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Build Customer Loyalty with a Successful Loyalty Program

piggy bank with coins

Increasing customer retention rates have proven beneficial in reducing acquisition costs, expanding customer lifetime value and maintaining customer engagement.  A loyalty program is an essential need in creating real customer loyalty but according to a study by CapGemini, 53% of loyalty programs are failing. Here are some do’s and don’ts when considering how to move your audience towards “loyalty” creating value in your brand and turning happy customers in to brand advocates.


Don’t

  • Make rigid rewards with low value and no relevancy to your guests

I have seen businesses use overstocked products which didn’t perform well in the first place as a reward for increasing order value or soliciting a new purchase. Don’t create a reward system that offers something of little to no value in exchange for a desired action. This lowers interest and engagement with your rewards programs.

  • Make it difficult to rack up and spend rewards

If you are offering a rewards program, make sure it’s seamless across all your channels. Whether a guest is spending online, or in person their rewards should be easy to accrue and easy to access. A great example is the Key Rewards Program available across all Williams Sonoma brands. They make it simple to spend online or in store while gathering points across all brands and aggregating them in to one account.

  • Ignore Customer Service

This should be a core focus whether or not you have a rewards program. Offering customers an answer to common problems and specific ones in a timely manner is key to building brand trust, removing obstacles on the path to purpose and collecting vital data on how you can improve your processes.

You’ve made your program accessible and focused on customer experience, but now you need to keep them engaged with your program. Here are some recommendations for building a rewarding program that feeds into loyalty based on some of the top rewards programs available. 

Do:

  • Make it worth their while

I mentioned before that using stale inventory you couldn’t move in the first place, is probably not the best incentive for convincing a guest to purchase again or continue engagement with your brand. So what can you offer? A study in 2014 stated 57% of guests were part of a loyalty program to receive some kind of discount. Understand what your customers are engaging with you for and where they find value in your services. Base your rewards off of this. If it’s a discount, ask them to increase order value. By adding tiers to the offers, you can incentivize guests to gradually spend more in order to have access to higher discounts. 

  • Enhance their experience

Benefits for loyalty can be primarily monetary ones, but that’s not what adds brand value. As a provider, get an understanding for what other benefits you can offer to enhance their experience and increase engagement with your brand. A great example is FabFitFun’s exclusive community. As a member, you also receive access to their gated community which features special announcements, Q&A’s with brand buyers and occasionally a drop-in visit from some of the brands they work with. Where else can you talk to the creator of some of your favorite brands one on one? Now that’s VIP treatment.

  • Keep it Simple

This is straightforward but should not be treated as a one size fits all recommendation. If your goal is to encourage more frequent purchases consider a straightforward points-based system that accumulates the more you shop, eventually leading to a free item or some monetary value. If your goal is to increase average order value, consider skipping the complex rewards tiers and simplify it to spend $25, save 10% but spend $50 and save $20%. This makes it crystal clear how to engage with the offer and what they are getting in return.

Customer loyalty has the ability to drastically impact your growth, businesses financial performance and customer retention. While this is just an outline of the do’s and don’ts when setting up a customer loyalty program, it’s a great first step ensure your strategy starts with your best foot forward.

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