics that matter most to you as well as forecast cash flow to help you evaluate the program’s long-term success.
Is your campaign on track? Should you alter your tactics? By keeping a close eye on performance, you can make steady improvements to your strategy, which will give your customer loyalty program the strongest chance of success.
Final thoughts on how to create a customer loyalty program: boost retention
A successful customer loyalty program is one of the best ways of retaining customers. Unfortunately, too many organizations fail to properly take advantage of this tactic. One thing for certain is a loyalty program shouldn’t be viewed as a cash grab. It’s a tactic that takes time and research but can deliver big long-term rewards.
Here we’ve shown how in eight steps you can build a loyalty program. Implement each stage carefully, and you should quickly start to see results. But, don’t take our word for it. Why not boost customer retention and revenue by building your loyalty program today?
