Beginner’s Guide to building a customer loyalty Program

If you are reading this article, congratulations!


You have taken the first step towards your loyalty program. Here we are sharing some must have strategies for a successful loyalty:

1. Offer rewards that are meaningful
2. Incentivise customer enrolment
3. Targeted rewards for different customer segments
4. Spread the word – promote your loyalty program

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1. Offer rewards that are meaningful

The rewards should not exist just for the sake of rewards. The rewards should be meaningful, and should delight your customers. If the rewards program is not enticing enough, the customer would eventually drop off.

Hence, spend some time to understand your business objectives and what does your customers expect from your loyalty program.

Lets take some scenarios to understand this:

Scenario 1:

There is a fine-dining restaurant who have 2 different loyalty campaigns:

Campaign A:

Offers 5% cashback to customers that they can redeem in subsequent visits

Campaign B:

Offers store credit, where the customer has to pay $500 in advance, where they can eat for the worth $550.

Which campaign would you prefer as a customer?

Most customers will prefer to enroll into campaign A because they don’t want to commit to $500  today. Rather they will prefer to have 5% cashback that they can redeem in subsequent visits.





Scenario 2:

There is a cafés where customers like to take away their morning coffees from, also has 2 loyalty campaigns:

Campaign A:

Offers 5% cashback to customers that they can redeem in subsequent visits

Campaign B:

Offers store credit, where you purchase say 9 coffees today and you get your 10^th coffee free.

Same question, which campaign would you prefer as a customer?

Most likely Campaign B, because committing to the cost of 9 coffees is easier when you know that you will buy from them every day. Also, you will not have to pay for your coffee every day, just pick your coffee and redeem 1 more out of 10.

We see that how cashback makes more sense in scenario 1 while store credit makes more sense in scenario 2. Hence, its important to offer reward that are meaningful to your customers.

2. Incentivise enrollment

Incentivising enrollment aims at new customers. Offering a welcome promotion to new customers is one of the best ways to attract more customers and built loyalty among the new ones.

It plays a very important role to:

• Enrol customers in your loyalty program, ofcourse
• Getting them to try your services for the first time
• Collect their data to engage them in the future with more offers

How can you incentivize enrolment is very simple – you can offer the a welcome gift, free item, 20% discount on the first purchase, etc.

 3. Targeted Rewards for different customer segment

Customer segmentation involves classifying customers into different groups based upon their similarities and differences from other groups. Segmentation allows you to interact with the customers and understand their needs in much wider details.

Choosing a different kind of reward programs for different kinds of customers to help to precise the process and establish better trust. Rewards through segmentation help to create a more personalized approach and making the customer feel special. Through this technique, you do not only sell to your customers but also show them how much you care.

Let’s go to this simple scenario to understand this better. If you are a bag store with a hello kitty tote bag with your hot selling item. If you offer a free hello kitty tote bag at every purchase of $50, which gender do you feel most of your customers will belong to? Yes, women.

Which also means that you just missed on the opportunity cost to effectively engage the other 50% of your customers that are men. In this case, all men receiving these messages wont connect with the brand as they will feel that you don’t know them and don’t care about their choices.

4. Spread the word – promote your loyalty program

Don’t hide your light under a bushe l – else its of no use.

It’s an absolute must to let people know that you have an amazing loyalty program just for them. A loyalty program is a brand’s most important marketing strategy. It should be visible to the customers at every touchpoint – cashier, website, social media etc.

Your staff should be trained to inform the customers about it. There must be posters or standees inside the shop. It’s a good idea to have some information outside of your store so that the prospect customers who are passing by can read, and might try it another time.

In today’s digital world, your customers visit your website and social media first before coming to the shop. So do not miss to put up there as well. More the exposure, higher the enrolment!

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Conclusion:

If you are starting a new program or trying to boost your customer loyalty program that the above-mentioned techniques will be very helpful. These techniques help to increase customer participation in the loyalty program and provide you with more opportunities to attract customers and build trust with them. With the right kind of initiatives, you can make your first time customer into a loyal and frequent one.