A customer loyalty program is a rewards-based marketing effort that provides incentives to repeat customers who demonstrate loyal buying behavior. When customers are rewarded for their loyalty and receive discounts, deals, and freebies in return, business revenue increases. The structured and long-term incentives of a customer loyalty program encourage shoppers to buy more frequently and more quantity than they ordinarily would, which leads to overall loyalty program growth.
If you haven’t already read our articles, What Is A Loyalty Program and Loyalty Program Types, take a moment to do that now. Otherwise, stay with us as we go over the 7 best loyalty program practices to implement at your business today.
“The primary objective of a loyalty program is to retain existing customers by encouraging them to buy more. Growth is one of the key goals of any business and the common growth strategies include acquiring new customers and retaining existing customers.” -- Pat Research, Inc.
Customer Loyalty Best Practices #1 – Define Clear Goals
The financial objectives of your customer loyalty program should be clear. Start by defining the specific actions and goals of your program. How much are you willing to discount select items in order to stimulate customer spending? If you’re using a points-based system, define the value of each point and also how many points must be accumulated before rewards are redeemed. Have you been tracking your customers’ buying habits already and if so, what would you like to change? Once you define clear goals for your program, other aspects will automatically fall into place.
Customer Loyalty Best Practices #2 – Focus on the Customer
Understand your customers first, then build your loyalty program around them. Your loyalty rewards program is about fulfilling your customers’ needs first and foremost, not about the products and services you offer. You’ll need to take time to familiarize yourself with studying the analytics of your customers’ spending habits, which your loyalty program platform records. You can then use this information to target a group and structure a promotion according to the group you’ve identified. If you get in good habits of paying attention to individual customers, groups, and trends, you can personalize your promotional marketing efforts to ensure success with each campaign.
Customer Loyalty Best Practices #3 – Utilize Customer Data
An extension of the second-best practice—focusing on the customer—is utilizing customer data. If you’ve gotten into the practice of monitoring trends among your customers, identifying groups, and implementing promotional campaigns that are personalized, then this best practice will come naturally, which is to generate data reports to study demographic and other trends. Because customer loyalty programs allow marketers to export customer data, it’s important that you get into this practice and use the information to tailor your next targeted campaign.
“Seventy-nine percent of consumers surveyed said personalized service from a sales associate is an important factor when determining where to shop.” -- Marc Castrechini, VP TSYS Merchant Solutions
Customer Loyalty Best Practices #4 – Meet Your Customer’s Needs
Now that you’re familiar with using the analytics of your loyalty rewards program to create even more successful promotional campaigns, meeting the needs of your customers should come easily. You will want to be sure that your loyalty program is aligned with your customers’ needs, preferences, and interests. And if you realize it isn’t, then take the time to adjust your campaigns accordingly. The most effective customer loyalty programs align with what the customer wants in terms of products and services. Brand messaging also matters. When a customer feels connected to your brand, that person naturally becomes loyal. The more connection you can foster, the more loyal your customers will be towards your business and that’s how you make your brand loyalty program successful.
Customer Loyalty Best Practices #5 – Reward Customers
Spending is a behavior and a customer rewards program should reward behavior, but there are many different ways to do that. So many, in fact, that we’ve actually written a whole article about it, Loyalty Program Types. While there are many strategies you can implement to reward your customers, such as points-based, tiered-based, VIP, and gamification, the most important aspect to keep in mind when it comes to upholding retail loyalty program best practices is that all of your customers are different people with different spending habits. If a specific customer only buys items under $10, you’re going to want to target them with a campaign that incentivizes that person to buy those low-cost items in bulk, for example, and not waste your time trying to sell them an expensive product or service.
Customer Loyalty Best Practices #6 – Use Simple Rules
Align your customers’ expectations with attainable rewards. To do this, there should be minimal restrictions in your loyalty program and the rules should be basic. Instead of publicizing offers that customers are unlikely to act on—because they’re unattainable—try rather focus on highlighting products and services that are well within your customers’ reach. If you can’t tell, be sure to track customer habits for insights. In short, only offer rewards you can deliver and you will stay in rewards program best practices.
Customer Loyalty Best Practices #7 – Create a Flexible Program
Try to make your loyalty program as flexible as possible. If you’re currently only offering points, try incorporating a tiered-based strategy with it. If you’ve only done deals and discounts, but never freebies, why not throw some in? Play around with setting the points so that you find the sweet spot to maximize ROI. Not every promotional campaign is going to be a hit, and that’s okay because you can make adjustments. Nothing is forever or written in stone. It’s most important that you offer flexibility to your customers and uphold this best practice. Trust us, your customers will notice and appreciate it, which will make them even more loyal.
Those are the 7 best loyalty practices. If you’re ready to invest in a loyalty program, we can help. Click here to see what Loyal~n~Save can do for you!
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.