How To Create A Customer Loyalty Program From Scratch

Customer loyalty programs are an excellent tool for giving back to the loyal group of individuals and companies who support your business ventures. Before you turn to your competitors to see how they structure their loyalty programs, you must instead turn towards the customer and ask yourself, “what does your customer need?” In the words of Jeff Bezos, “we see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better. … If you’re competitor-focused, you have to wait until there is a competitor doing something. Being customer-focused allows you to be more pioneering.” Through these words of wisdom you can structure your approach to creating a customer loyalty program from scratch.

Tips To Remember When Creating a Customer Loyalty Program

The customer is always right. This is a common mantra that any marketer and business owner has heard for generations. However, the phrase has received new meaning in the age of the Internet. [Remember that] “if you make customers unhappy in the physical world, they might each tell six friends. If you make customers unhappy on the internet, they can each tell 6,000” (Jeff Bezos). And so, you must take the time needed to understand your customers, so that you can create a loyalty program that is beneficial and will be shared with those “6,000 digital acquaintances.”

Tip #1: Establish A Clear Goal

If customers aren’t given a clear finish line (or multiple achievement points) then they will lose interest in your customer loyalty program. To avoid the latter issue, answer the following questions before you start your customer loyalty program:

• What type of behavior do I want to reward?
• What should the reward be? (More on answering this question in Tip #2.)
• How often do I want to give rewards?
• Can any customer enter the loyalty program?
• Will there be different levels to the reward program? (Once again, more on answering this question in Tip #2.)
• What do I want to achieve with the reward program?

Tip #2: Structure Your Rewards Carefully

You must be careful to structure your rewards so that they achieve a balance between creating a sustainable program and achievable rewards (that are in fact rewards and not simply giveaways). Whether you choose to require customers to spend a certain amount of money on products or services, or want them to achieve a certain number of visits (if you have a physical store or location), you must create a program that supports your business goals. For example, your goals might be to: give back to loyal customers, provide an incentive for existing customers to refer new customers, or simultaneously reward social media engagement from existing customers. No matter your goals, the customer loyalty program should be designed to support the rewards without limiting your financial gains.

Tip #3: Be Creative

Rewards don’t have to come at a high cost to your business. However, your rewards should creatively provide an incentive to customers. Incentives can come in a wide variety of forms including points to be traded in, discounts, and other types of monetary rewards. Above all, the loyalty program should be designed to differentiate between products, services, and the rewards offered to customers that are based on purchasing patterns and profitability. For example, “gold” members might receive better deals over the “silver” members, who receive better deals than the “bronze” members. No matter what style of customer loyalty program you implement, if you want it to succeed in the long run, then you need to ensure that customers have a reason to become more loyal towards your company via an increase in purchasing patterns.

Tip #4: Create A Program That Is Easily Understood And Promoted.

When you are creating a loyalty program from scratch it is important that you create something that can be easily understood by your employees and customers. Additionally, the program needs to be easy to promote via the digital publication channels that are managed by your Content Management System (CMS). Whether you choose to advertise the new program via your email newsletter, add it to your social media pages, write about it on your blog, or create a separate webpage that highlights its benefits, you must spread the word. You might even consider partnering with other businesses to further promote the program in a low-cost fashion.

Tip #5: Keep It Fun

As you consider the various levels and incentives associated with your customer loyalty program, you should always remember to keep it fun. Customers don’t want to partake in something that isn’t enjoyable. In fact, it should be as hassle-free as possible, while simultaneously playing to the inner competitor that exists in all of us. In a recent survey of staff, faculty, and students, the Harvard School of Public Health, discovered that the majority of respondents favored relative over absolute advantage. This competitive advantage can be used as you design the psychology of your customer loyalty program. In other words, it is human nature to not only “keep up with the Joneses,” but to stay one step ahead of them via a relative advantage.

Understanding The Role Of Ego In a Customer Loyalty Program

The final ingredient that you must factor into your customer loyalty program is that of the ego. Your customers are not only going to join a program for the incentives that it delivers, but also for the feeling of superiority it provides. A prime example of this superiority is the manner with which airline passengers strive to board the plane first. It doesn’t matter that the plane can’t leave until everyone is boarded. People like to use the incentive of being a “medallion member” to gain entry first. It is this feeling of superiority, which is driven by ego, that makes airline customer loyalty programs so successful.

In conclusion, building your customer loyalty program from scratch will require you to first establish clear goals. Secondly, determine what reward or incentive you can provide that will result in a happy customer, as well as an increase in purchasing patterns. Thirdly, design a program that is creative, fun, and easily promoted. Finally, your customer loyalty program must play to the specific ego(s) and competitive nature of your customers. Together, the latter ingredients will deliver a customer loyalty program that is rewarding to both your business and its customers.