How to Create a Customer Loyalty Program that Gets Results

It’s widely known that it takes less money to retain a customer than to procure a new one, which is why it’s so critical to find tangible ways to build a customer loyalty program.

Enter the venerable customer loyalty program. Chances are you’re a member of a dozen or so — from the espresso punch card at your local coffee shop to a paid membership program like Sam’s Club or Costco.

Some of these may add value to your life as a consumer, but just think about how many unused cards you have languishing in the back of your wallet or kitchen junk drawer.

The truth is that customer loyalty programs are a dime a dozen, and your customers are dealing with the same dilemma as you are.

How do you prove to customers that your program is worth joining?

Brand your customer loyalty program

Branding your loyalty program is an often-overlooked step. By branding your program — and even dubbing your followers with a catchy tribe name — you can help create a sense of identity to connect your customers with your company.

Think about Sephora’s three-tier program: Beauty Insider, VIB (Very Important Beauty Insider) and VIB Rouge. Or Cathay Pacific Airways’ frequent flier program, the Marco Polo Club. Both companies’ programs evoke a sense of community.

customer loyalty program

Celebrate birthdays — with a twist

Who doesn’t love a gift on their birthday? Giving customers a discount or freebie on their birthdays is a popular way of saying thank you. So popular, however, that some customers are inundated with promotional emails on the Big Day.

Try giving customers a twist on the usual birthday offer. For example, why not celebrate their half-birthday with a special gift? Or, send them an email coupon a week after the date wishing a happy belated birthday (and maybe taking advantage of the birthday money they may have received).

Read more: Does Your Site Make Every Customer Feel Special?

Reward referrals & social sharing

Word of mouth is a valuable way to gain new loyal customers — why not encourage referrals and social sharing by building rewards into your customer loyalty program?

You could set this up in a few ways: either reward customers with a small amount of points per share or referral, or offer a larger bonus every time a customer’s referral makes a purchase.

By doing the latter, you can set up the reward based on how much you’re willing to pay to acquire a customer.

Double the fun with bonus points days

Need a boost in the slow season, or looking to attract customers during highly competitive days like Cyber Monday or Black Friday? Give loyalty club members an extra incentive to shop by offering double points.

It’s an effective way to stand out against the competition and create a spike in sales.

Seek strategic partnerships

Partnering with another brand to offer complementary rewards can be a great way to both cross-promote your products to their audience — and to spice up your loyalty program.

Try connecting with other companies who share a mission, a geographic location, or compatible product.

Make social responsibility the reward

You don’t necessarily need to give the reward to the customer themselves: Consumers love a chance to give back.

Returning a small financial amount (say, 1-2% of the purchase) to your customer may not add up to much of an incentive. But that same amount from every customer can add up to a substantial donation to a worthy organization.

Match the charity with the values that your customers care about, then reward your loyalty club members by keeping them updated with stories about the good their money is doing out in the world.

customer loyalty program

Give customers a head start

Professors Joseph Nunes and Xavier Dreze came up with a fascinating finding about successful customer loyalty programs, which they entitled “The Endowed Progress Effect.” Basically, they set up two different loyalty punch cards.

The first was a standard “buy 8 car washes, get 1 free” offer. The second was styled as “buy 10 car washes, get 1 free,” but two slots were already stamped.

Both groups had to purchase the same amount to get a reward, but because the second group had a psychological head start in finishing the card, they had nearly double the amount of completion rate.

(Read about the study on HelpScout.)

Consider giving a customer a “signing bonus” when they join your loyalty program. (Think about airlines’ offers — if you sign up before we land, you get an extra bonus.)

Read more: 5 Ways to Create a Personalized Shopping Experience

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