How To Create a Customer Loyalty Program in 8 Steps
This article is part of a larger series onRetail Management.
A customer loyalty program is a customer-facingmarketing strategydesigned to create incentives for people to continue to choose and engage with your store, ultimately creating brand loyalty. This guide will walk through the eight steps for creating a customer loyalty program.
One of the easiest and most effective ways to create a loyalty program is by usingcustomer loyalty program software. If you need some inspiration, check out ourcustomer loyalty program ideas and examples.
Step 1: Determine the Objectives of Your Customer Loyalty Program
In general, in a customer loyalty program, a customer performs an action and then they get a reward. The actions you choose to recognize and the incentives that you provide will depend on the goals you want your loyalty program to accomplish. Whether you want to incentivize referrals or boost social media engagement,define the goals of your loyalty program so that it promotes specific shopper behaviors and boosts targeted areas of your business.
For example, say you want to bolster your online reviews to boost trust and traffic to your ecommerce site. Either manually or usingloyalty software, you can structure your loyalty program so that members get rewards each time they write a product review.
Some behavior that you could offer rewards for include:
- Writing referrals
- Spending a certain amount of money
- Interacting with your brand on social media (e.g., tagged photos, comments, likes, follows)
- Buying a specific product
- Shopping on sales days
- Leaving product reviews
- Uploading a photo
- Visiting your store a certain number of times
- Sharing your store online
The goals of your loyalty program will ultimately determine what actions you will reward. Once you have determined this, the next piece of the puzzle is to decide what those rewards will be.
Step 2: Select Rewards That Create Incentive
Another thing that you want to consider when designing your loyalty program is the incentive, particularly whether the reward you are offering your customers is appealing.Ultimately, a desirable reward will make people want to interact and spend at your business and will foster their loyalty.
For example, say you sell flowers. In this case, a reward of a mini bouquet would be a great prize to motivate your customer base, whereas an Amazon gift card would likely be a less effective reward.
Consider what will excite your customers when choosing a reward incentive. Try:
- Store credit
- Small gifts
- Gift cards (to your own store or others)
- Exclusive products
- Exclusive deals or offers
- Moving up in membership tiers
Step 3: Choose a Rewards Program Structure That Fosters Loyalty
Once you know the goals of your rewards program and the offerings you will provide, it is time to select a customer loyalty program structure.Your rewards program structure defines exactly what actions reap benefits and what those benefits are.
Did you know?
A customer loyalty program is key forstarting your retail businessas it can grow your customer base and drive sales. In fact, a popular statistic in the loyalty landscape says that a mere5% increasein your customer retention can increase your revenue by anywhere from 25% to 95%.
这里有七种不同类型的忠诚programs that you can choose from, the ends that they each serve, and examples of where they have been successful.
Best for:Businesses looking to target large spending and/or specific customer behaviors.
The points program is the most popular kind of loyalty program used today. It offers points to customers based on how much they spend or specific actions that they take (like signing up for newsletters or leaving product reviews). Customers can then redeem their points as store credit or other prizes.
A great example of a successful points loyalty program is the Soludos brand’s Sunshine Club. When customers sign up and become a member in this program, they will start to receive 10 points for every dollar spent on the Soludos site. From there, they can redeem their points for money off future purchases. As a result, Soludosincreased their customer spendby 32.8% and repeat purchase rates by 39%.
Look for a software program with a customizable incentives and rewards option so that you don’t get pigeon-holed into a rigid points structure that can’t serve your business’s evolving needs.
Best for:Businesses looking for a simple program structure that promotes spending.
Another program you can use is the cash back program. In this structure, you offer customers store credit based on how much they spend. This program is very easy to set up and maintain with or without a software program to do it automatically.
This program is similar to the points program in that it rewards a specific customer behavior. In this case, however, the loyalty action is not customizable. It is limited to “the more you spend, the more you earn.”
A cash back program that I personally know and love is the TJX rewards program through TJ Maxx. The program is simple: When you use your TJX card at a TJ Maxx store, you get 5% cash back in store credit. This program promotes larger purchases in pursuit of rewards—quite effectively, I might add—and is easy for customers to understand and follow.
Best for:Businesses that rely on a steady stream of regular customers or those wanting to promote frequent purchases.
A punch card program is another loyalty structure in which you tally people’s purchases and offer a free reward once the customer reaches a certain number. This structure specifically promotes frequent visits and the cultivation of “regular” customers.
For example, Aviano, a small coffee shop located near a hub of businesses, has a loyalty program that offers a free coffee for every 10 you purchase. The small shop is constantly flooded with people and has a steady stream of regular customers from the surrounding areas.
People want their rewards program to be digital. Get rid of the paper card and offer a digital punch card system, like the one fromCandyBar.
Best for:Businesses with a customer base interested in exclusivity and gamification.
A tiered program is a loyalty program structure where you create different levels that customers can reach once they meet a threshold of points. As customers move up the levels (or tiers), they get access to better and more exclusive rewards and offers.
分级程序通常是搭配了一个点program, and use exclusivity and gamification to incentivize customers to make purchases.
Gamification:The process of introducing game elements—like competition and scoreboards—into areas where they are not typically found, like your loyalty program.
Ren, a clean beauty brand, has a tiered rewards program called “Clean Collective Rewards” where customers can move through Ally, Advocate, and Activist tiers as they purchase clean beauty products and interact with Ren’s social media. As members move up the ranks, they get access to better deals and exclusive offers and promotions. With this incentive in mind, Ren’s loyalty program has seen major results.
REN’s team saw a68% increase in customer spendby loyalty members, and its member repeat purchase rates also grew, reaching values that were 63% higher than guest visitors. As a result, REN generates 38% of its total revenue from loyal customers.
Best for:在购物中心或企业otherwise benefit from sharing a customer base with other brands.
A coalition program is a loyalty structure in which customers can get access to deals from two or more businesses in exchange for shared user information. For example, say your store is on a busy street of shops and you all decide to join a coalition loyalty program for the neighborhood. This would make it so that if a customer signed up for a loyalty program at one of the shops, they would be signing up for the neighborhood coalition of loyalty programs.
In this strategy, groups of shops will hold events for their loyalty members, like combined sales, special parties, or coalition-wide offers. In certain coalitions and with certain software, individual stores are also able to hold their own sales and market to the shared coalition customer base.
An example of a coalition customer base is the Pearl Street Rewards Program in Denver. Pearl Street is a popular shopping street filled with shops and restaurants. Many of the stores work together in a shared loyalty program that gives members access to neighborhood-wide deals and invites to special events.
Best for:Businesses using loyalty software with customization options or those otherwise looking to combine loyalty structure for maximum appeal.
Hybrid loyalty programs are programs that offer a combination of several different kinds of loyalty structures. For example, as we covered earlier, points and tiered structures are typically used together, and you might also see coalition and punch cards, or premium and tiered. Feel free to customize your loyalty experience to cater to your customers’ needs.
For example, Blue Coast gym offers a punch card membership to all its loyalty members. Additionally, as members take classes, they gather points that can be redeemed for gym gear and apparel. Blue Coast did not confine itself to a single structure—it was creative and tried a combination ofloyalty program ideas.
Step 4: Decide How You Want To Run Your Program—Software Automation or Manual Application
Once you have determined how you are going to structure your loyalty program, it is time to decide whether you want to run your program manually or with a loyalty program software. For manual applications, you will be the one tracking when customers perform loyalty actions and then manually awarding them points, rewards, or whatever you choose.
On the other hand, with loyalty software, almost everything in your program is automated. Loyalty program software can integrate your loyalty program with your existing POS and ecommerce site and then track member actions, keep member information on file, automatically award points or other rewards, send out outreach messages, and run reports on your program’s success.
When looking at loyalty software, some things you will want to consider include:
- Flexibility of rewards structure: Some programs let you choose how you want to structure your loyalty programs and some have a set structure already. Look at the types of loyalty programs the software can support and how flexible you can be in designing it.
- Price: Most programs scale their pricing either based on the size of the business or the number of available features. Understanding how pricing works will help you understand cost-effectiveness.
- Customization: Different software have different visual customization capabilities, from how things appear on your website to the messages you send. Consider how much branding you want for your program when considering software.
- Integrations: You will definitely want to integrate your loyalty program into your website and POS system and different software will have different integration capabilities.
Depending on thesizeof your program and thecomplexityof its structure, consider using a loyalty program software. Our top pick for loyalty software isLoyaltyLionfor its flexible reward structure options, branding capabilities, and POS and ecommerce integrations.
You can also read more about our other top picks in our guide to thebest customer loyalty program software.
Step 5: Brand Your Loyalty Program
Creating a loyalty experience that is in line with your brand includes more than just choosing a rewards structure that will incentivize people to shop and spend at your business. You also have to brand all the facets of your loyalty program to ensure that it is cohesive with the rest of your brand.
Did you know?
Consistent presentation of a brandhas been shown to increase revenue by 33%.
这里有一些您可以自定义的元素keep your loyalty program on brand. Customization can be done by hand, but we recommend using a loyalty software to help organize and streamline your processes. Be sure to check your program’s customization options when selecting a software.
- Rewards currency: Rather than simply calling them “points,” brand your rewards currency. If you own a plant shop, for example, your points could be called “seeds.”
- Interfaces: If you are presenting your loyalty program online, be sure that the customer portal, the rewards tracker, and any other customer interfaces are consistent with the rest of your brand and website aesthetic.
- Messaging: If you are sending out texts, emails, or displaying text on posters, be sure that you present information in your brand voice.
- Merchandise: Consider offering branded merchandise to your loyalty members.
A great example of a loyalty program that has been branded seamlessly from top to bottom is Chewy, a pet supply online retailer. Chewy offers a loyalty service where you can make an account and get access to its auto-ship feature and great pet supply deals. Chewy’s entire branding concept is that it cares about your pet, and it has designed every aspect of the brand to demonstrate this.
From deals “to help care for your best friends” to personalized pet birthday letters with special offers—Chewy knows how to create a loyalty program that speaks to its brand image.
Outreach Marketing
Outreach marketing includes any marketing initiatives that are targeted at customers when they are not physically in your store. In loyalty programs, the most common type of outreach marketing is email and text campaigns offering special rewards or simply acting to remind members of your business. You can either send out these messages by hand or use a loyalty program software that allows you to send out messages en masse.
The marketing surrounding a loyalty program can look different. You can contact people to let them know about events or sales, offer them deals, send out surveys, remind them of their rewards opportunities, or to invite them back. What your messages say is up to you, but as with everything in the loyalty program scheme, be sure that you are creating something that will actually be compelling to your members and is in your brand voice.
With certain software programs, you can also create automatic messages that go out with set triggers. For example, you can design your marketing nudges to correspond with your sales schedule or go out when a customer hasn’t visited in a month.
Mango, a women’s clothing brand, has a great text and email marketing program. To join the loyalty group, you provide your information in exchange for a coupon code. Then the brand can send you messages about new collections, sales, and survey requests.
Step 6: Devise an Acquisition Strategy
Another thing that you have to consider before starting the rollout of your loyalty program is how you are going to get your first members. You must create an initial incentive to join—it is seldom enough for people to give over their information without some sort of signup offer.
I would suggest offering a 10%–15% discount as this is the most common and appealing option for customers. You can, however, also offer a free gift or a next purchase coupon; in some cases, your membership offerings may be so good that you don’t need to offer an additional acquisition deal.
For example, when people signed up for the loyalty program at my boutique, we offered them a $10 coupon for our customers’ next visit, instant access to an exclusive monthly discount, and early access on sale days. Here we didn’t offer a first-time purchase offer, but sweetened our sign-up deal with other perks and benefits.
Step 7: Train Your Associates
While you are the one that creates and oversees your program, your employees will be the ones implementing your program day-to-day and pitching it to potential new members.
Be sure that you train your employees not only on all the terms of the program, but also on how to present it to new customers, operate any interfaces so they can answer questions, and troubleshoot any problems. You will also want to create a written protocol for your training initiative so that others can implement the training as well.
例如,当我有培训新员工,我们would use a training checklist to be sure we were checking off all the skills. The employees would learn our program terms, shadow me at the register pitching and implementing it, come up with their own spiel for introducing our program, and then be ready to go.
Step 8: Monitor & Adjust
The last thing that you want to do to ensure the longevity and ongoing success of your loyalty program is to have some sort of reporting mechanism. If you are trying new strategies, trying to improve your program, or simply want to gauge its success, you should create a means of tracking your program over time.
Most loyalty program software have built-in reporting systems for you to use. In addition to showing program performance over time, many can also report on customer behavior and journeys to give you insights on how certain customers are engaging and how you can target them to boost loyalty.
When looking at loyalty programs or creating your own reporting infrastructure, consider what metrics are most important to you for understanding your program. Customer behaviors? The number of members? Customer segmentation? Offer performance? Whatever you decide, use reporting insights to make adjustments to your program that will help it prosper.
Bottom Line
Customer loyalty programs play a huge role in driving your business. From how you brand your interface to the rewards you offer to the overall structure—you should take care to create a loyalty program that is in line with your brand and will speak to your customers. Use the guide above to walk you through each step of crafting your loyalty program and watch as customers come back again and again.