7 min read
Jan 2, 2025
You've researched your customers, designed your loyalty program, and released it into the wild. Job done. Time to sit back and relax, right? Not quite. Creating a customer loyalty program is only the first step. To keep members engaged now and in the future, you must refine your program continuously.
Here are 11 loyalty program best practices that will help you get maximum value from yours.
What is a loyalty program?
A marketing strategy that rewards customers for buying your products or using your services. Aside from giving customers a compelling reason to choose you over your competitors, the benefits of loyalty programs range from helping you attract new customers to forging stronger relationships with existing ones.
Loyalty Program Best Practices
1. Know Your Customers
To design a loyalty program that resonates with your customers, you must first understand what they want and need.
Do they want to make their money go further? Are they looking for opportunities to share their passion for your products? Answering questions like these will help you develop member profiles and audience segments so you can deliver more rewarding experiences and build stronger connections.
Data is the key to unlocking these deeper member insights. This falls into two broad categories:
- Demographic (quantitative) data. E.g., age, gender, location
- Psychographic (qualitative) data. E.g., attitudes and preferences
For the best results, collect both.
2. Define Your Goals and KPIs
Setting clear, achievable goals will help to determine the shape your loyalty program takes. Do you want to increase repeat purchases? Consider an earn-and-burn program that provides a range of rewards and entry methods. Looking to strengthen relationships with your top spenders? Try a tiered program that reserves the best rewards for your biggest advocates.
It's equally important to set key performance indicators (KPIs). After all, you won't know if you've succeeded if you don't monitor your progress.
Finding the right KPIs depends on your goals, but common ones include:
- Member acquisition
- Customer retention
- Reward redemption
- Repeat purchase
- Effort score
Review your goals and KPIs regularly to ensure they align with your customer loyalty strategy.
3. Set Team Responsibilities
One loyalty program best practice brands often overlook is accountability.
Managing a loyalty program requires careful coordination with multiple team members. As you start building your program, meet with key stakeholders to ensure everyone knows their responsibilities and what's expected of them. A typical team might look like this:
- Loyalty manager: responsible for creating and executing your loyalty program strategy. This includes coordinating with other stakeholders to ensure everything runs smoothly.
- Software specialist: responsible for configuring your customer loyalty platform, ensuring it integrates seamlessly with your tech stack.
- Marketing manager: responsible for raising program awareness and maximizing participation through strategic marketing initiatives.
- Data analyst: responsible for analyzing loyalty platform data to identify shopping patterns and behavioral trends.
4. Integrate Your Tech Stack
Today’s loyalty programs run on sophisticated software. To minimise disruption and unify your data, it's crucial your loyalty software integrates seamlessly with your wider tech stack. This includes your:
- Point of sale (PoS) system
- Customer relationship management (CRM) software
- E-commerce tools
- Customer Data Platform (CDP)
Snipp tip
For minimal disruption, choose a customer loyalty platform provider with a flexible API. This makes it easier to integrate with third-party tools and enables you to customize your solution with optional add-ons.
5. Lower Your Entry Barriers
Simplicity is essential to a successful loyalty program. Research shows that customers gravitate towards programs that are easy to join and use. Simple sign-up and points/reward earning rules, a user-friendly program website or mobile app, and a straightforward reward redemption process all help to reduce friction. This makes it easier to attract new members and satisfy existing ones.
6. Segment and Personalize
The most effective loyalty program best practices are often the most obvious. As you start putting your program together, use the data you’ve already collected to identify your key member segments. These might be based on location, lifetime value, or even shared interests.
Segmenting your members enables you to create personalized experiences, rewards, and marketing campaigns. 78% of customers are likelier to make repeat purchases from brands that personalize their communications. Why? Because it shows you understand and respect their needs.
7. Provide Extensive 'Earn' Options
Traditional earn-and-burn loyalty programs remain a firm favorite among customers. Every purchase earns points, which members can exchange for rewards. In tiered programs, members gain access to better rewards as they reach new levels – incentivizing repeat purchases. This makes them ideal for B2B channel incentive programs, where you need every advantage to keep partners engaged.
For greater engagement, allow members to earn points through non-purchase interactions, such as:
- Writing product reviews
- Referring a friend or family member
- Sharing posts on social media
- Completing customer surveys
- Participating in community events
Earn-and-burn programs are easy to understand and use. They’re also quick to set up and scale, making them ideal for brands with limited resources.
8. Offer Relevant Rewards (burn)
Everyone likes a cash prize, but the most successful brands offer unique and relevant rewards that match each member's individual preferences for maximum engagement. It stands to reason. A one-month gym membership is more likely to resonate with members of a health food brand’s loyalty program than a $150 hamper full of candy.
Today’s customer rewards platforms offer numerous options beyond traditional cash-backs and discounts, including:
- Early access to new or limited edition products
- VIP discounts
- Access to members-only events
- Experiential rewards
- Charitable donations
Depending on your members, you could also include ESG-based incentives. For example, reward members for adopting eco-friendly practices, like food waste recycling.
9. Make it Omnichannel
Every customer is different. While some like to engage with your brand in-store, others prefer the convenience of a digital customer loyalty app. Connecting your online and offline channels allows you to deliver a seamless experiences across every customer touchpoint – so members can engage with your program wherever, whenever, and however works best for them.
10. Engage with Your Members
Email newsletters, surveys, feedback forms, and social media have made it easier than ever for brands to connect with their customers. The trick to keeping them engaged is to reach out regularly.
Social media polls are a great way to get loyalty program members to interact with your brand, while providing valuable insights into their preferences. Alternatively, invite members to share user-generated content (UGC). This could be anything from reviews to TikTok videos of them using your products. If possible, incorporate gamification into your program. Weekly leaderboards, challenges, and quizzes encourage members to interact with your brand beyond the cash register.
11. Refresh, Optimize, and Innovate
When it comes to customer loyalty, you can't afford to take your foot off the gas. Preferences change. New trends emerge. The only way to keep up is to monitor and evolve your offering constantly.
Customer loyalty platforms provide a wealth of data to help you pinpoint what works and what doesn't. This ranges from macro customer engagement and sales data in-depth member basket analysis. For more qualitative insights, conduct regular member surveys. Candid feedback helps you gauge member sentiment towards key aspects of your program over time. For example, reward relevance or perceived value. You can then use these insights to fine-tune your program.
Ready to Win Customer Loyalty?
Customer loyalty is like a constantly shifting game. Just when you think you’ve cracked it, the rules change. But by adopting these loyalty program best practices, you can stay one step ahead and outplay your competitors.
Dec 23, 2024
2 min read
