Building a Loyalty Program That Works

Loyalty programs are hardly a new marketing tactic, but they’ve survived this long precisely because they’re effective. Customers respond to feeling like they’re getting something special, and particularly if it’s in recognition of having an ongoing frequent relationship with a particular business, and businesses know that a little bit of appreciation for their best customers can go a long way to retaining customers in a market place that offers an increasingly large number of alternatives. But as consumers, we can all remember some loyalty programs that have just flat out not worked for us, whether they were too complicated to use, too restrictive, or just didn’t offer the kinds of perks that made a difference to us. Loyalty programs should, and really must, go beyond a “get the tenth free” punch card or another piece of cheap plastic cluttering up a wallet. Luckily, establishing a loyalty program that’s effective for your business and customers both doesn’t have to be that complicated if you keep a few things in mind.

Ease of use – If you want people to take advantage of the loyalty program, and you do because it keeps them coming back and makes them feel like they’re getting extra value, it has to be easy for them to use. Physical cards are fine and can serve as good reminders simply by virtue of people seeing them in their wallets all the time, but make sure that there is a simple backup plan if someone forgets or loses their card. If you have a customer’s phone number or email address on file, there is no reason you shouldn’t be able to find their loyalty account information that way. Also, for businesses operating both brick and mortar and online store fronts, make sure that customers at least have the option of coordinating all of their purchases. Beauty retailer Sephora does a fantastic job of this, not only allowing customers to bank points for their loyalty perks on both in store and online purchases, but keeping a customer facing record of all purchases made, even once products (or even specific colors) have been discontinued. It’s a seemingly small thing that makes all the difference in keeping a customer coming back for all of their relevant purchases.

Reward what people would do anyway – You could consider this an off-shot of ease of use, but it bears specific mention. A loyalty program is about rewarding customers for choosing to do business with you, it shouldn’t be an excuse to get them to jump through a thousand hoops to get some promised reward. Offer extra perks for liking and following social media accounts if you’re so inclined, but be wary of requiring it, and also be wary of making it too difficult for customers to earn rewards. You can offer bonuses to help push a particular product line, but you’re best served to not be seen as punishing customers who want to do business with you but simply prefer a different product. The sense of “is my money not good enough for you?” that can leave in some customers’ mouths is very real and can undo a lot of the good will a loyalty program is designed to engender.

Offer perks people actually want – If you’re going to promise great discounts or other perks, you have to deliver on things people actually want. When in doubt, the more flexible the perks, the more likely people are to be happy with them. Offering a free drink for every however many visits or $5 off your next purchase or similar is much more exciting for people, and feels much more like a real reward, than a free double shot half-caf soy vanilla spice latte or a free product from a line someone has never purchased before (and in which they may have no interest). There is a time and a place for special offers on specific products you’re trying to get more exposure, but that needs to be separate from any earned rewards for frequent customers.

Use it as a chance to promote new products – You know how I said there was a time and a place? Yep, here it is. Separate and independent from any earned perks or rewards, your most frequent and loyal customers are a great group to tap to try (and hopefully review) new products and hopefully share their positive impressions of a wider range of your products with other people. You can take advantage of having access to these frequent customers to test new products or get those products wider awareness, but just remember that even your customers who buy the same three things every time and aren’t really interested in trying anything new deserve appreciation.

Think beyond discounts – Discounts and free products are great and are probably going to be the backbone of most loyalty programs, but early access to products, extended sales, and personalized service can all be part of a larger loyalty program as well. Remember that discounts, while extremely popular, are also the easiest thing for competitors to duplicate. Using the Sephora example again, their products tend to be very high end and in a lot of cases I can get them cheaper on Amazon or Ebay or other discount sites, or I could use a less expensive alternative. Sephora’s free products as part of their loyalty program are great, but it’s things like their amazingly easy no questions asked return policy and their beauty consultations offered to their members that make me want to continue shopping with them. I can think of half a dozen other places at least where I could get most of the same products, probably for a little less, but the other perks of being a frequent shopper there makes it worth it.

Coordinate with other efforts – You want your loyalty program to really be part of the customer journey from start to finish, so build it in to the rest of your marketing efforts. Make sure it’s referenced on social media and build in special social media perks if you’re trying to drive engagement on a particular platform, make sure your customer service teams in all venues are encouraging people to use the program and have a clear understanding of its details, and build it into your branded app if you have one. Whatever you do, don’t expect your customers to download a second app to their already cluttered mobile device. Much as I love Major League Baseball and think they do a lot of things extremely well with their marketing efforts, I get slightly annoyed every time I go into the sports folder on my phone and realize I have two separate apps from them, one for scores and news and one to check-in to games and get access to localized content on game day, when I really should only need one.

If you focus on truly rewarding your most loyal and dedicated customers, all of this will probably come naturally. Think about what’s in it for them and not for you and you’ll be on the right path. Have a great loyalty program experience? Please share in the comments, we love hearing from you!

Read more:

• Loyalty Test: Bad Customer Service