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8 Tips For Creating A Successful Loyalty Program in 2020

July 14, 2020 Strategy

For the retailer, there isn't a single business goal more important than securing frequent shoppers. Customer retention equals profits, and increasing the lifetime value of every customer who enters your store is the central purpose of implementing a customer loyalty rewards program.

8 Tips For Creating A Successful Loyalty Program in 2020

For the retailer, there isn't a single business goal more important than securing frequent shoppers. Customer retention equals profit, and increasing the lifetime value of every customer who enters your store is the central purpose of implementing a customer rewards program. 

The loyalty strategists at Loyal~n~Save have done the work for you. We've scoured the internet, read every website on the subject, and researched every blog, article, and resource we could find regarding the tips, tricks, and tactics that guarantee loyalty program success. 

The 8 tips detailed below will help you design a creative and successful rewards program. Your effort shouldn't end once you've tailored your program according to the suggestions we've laid out, however. Keeping your existing loyal customers engaged, shopping, and winning requires dedication on your part. An effective loyalty rewards program must also be promoted and maintained if you want to see a steady increase in customer retention, profits, and ROI. 

What does this mean?

It means that in addition to wearing the "retailer and business owner" hat, you must now fulfill another role as a marketing strategist in order to compete for a healthy share of your customers' wallets. If you're ready, then so are we, so let's put on our brand-new marketing hats and get started with some sage business advice from a Forbes Agency Council Member:   

"At the core of all of these strategies for customer loyalty and retention is communicating with and listening to the customer. From games to VIP perks and social media engagement to personalization, when companies know what customers want and provide that to them, those customers will be more likely to reward them with a long and loyal relationship."  
--Sallie Burnett, Forbes Magazine

Why are we introducing a quote at the top of this article that sounds like a conclusion? Because it's vital that you understand the importance of communicating with your customers. Your loyalty rewards program is a communication tool, first and foremost. And strong communication leads to strong relationships. What do strong relationships lead to when there is a bond building between your retail brand and your customers? 

The answer is customer loyalty, customer retention, and overall business success. 

1. COMMUNICATION IS KEY

Have you ever heard the expression "you never get a second chance to make a first impression"? It might sound severe, but we all know it's true. A first impression is exactly that--a one and only chance. It's easy to keep this in mind when you're heading into an important job interview or a promising blind date, but this expression and the rule it represents also applies to the first impression that your retail brand makes with your customers. 

During this first impression, you have an opportunity to communicate to the customer what your brand is all about, and once the customer is acquainted with your retail store, the communication should be two-way and last a lifetime. Your loyalty program can both start and maintain this two-way conversation. Be mindful to commit yourself to the relationship. On the one hand, you must be prepared to regularly reach out to your loyal customers. On the other hand, you should provide your customers with multiple ways to contact you with their questions, concerns, and customer service needs. Can your loyal customers reach you easily via your website, social media, direct email, and your loyalty program's mobile app? If not, it's time to build these lines of communication. Remember, communication needs to flow both ways.

2. JOINING INCENTIVE

What's in it for the shopper? This is a critical question you must ask yourself. Why would one of your shoppers actually sign up for your retail store's loyalty program? If the answer that comes to mind is as simple as, "because the customer will get a deal on goods or services once they've spent enough money", then your rewards program is not going to attract anyone. It certainly isn't going to inspire members to shop frequently, exclusively, and generously at your store. 

Your loyalty rewards program needs to make a strong, positive first impression with your shoppers if you want them to join. What will the shopper receive right here and now if they join? What is the points earning system? And how will they be rewarded long term? The answers to these three questions will make or break your loyalty program, and you need to be able to answer them in three sentences or less. Keep the answer as concise as possible and make sure your sales staff can verbalize it easily at the check-out counter. Include it on your website and display it on your in-store digital signage. Offering a joining incentive doesn't have to negatively impact your bottom line, either. You don't have to give away free merchandise or a highly sought after service that will cause you to lose money in the long run. As you read on, you'll discover creative alternatives to redemption items that won't cost you much at all--psst, pay close attention to the "offer unlocked online content rewards" section. The main takeaway here is that if you can't quickly communicate to your shoppers what they'll gain from your rewards program immediately, in the short term, and in the long term, then they aren't going to sign up.

3. GET THE WORD OUT

Now that you're crystal clear on what your loyalty rewards program is all about and you're confident that you and your sales staff can communicate the benefits with speed and ease, it's time to get the word out. Shoppers are not going to know about your customer rewards program unless you tell them. There are many ways to do this and platforms on which to do it. In order to cover your bases and be as thorough as possible, you're going to want to do as many of these as possible to get the word out and generate an interest for customers.

Market your loyalty rewards program using the three concise sentences that you devised based on the "joining incentive" section above. But where exactly should you "market"? First, your in-store sales staff must be trained and comfortable with communicating this three-sentence "pitch" to every customer they come into contact with. The shoppers who are already in your store are the most likely to join. Why? They obviously like what you're selling! They're here, aren't they? Your sales staff are in the best position to nudge your shoppers in the right direction. Secondly, it's important to differentiate free marketing versus paid advertising. If you can afford to do both, then great! If you can only invest your time, and not funds, then stick to free marketing. As your business grows, you may eventually be in a position to allocate a marketing budget. Free marketing avenues include social media, press releases, in-store signage, and emailing your current shoppers if your POS system has collected their contact information. Paid advertisement avenues include online ad spots, newspaper ads, and paid ads on large social media platforms, namely Facebook, Instagram, and Twitter.  

4. PUT A TIME LIMIT ON IT

Okay! You're committed to building a relationship with your customers via strong and frequent communication. You've devised a clear, communicable loyalty program pitch. And you've gotten the word out by distributing your program pitch in a massive marketing effort. Phew! You are now ready to take a look at the rewards structures that you've set up within your loyalty rewards program. There are numerous ways to set up rewards structures and we aren't going to delve into those ways here. In fact, we've already dedicated an article to that subject called, Different Types of Loyalty Programs, and we encourage you to check it out if you're still in the phase of structuring the your loyalty program.

Instead of retreading the same ground, this section is going to shine a big, fat spotlight on the most effective incentive tactic out there...otherwise known as "put a time limit on it". What does this mean? It means that whatever loyalty program strategy or strategies you have in place, whether it's a straightforward points-based program, tiered program, value-based program, VIP program, gamified program, etc., if you place a time limit on it, it will be more successful. If this doesn't fully make sense yet, that's okay. Let's go deeper. For example, rather than state that for every ten coffees bought, the member will get one free coffee, instead implement this: for every ten coffees bought within a week, the member will get one free coffee. Instilling a ticking clock will add excitement to your program and effectively motivate your loyal customers to keep buying so that they don't miss out. 

5. OFFER UNLOCKED ONLINE CONTENT REWARDS

Earlier in this article, we mentioned that getting creative in terms of the actual rewards you offer can be a clever way to save money. Move away from offering "dollar-backed" rewards and instead use experiential rewards. Interestingly, today’s consumers appreciate enhanced experiences more than they appreciate free goods. 

Right now, the most popular and effective "experience" that loyalty members prefer to redeem their earned points for is locked online content. "Locked online content” is a digital item that no one has access to unless they become a loyalty member and apply earned points towards redeeming the content. A great example of this is offering an e-book as a reward. For example, a pet retailer could implement a tiered rewards program where the loyalty customer will receive a special series of pet owner’s e-books when they reach the first, second, and final tiers of the program. Ask yourself, what industry does your retail store fall within? What special content might your loyal customers appreciate? How can you develop and offer digital content that members will be excited to unlock using their hard-earned rewards points? The more creative you get, the more your customers will appreciate the rewards!

6. ESTABLISH CULT LOYALTY

Are you familiar with the term "legacy loyalty"? This retail term commonly refers to store-loyal customers, but the connotation associated with "legacy loyal" is actually very specific. A customer who is so familiar with a store that they patronize it out of habit more than enthusiasm is said to be "legacy loyal". People tend to be creatures of habit, which means that shoppers are likely to get into a routine of accidental loyalty when a particular retail store is convenient. Any kind of loyalty is beneficial, but your customers should choose your store for better reasons than because they're in the robotic habit. This is where "cult loyalty" comes in. 

As opposed to legacy loyalty, which is all about habit and convenience, "cult loyalty" refers to a deeper, intertwined relationship between the customer and the brand. This deeply connected relationship has the power to influence the shopper's sense of identity. The best example of the depth of cult loyalty and a brand's influence over a shopper’s identity emerged from the tech giant, Apple. If you think about Apple's branding and recall the messaging in its product advertising, then you'll gain a sense of what we're talking about. The Apple consumer considers themselves part of the technological innovations that they buy and use. Ever try to convince an iPhone user to switch to an Android? It never goes well. Apple users identify with the brand and are innately cult loyal because of it. So, ask yourself, how can you foster cult loyalty among your customers? In what ways can you tailor your loyalty rewards program so that the members begin to identify with your brand? 

7. IMPLEMENT GAMIFICATION

Yes, you read that correctly--"implement gamification. You’re probably asking yourself right now, what does gamification have to do with your customer loyalty rewards program? If the purpose of using a loyalty program at your retail store is to increase customer retention and maximize profits, what do games have to do with attaining that goal? 

Everything.

Games are fun. Don't forget, most loyalty rewards programs are old, boring, and dusty. They all look the same to the consumer, and worse, these days shoppers have loyalty rewards cards for literally every store they shop at. Implementing games as part of your loyalty incentives is one of the best ways to make your retail store stand out from the competition, and better yet, stand out in the consumers' minds. You can add a gaming element to any rewards incentive structure. We're so enthusiastic about this success strategy in fact, that we've dedicated an entire blog article to the topic, How to Gamify Your Loyalty Program. For specific tips, tricks, and tactics to alter your rewards incentives so that they're gamified, be sure to give that article a thorough read. But for now, we'll summarize by saying that in order to gamify your program, all you need to do is add a fun and social spin to the points-earning systems you already have in place. Also, gamifying your rewards program works best when it comes with a mobile app that your customers can use. Instill healthy competition among users, make playing and winning straightforward, and include surprising rewards that are "small but thoughtful" whenever your loyalty customers play, such as a modest amount of bonus rewards points. 

8. CONSTANT CONTACT

This is the eighth and final tip of our 8 tips for creating a successful loyalty program in 2020, and it has everything to do with the first tip--"communication is key". You must maintain communication with your loyalty customers, which is why we've titled this section "constant contact". In order to hold your members' attention and keep them working towards redeeming earned points on big-ticket items, you need to get into a consistent habit of reaching out, but only in helpful--never obnoxious--ways. Doing so will strengthen your relationship with them and build your brand identity in their hearts.

Firstly, identify your loyal customers and segment them into groups according to demographics and the types of goods or services they prefer. Then, according to these specific groups, you can issue personalized marketing campaigns that include new products and services they would be interested in. You want your customers to feel as though you know them to the extent that you can accurately predict the items they are going to be excited about buying, similar to a close friend. What other information can you contact them with that they will consider helpful? Points-earned statements are highly appreciated, especially when those emailed--or texted--statements note how many more points the customer needs to earn in order to be eligible to start redeeming. When these statements also include attention-grabbing images of recommended items or services, the marketing effort will be all the more effective at enticing your customers back into your retail store. 

At the core of all of these tips you will find the importance of communicating with and listening to your loyalty customers. As you implement these specific tips, you'll need to monitor how each strategy is working. Look at the data and analyze how your campaigns are performing and make adjustments along the way. Pay attention to your acquisition rate and also how the lifetime value of your returning customers is either rising, plateauing, or falling. The data will communicate what your loyalty customers really think of your program. Listen, respond, and watch your business grow.

Now that you know how to create an effective loyalty rewards program for your retail store, you might want to take a closer look at the Best Loyalty Program Practices, Why Is Customer Loyalty Important? and How to Calculate Customer Lifetime Value to Maximize ROI! 

If you're interested in learning about Loyal~n~Save and what our loyalty strategists can do for your retail store, feel free to Contact Us at any time!

This article was written by Loyal~n~Save, an omni-channel customer loyalty solution for retailers looking to increase customer retention and new customer acquisition.
Mira Gibson
Mira Gibson

Mira Gibson is a Loyalty Strategist at Loyal~n~Save where she develops innovative marketing strategies for small businesses. She is a content machine and advocates that marketing consistency and frequency is tantamount to success. She’s a passionate writer, avid reader, and she also manages a political blog in her spare time.