Best Practices for Building a Customer Loyalty Program

Loyalty programs today are much more advanced than just Starbucks stars and frequent-flyer miles. Practically every brand has added some kind of exclusive content, tier program or VIP status to their offerings in order to attract and retain their most loyal customers. 

In a recent webinar, I joined Philip Shelper, CEO of Loyalty & Reward Co, who shared his insights about how to create a strong customer loyalty program. 

“When we talk with clients about the fact that there is so much opportunity for them to do different types of approaches to stimulate those desirable customer behaviours, it really opens their mind to what’s possible,” Shelper said. 

Here are some popular customer reward program models to consider:

• Punch-card model such as a café loyalty card
• Currencies, including collecting logos, offering tokenized assets (shares or real estate), even cryptocurrencies
• Tiers like Google Guides 
• Member benefits, common with utilities, telcos and insurance companies to offer discounts or gifts, etc.
• Credits you earn for a discount on your next purchase
• Referral programs, which build in a surprise and delight element
• Gamification
• Card-linked offers or rewards when you sign up for a new credit card

How to Audit Your Customer Loyalty Program 

To do your audit, think of your customer journey map. Assess your strategy to manage the customer lifecycle. Where can you insert your loyalty program to incentivise and reinforce customers’ desired behaviours?

Examine your proactive data collection strategy. How do data and insights you have collected help personalise the customer experience? Have you built a program that allows customers to collect rewards via multiple channels? Customer experiences are multi-faceted and always evolving. In order to build a strong customer loyalty program that will reap rewards for your brand, you need to keep in mind several different elements. 

Checklist for Building a Great Customer Loyalty Program

We recommend eight basic principles to build any great customer loyalty program. Look for these qualities and features as you work to design your loyalty program, and you’ll be well on your way to developing long-term, meaningful customer relationships.  

1. Simple to join, understand and engage. It should be woven into your company’s existing processes to align with the customer’s everyday spending habits 
2. Delivers more value to members without impacting your profit margin
3. Considers other ways to deliver value beyond your product or service. For example,gamification and digital games work well where you get customers to play a simple game to unlock a prize or discount code.
4. Emotionally connects them to your business and converts them into an advocate
5. Offers them a sense of belonging and exclusivity through VIP events and special gifts
6. Differentiates your offerings from the competition
7. Cost-effective. Continuously monitor the ongoing cost vs. reward balance of the program.
8. Evolving. Iterate the program based on a customer feedback loop, analytics, etc., to optimise it over time and promote deeper member engagement.

Zero-Party Data Will Take Your Customer Loyalty Program to the Next Level

Once you’ve got these qualities accounted for, this is where zero-party data comes in. Loyalty programs are an amazing opportunity for companies to collect zero-party data and feedback from their best customers. 

Create survey opportunities, conversational apps and other forums for customers to tell you what they want, so your brand can use that data to better personalise their customer experience. Many innovative brands have used quizzes to gather information about exactly the product preferences of their audience to match them with exclusive offers. From digital stylists having customers add in their favourite colors and fabrics or an online alcohol delivery service asking about your preference between fruity or spicy flavours, customers are more willing to go into detail when they know their answers will have an impact on their end experience.  

Curious for more expert insights into loyalty programs? 

Watch the whole webinar to get insights into new data collection strategies and how to apply them to your own loyalty and reward programs.