Dos and Don’ts When Formulating Customer Loyalty Programs

Your business needs to attract new customers. But it also needs to ensure that the existing customers keep coming back. They would buy from you much easier and they would often spend more. They would also help to spread the word about your business.

According to a study conducted by Inc, the approximate cost to acquire new customers is often 5-10 times more than what a business needs to spend on selling to current customers. You need to understand the importance of your existing customer base.

A business often uses the tried and tested path – a loyalty program – to urge existing customers to stay loyal and refer the business to family and friends. But you need to know how to do it right to achieve the right result.

Let’s look at the Dos and Don’ts for the conception of a successful loyalty program.

Do think like a customer

When a customer participates in a loyalty program, they have some expectations, a freebie, a discount or perhaps a special treatment. Fail to live up to this expectation, and you fail to keep the customer hooked on.

Don’t forget to survey

Place a remark card at your cafe, add a comment section to your website or use online tools to get your customers’ opinions, views and thoughts. This would give you clues about how to design your program to suit their desires.

Do pay attention to competitors

Before you plan anything, find out more about what your competitors are doing right. Take lessons from this. And think up something unique you can add to make it more interesting.

Don’t complicate things

Every $10 spent earns 1.8 points and a customer needs to earn 500 points to get a discount of 50% on the next purchase. If this is how your plan works, it isn’t much of a loyalty program; it is a maths puzzle! Keep it simple.

Do implement a tier system

If your program makes a customer wait too long for a reward, it would be easily forgotten. Resolve this obstacle with a tiered system where they get simple benefits at first and have to purchase more to reach the top rungs.

Don’t forget values

Monetary benefits work best, but other perks work too. Build your program around concepts that customers’ value. Reward eco-friendly choices. Awareness of the importance of environmental preservation would also boost your business image.

Do inject some fun

A great way to attract current customers to the loyalty program is to transform it into a game. Whether they need to draw a card to get a freebie or crack a code to get a discount, a little fun often goes a long way to winning over loyalty.

Don’t fail to observe

Keep track of what customers say about your business, and your loyalty program, on social platforms. It would give you hints of problems and help you make sure that you get rid of them early.

Do partner to provide

Create inclusive benefits for customers by partnering with other businesses. A children’s clothing store may partner with a children’s toy store and offer discounts and freebies on purchases from both.

With a little ingenuity, it is possible to create a program that adds value to a business.

The loyalty program that works for your business depends on what you do and whom you serve. A fun-filled game may work for a fast food joint. But it would require a proper points system for exclusive brands.

You also need to focus on the perks you offer for participation in a loyalty program. While a free coffee works well for Starbucks customers, you need to come up with extravagances.