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6 Steps to Creating an Effective Customer Loyalty Program

You can’t build a successful business based on selling to a wide audience of one-time customers. You might make a quick buck if you have a superior product or service and a great marketing plan. But you’ll run out of customers or you’ll burn through your marketing budget pretty quickly trying to bring in new business. Then what?

The optimal scenario for your company is to create a growing base of loyal customers who not only buy, but buy frequently, who buy increasingly profitable products/services over an extended life span, and who refer new customers to you.

Sounds perfect, right? But how do you transform a new buyer into a loyal client?

Here are six steps to building a customer loyalty program whether you’re a single-store B2C retail shop or a multi-location B2B service organization.

1. Set up rules and guidelines for your customer loyalty program.

Loose, subjective rules that require impromptu decisions as to who qualifies for your loyalty program and what benefits they receive can create more problems than profits. By defining your program before you launch it, you will increase customer appreciation, which will ultimately help improve your brand identity and awareness … and your bottom line.

Here are three key elements to consider for your program:

  • Set your goals on creating deeper relationships with customers, better reviews, and greater exposure for your brand.
  • Consider tiers for your program based upon how much customers spend, the number of prospects they refer to you, or the length of time they’ve been with you.
  • Focus on customer benefit over company sales.

2. Choose the right reward.

Not every industry or customer-type has the same motivation for choosing to remain loyal to a business. While customer loyalty programs can help strengthen your brand and build awareness, focusing on rewards that offer the most value for your customers is far more important than mass-produced gifts stamped with your logo on them. By focusing on making your customers feel special, you will create a far more positive impact to your bottom line than if you create rewards that seem to be merely an incentive to buy more.

For example, if you operate a family restaurant, you may want to create a “Wall of Fame” where you put up a plaque with your loyal customers’ names or pictures. Or if you’re a hi-tech corporation, you might consider creating a program whereby your best customers get access to advance releases of your products/services before you roll them out to the general market.

While these specific forms of appreciation may not be right for your particular business, the same principles apply. When you can elevate your customers to a celebrity-status or provide them a competitive advantage, it increases the chances that your customers will return the favor by bragging about your business to their circle of friends and colleagues, which helps create better visibility and likability for your brand.

3. Create an easy-to-use system.

Ease of use for your customers and employees is critical. Think about your ideal customers that you want in your program. What’s the easiest way for them to join? Is it to fill out a paper form that ships with a product, or to complete a form online? Once they become a member of the program, can they access the benefits with a loyalty card, or do you provide them with a special log in to your system where they can access the rewards when they want to? Whatever methods you choose, remember to make it easy for your customers.

4. Train your team.

Second only in importance to ease-of-use is your teams ability to make your loyal customers feel special. When you create a loyalty program, train the people on your team who have the most interaction with the customers. This includes any staff, from salespeople, to servers, and any customer service staff who may have a direct interaction with your customer base. If your customers have questions about your loyalty program, you want to be able to provide them with quick answers and service. Your frontline team should be able to handle these scenarios without passing your customers on to multiple people.

5. Market your program.

When you’re creating the marketing for your program, take a multiple “touch” approach. First, market your program to customers for awareness and incentive, followed by additional marketing when they join the program with new information about your business so they know of all of the great products/services you offer that they can take advantage of as a member. In a typical sales cycle, you need to “touch” a customer multiple times before they make a buying decision. When you provide them with a specific reward, you’re far more likely to catch their attention and get them to take action quicker. This will reduce your marketing spend, generate additional sales, and create ambassadors for your business who use word of mouth and social media to spread the good news about your business.

6. Track participants, rewards and ROI.

Tracking activity and progress is essential to maximizing your ability to create better relationships with your customers and achieve maximum profitability. To make your customers feel truly special, you need to go beyond welcoming them into a program. It helps when you interact with them if you can refer back to their last visit or purchase, and make recommendations for current products/services that match their particular wants and needs. Plus, if you do create a tiered program, you can build excitement by notifying customers as they approach a new level and welcome them to their new status as a preferred customer when they achieve it.

And let’s not forget about the bottom line. A well managed program creates greater opportunities for success. By tracking the ROI of your customer loyalty program, you will be able to adjust your marketing, the rules of the program and the rewards accordingly to create a win-win for your business and your customers.

For more information about how to create an effective customer loyalty program as part of your business’s strategic marketing plan, call us at (410) 366-9479 ext. 2#. 

Dina Wasmer is President of Incite Creative, a marketing and graphic design firm that provides brand-building services and strategies for small-to-middle-market businesses and non-profit organizations in the Mid-Atlantic region. Additionally, Dina is an adjunct professor at the University of Baltimore teaching typography and graphic design principles. For more information, log onto www.incitecreativeinc.com or contact dina@incitecreativeinc.com

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