Loyalty Programmes: How do you make them work?

So you want to build customer loyalty. Loyal customers are huge assets, and generate a significant amount of revenue for you. Plus, for each additional year that you serve them, they become less costly too. In turn, they buy more from you, pay you the best prices, and bring in more consumers through referrals.

So what’s your plan for building loyalty? Which approach do you think works best? Let’s talk about what’s most effective. Reward and loyalty programmes are strategies that guarantee success if you want your customers to become more loyal and stay with you.

Customer reward programmes have been around for long enough and tried out by many brands. We’ve often see airlines offer frequent flier programmes and telecom companies reduce their rates while giving out the additional volume. In essence, reward programmes build customer loyalty. But does it always? A part of the equation is to implement the programme correctly, which may not be so.

Many companies treat loyalty programmes as a means of temporary promotion or special monthly giveaways.  When this is the approach, rewards programmes may offer some motivation to your consumers, but they only return a fraction of their value and don’t really build loyalty. For them to do wonders for your company you must plan and implement rewards systems as a long-term strategy. And in the process, you continue to educate your customers and give them more and more reasons to stay with you.

So what’s the core concept?

Every loyalty programme out there is based on a simple concept: you reward our customers whenever they take an action that is desirable for you. For instance, you can award them points for buying from you, rating you, leaving feedback or anything else.

What are the essential components?

Making customer loyalty programmes work for you means that you should focus on each of the following components.

What do you want to give out rewards for?

Think about desirable actions like making purchases, rating, referrals, and registrations. Allot each action a specific number of points which your customers would earn when they take it. Needless to say, most of the points should be for purchases that are made.

How would your customers use the rewards?

When your customers have earned points, they should be able to use them in some way.  Many businesses mess up here, so think through this carefully. Whatever method you decide, it should be easy for your customers to earn and redeem points.

What is in it for the customers?

The focus of your programme should be the rewards you award; this is what would entice your potential consumers. Your rewards should be good enough for your customers to buy from you again and again.  For instance, you can offer them free shipping, discounts, and even cash back offers.  Considering this aspect: here’s a little tip: start with a single reward; usually, such programmes are easier to manage, and often outperform complicated loyalty programmes.

What rules do you want to enforce?

Enforce some rules so that the programme isn’t misused.