Setting up a customer loyalty program: 3 best practices

David Buckingham
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Loyal customers are a critical profit driver – 57% of consumers spend more on brands or providers that they're loyal to. Hence why retailers have used loyalty programs for decades to encourage more frequent visits and grow customer spending.

But loyalty is getting harder to win. 

Standard points-based systems won't cut it any longer. Today's consumers want unique loyalty experiences that are personalized to their behaviors and preferences. And they won't hesitate to switch to a competitor if they think their loyalty will be better rewarded elsewhere.  

When a customer's loyalty can be so fickle, how do you get them to stay true to you? 

3 key loyalty program best practices to follow

1. Make it personal   

To today's consumers, personalization matters. Nearly one-third of US loyalty program members said that they'd exchange their personal information for more personalized experiences and rewards

The best way to drive loyalty is to give something back to the customer that’s personalized and valuable to them. You want to surprise and delight them with something they'll love.

61% of consumers say that the most important way a brand can interact with them is by surprising them with offers or gifts just for being a customer. 

Think of it like getting a loved one a gift for their birthday. You wouldn't give them a voucher for a generic high-street retailer. You'd take the time and effort to get them a meaningful gift with real thought behind it – a bottle of wine that they found and enjoyed on holiday, perhaps, or something related to their favorite hobby. 

Less than 25% of programs are personalizing member experiences based on previous interactions, purchase history, and stated or inferred preferences. If you can personalize yours, you've got a major opportunity to set your brand apart from the competition. 

The best way to deliver this level of personalization is through customer data. 

2. Know your customer

To give customers the most relevant rewards and messaging through your loyalty program, you need to know what they're buying, where, and when. And because customer behavior is always changing, this requires real-time, line-level data.

The most effective way to get to know your customers is with retail marketing analytics. Analyzing real-time data gathered via a payment token alongside loyalty card data unlocks insights that will give you a much better picture of an individual customer's behavior.

Use those insights to continuously update the offers and messaging you send so they're as personalized as possible. 

Read the 4-step marketer's guide to retail data analytics. Discover how to  transform your data into targeted marketing. 

3. Keep it simple

Trying to embellish loyalty programs with gimmicks, like apps or gamification, can be tempting. But whatever value they might appear to add, the end-user experience must always come first. 

When setting up your loyalty program, think – how many barriers are there between a customer and their reward? Do they have to log in to an app, turn on their Bluetooth, enter a code, or click through to a website?

The more hoops you make a customer jump through to claim rewards, the less likely they'll be to engage with your loyalty program. So, keep the user experience simple and streamlined.  

The keep-it-simple rule applies to messaging as well. Your communications should always make it clear where a customer currently stands within your loyalty scheme, and what they need to do to reach the next reward. This is especially important for enticing lapsed customers back. Show them something you know they're going to want and make it easy to understand how they can get it by returning to your retailer.  

Keep your customers coming back 

A customer loyalty program can improve your customer retention, increase how much they spend in your stores, and boost your profits. But only if it's done right.

When implementing your program:

  • Know your customers through retail marketing analytics 
  • Delight them with personalized rewards they truly value
  • Make the loyalty experience as simple and intuitive as possible  

The 4-step marketer's guide to retail data analytics


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