How to Create a Customer Loyalty Program in 6 Steps

Customer loyalty programs are one of the best ways to grow your business. They allow you to reward and incentivize customers, increasing customer retention over time. In this guide, we will teach you how to create a customer loyalty program that increases profitability while keeping it simple for employees and vendors take care of the other tasks involved in running an effective program.,

Customer loyalty programs are a great way to get people to spend more money with your business. They can be created in 6 steps, and it’s easy for businesses of any size. Read more in detail here: how to create a point system for rewards.

A customer loyalty program is a consumer-facing marketing technique that aims to incentivize individuals to keep coming back to your shop and engaging with it, resulting in brand loyalty. To build a loyalty program, start by deciding on a structure that fits your company’s goals. Then, brand your program and develop a marketing plan for it, educate your personnel, and roll out your customer loyalty program. Finally, keep an eye on the program and make adjustments as needed.

The six stages to building a loyalty program are detailed below:

1. Select a Program Structure That Is Appropriate for Your Company

The kind of company you have, the objectives you have for your loyalty program, and what incentives will appeal to the clients you serve can all influence how you connect with your customers and eventually build loyalty to your shop.

Set Business-Friendly Objectives

What you provide consumers as a reward is determined by the objectives you wish to achieve. Make sure to outline your loyalty program’s objectives and use it to encourage certain consumer habits and increase specific company sectors.

Let’s imagine you want to improve your online reviews in order to increase trust and traffic to your ecommerce site. You might set up your loyalty program such that members get benefits every time they submit a product review, either manually or via loyalty software.

Other things for which you may provide incentives include:

• composing referrals
• The amount of money spent
• Interactions on social media (tagged photos, comments, likes, follows)
• Purchasing a certain item
• On sale days, go shopping.
• Product evaluations
• Adding a picture

Select Incentive-Inducing Rewards

Another item to think about when developing your loyalty program is the incentive or if the reward you’re delivering is enticing to your clients. Finally, a desired incentive will encourage consumers to connect with and spend money at your firm, resulting in increased loyalty.

Let’s suppose you’re in the flower business. A tiny bouquet as a prize would be a terrific award and would drive your client base in this scenario, however an Amazon gift card would be a less effective reward.

When picking a reward incentive, think about what would thrill your clients. Try:

• Credit in the store
• Small tokens of appreciation
• Gift certificates (to your own store or otherwise)
• Products that are unique
• Deals or offers that are only available to you
• There are many levels of membership.

Here’s a rundown of seven distinct types of loyalty programs, along with the goals that each one serves and instances of where they’ve been effective.

A customer loyalty program is essential for launching a retail company since it may help you expand your client base and increase sales. In fact, it has been shown that a 5% increase in client retention may raise income by anywhere from 25% to 95%.

Program of Points

The Program of Points is the most popular kind of loyalty program and offers points to customers based on how much they spend or specific actions that they take (like signing up for newsletters or leaving Product evaluations). Customers can then redeem their points as Credit in the store or other prizes.

Ulta, a huge beauty business, is an excellent example of a good rewards system. Customers are given points for every dollar spent in Ulta’s Loyalty Rewards Program, which incentivizes them to pick Ulta over other beauty businesses. Ulta then sends out texts and emails with customized bonus point offers that are tailored to the customer’s specific requirements. It may, for example, provide double points during a sluggish week or extra incentives for purchasing particular items.

Tip: Look for a software application that allows you to customize incentives and prizes so you don’t become stuck in a rigid points system that can’t keep up with your company’s changing demands.

Ulta offers rewards based on The amount of money spent in order to boost loyalty. (Source: Ulta)

Best for: Companies who want to target high-volume spending and/or particular client habits.

Program of Cash Back

Another program you can use is the Program of Cash Back. In this structure, you offer customers Credit in the store 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.

The Program of Cash Back is similar to the Program of Points 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 Program of Cash Back 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 Credit in the store. This program, quite effectively I might add, promotes larger purchases in pursuit of rewards and is easy for customers to understand and follow.

TJ Maxx offers cash back in the form of certificates that can be redeemed as Credit in the store. (Source: TJ Maxx Rewards – Synchrony)

Best for: Companies seeking for a straightforward program framework that encourages expenditure.

Program for Punch Cards

A Program for Punch Cards 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.

Aviano, a tiny coffee shop near a business district, for example, has a loyalty program that gives you a free coffee for every ten you buy. The modest business is always bustling with clients, with a continuous stream of regulars from the neighboring communities.

Best for: Businesses that depend on a consistent supply of repeat customers or wish to encourage frequent purchases in other ways.

Aviano has a customer loyalty program that rewards customers who return. (Image courtesy of Cherry Creek North)

Tip: Most people prefer a digital rewards program. Get rid of the paper punch card and replace it with a digital punch card system like CandyBar’s.

Program with Different Levels

A Program with Different Levels 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.

Program with Different Levelss are typically paired with a Program of Points, and use exclusivity and gamification to incentivize customers to make purchases.

Gamification is the act of bringing game components, such as competition and scoreboards, to places where they aren’t usually seen, such as your loyalty program.

Uber’s rewards program is an excellent example of a tiered business plan. You get a point for every dollar you spend on any of Uber’s applications or services. Your status rises as you acquire points, and you get access to greater services, treatments, and deals. This incentive encourages users to choose Uber instead of competing ridesharing providers.

Depending on how much money you spend, Uber provides several statuses. (Photo courtesy of TechCrunch)

Businesses with a consumer base that values exclusivity and gamification are the best fit.

Program of Cooperation

A Program of Cooperation 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.

Groups of stores will host events for their loyalty members, such as combination promotions, special parties, or coalition-wide deals, as part of this approach. Individual retailers may hold their own sales and advertise to the joint coalition client base in specific coalitions and with particular software.

The Pearl Street Rewards Program in Denver is an example of a coalition client base. Pearl Strip is a well-known retail street featuring a variety of stores and eateries. Many of the establishments collaborate on a common loyalty program that allows members to take advantage of neighborhood-wide discounts and special event invitations.

Best for: Shops in shopping malls or businesses that might profit from sharing a consumer base with other brands.

Programs that are either premium or fee-based

Another type of loyalty structure that you can use is a Programs that are either premium or fee-based. In this structure, members pay an upfront fee to join and then get instant access to special rewards and deals.

Customers are rewarded with immediate pleasure, which encourages loyalty. Make sure, nevertheless, that the incentives you give are in accordance with the price. 70% of customers are eager to join premium loyalty programs if you generate the correct amount of motivation and give rewards that are valuable enough.

Take, for example, Costco, a wholesale retailer. A shopper card, which offers members access to Costco’s discounts and items, costs $60 per year. People are prepared to pay the membership fee to obtain access to everything that Costco has to offer since it is able to provide such exclusive things at such affordable costs.

Costco provides a variety of premium memberships that give consumers access to all of the store’s offerings. (Photo courtesy of Groupon)

Businesses that provide premium discounts, subscription-based services, or substantial enough incentives/rewards are the best fit.

Programs using a Hybrid Approach

Hybrid loyalty programs combine multiple distinct types of loyalty schemes into one program. Points and tiered structures, for example, are often used together, and you may also find coalition and punch cards, or premium and tiered. Feel free to personalize your reward program to meet the demands of your clients.

Blue Coast gym, for example, provides all of its committed members with a punch card membership. In addition, when members attend courses, they earn points that may be used to purchase gym equipment and clothes. Blue Coast did not stick to a particular structure; instead, it was innovative and attempted a variety of loyalty program concepts.

Best for: Businesses wishing to mix incentive structures for maximum appeal or those employing loyalty software with customizable capabilities.

2. Give Your Program a Name

Creating a loyalty experience that is consistent with your store is more than just selecting a rewards system that will encourage customers to purchase and spend at your establishment. You must also pay close attention to the smallest things to ensure that your loyalty program is consistent with the rest of your business.

What if I told you that

A consistent brand presentation has been demonstrated to improve sales by 33%.

Here are a few items you may change to make your loyalty program consistent with your brand. Customization may be done by hand, but to assist organize and simplify your activities, we suggest adopting a loyalty software. When choosing software, be sure to look at the customization choices.

• Instead of points, consider branding your rewards money. For example, if you operate a plant business, your points may be referred to as seeds.
• Customer portals, rewards trackers, and any other customer interfaces should be consistent with the rest of your brand and website style if you’re offering your loyalty program online.
• If you’re sending out messages, emails, or putting text on posters, make sure you use your brand voice to convey information.
• Items: Consider providing your loyalty members with branded merchandise.

Chewy, a pet supplies internet shop, is a superb example of a loyalty program that has been branded consistently from top to bottom. Chewy has a loyalty program where you can sign up for an account and have access to the auto-ship option as well as fantastic pet supplies savings. Chewy’s core branding philosophy is that it cares about your pet, and every facet of the company has been created to reflect this.

Chewy understands how to design a reward program that corresponds to its brand image, from incentives “to assist care for your closest pals” to customized pet birthday greetings with exclusive offers.

Chewy gives out birthday cards to its devoted customers’ dogs on their special occasions. (Image courtesy of Chewy)

3. Make a marketing strategy for outreach.

You may design an outreach marketing campaign to keep clients interested even when they aren’t physically or digitally engaging with your shop after the bones of your program are defined and your interface has been branded. Text and email are often used for outreach marketing, and loyalty program software includes messaging services.

The marketing for a loyalty program may take many different forms. You may contact them to inform them of upcoming events or promotions, give them discounts, send surveys, remind them of their reward options, or welcome them back. It is up to you what your messages say, but as with everything else in the loyalty program scheme, make sure you are developing something that is both attractive to your members and consistent with your brand language.

You may also build automated messages that are sent out based on preset triggers using various software applications. You may, for example, time your marketing nudges to coincide with your sales calendar or send them out after a month if a consumer hasn’t visited in a month.

Mango, a women’s apparel retailer, has a fantastic SMS and email marketing campaign. You offer your information in return for a promo code to join the loyalty program. The company may then contact you with information about new collections, sales, and survey requests.

Send out communications to your customers through email or text to keep them informed and encourage interaction. (Image courtesy of BigCommerce)

4. Create an acquisition strategy

Another item to think about before beginning the distribution of your loyalty program is how you’ll recruit your initial members. You’ll need to establish an initial incentive for individuals to join—rare it’s that people would give over their information without some type of registration offer.

I recommend providing a 10% to 15% discount since it is the most popular and tempting choice for clients. You may, however, give a free gift or a voucher for a future purchase; in certain circumstances, your membership offers may be so outstanding that you won’t need to offer another acquisition bargain.

For example, in my boutique, we provided consumers with a $10 voucher for their next visit, immediate access to an exclusive monthly discount, and early access to sale days. We didn’t give a first-time purchase discount here, but we did sweeten our sign-up offer with additional advantages and incentives.

5. Educate Your Employees

While you will be the one to design and monitor your program, it will be your staff who will carry it out on a daily basis and sell it to prospective new members.

Make sure your personnel are trained not just on the program’s terms, but also on how to offer it to new consumers, use any interfaces to answer inquiries, and troubleshoot any issues. You should also produce a formal protocol for your training endeavor so that it may be implemented by others.

When I had to teach new personnel, for example, we used a training checklist to ensure that we were covering all of the bases. Employees would study the terms of our program, see me pitching and executing it at the register, create their own spiel for presenting our program, and then be ready to go.

6. Keep an eye on things and make adjustments.

Having some form of reporting system is the final thing you want to do to assure the sustainability and continuous effectiveness of your loyalty program. You should design a way to monitor your program over time whether you are trying new techniques, attempting to enhance your program, or just wish to measure its performance.

You can utilize the built-in reporting mechanisms in most loyalty program software. Many may report on customer behavior and journeys in addition to demonstrating program effectiveness over time, giving you insights into how particular consumers engage and how you can target them to increase loyalty.

Consider what metrics are most relevant to you for understanding your program while looking at loyalty programs or establishing your own reporting architecture. What are the customer’s habits? What is the total number of members? Is it possible to segment customers? Are you willing to provide a performance? Whatever you decide, utilize the information from your reports to make changes to your program that will help it succeed.

To get insights into your consumers and program success, use reporting capabilities inside loyalty software. (Image courtesy of Annex Cloud)

Conclusion

Customer loyalty programs are critical to the success of any company. You should take care to develop a loyalty program that is in accordance with your brand and will speak to your clients, from how you brand your interface to the benefits you provide to the entire structure. Use the steps in the instructions above to help you through each stage of creating your loyalty program, and watch as consumers return again and time again.

The “loyalty program template” is a document that provides a step-by-step guide on how to create a customer loyalty program in 6 steps.

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