Reaping the Rewards of a Customer Loyalty Program

The good thing about a customer loyalty (aka reward) program is that you can benefit from one whether you sell widgets or window cleaning services. In fact, according to Propco Incentives, there are 2.7 billion loyalty program memberships in the U.S. today. However, due to such competition, you really need to think strategically when considering a loyalty program. Here are a few things to keep in mind.

The Type

There are a few choices available here. You can go with a simple points system where customers accumulate points based on how much product they purchase, the number of times they visit your store or website, or how may customer referrals they provide. Points are then exchanged for a prize, cash, or a free or discounted product. Frequent flyer miles are the prototypical example.

You can use a graduated system where the more a preferred customer spends, the better the prize. For example, a retailer can offer a $20 discount when someone buys a $200 pair of shoes or a $10 discount when he or she purchases a $100 pair.   

While risky, you can offer a paid benefit status for access to special benefits. For $95 annually, United Airlines Mileage Plus credit card offers bonus miles, free baggage check, club passes and more. Amazon Prime is also successfully uses this method.  

The Experience

Competition is intense and attention spans are short. If nothing else, make your program easy to understand, participate in and redeem the rewards.

Make the online experience aesthetically pleasing, a place where someone might want to “hang out” to play a game to win some points. Also, try and give the points a creative name. Schrute Buck anyone?

The Technology

Automate the process. There are many online apps that, for a monthly subscription fee, will create a custom loyalty program as well as administer all or part of it. Some of the more common ones are Belly, FiveStars and Front Flip. There are even apps that are specific to certain industries like Sparq (automotive) and LevelUp (restaurant).

When people initially register, only ask for basic information such as name, email address and perhaps birthdate. (Who doesn’t like getting a nice note or festive email on their birthday?)

The Awareness

Loyalty programs are an excellent way for customers to feel good about updating your mailing list by giving them something of value.

When you deploy your program, promote it via multiple channels such as email, website and social media. Updating people when prizes or games change is a great customer touchpoint. Incentivize your current customers to bring in new potential clients. “Refer a friend or family member and receive 25,000 points or a 50% discount on your next purchase.”

The old adage is that it’s easier (and cheaper) to sell to current clients than get new ones. With a good loyalty program, you can effectively do both.