August 26, 2015

5 Tips for Creating Great Customer Loyalty Programs


Customer loyalty programs are popular for one simple reason: research has shown that it’s much easier to sell to an existing customer than to acquire a new one. Marketing experts are well aware of the fact that it’s going to be a lot cheaper to engage a customer who has already done business with you to do so again than it will be to get someone who has never done business with you.

But having a customer loyalty plan just for the sake of having one isn’t the point. Your marketing team could put a lot of time and effort into creating a loyalty plan that no one responds to, which is a waste of money and resources no matter how you look at it.

According to customer loyalty studies, billions in rewards go unredeemed by customers every year. If your customers aren’t redeeming the rewards, that means that there is something wrong. Usually, the problem is that your loyalty programs are either too confusing or simply don’t offer enough value.

If you’re struggling to create customer loyalty programs that offer substantial benefits for both you and your clients, here are some tips to follow during the creation process.

Keep It Simple

Becoming eligible for rewards and then redeeming them should be an incredibly easy process. The fewer rules, regulations, and restrictions you have in your loyalty programs, the better.

Making your rules incredibly convoluted could turn off people considerably. And if they feel that your customer loyalty program is giving them the runaround, they’ll probably feel the same way about your brand in general.

Most loyalty plans work the same way: you offer rewards, discounts or special features according to how many points a customer has earned through your plan. It sounds simple, but a lot of companies are making it a lot more complex than it should be.

Make sure that the conversion between how many points you earn and what you get for them is as simple and intuitive as possible.

Provide Options

While your actual plan should be fairly simple, that doesn’t mean that you shouldn’t diversify your offers. It’s important to try to offer something for every subset of users. Of course, you are going to have to offer big-time rewards for big-time customers and more modest rewards for less active customers – that’s a given.

You are also going to want to offer different types of rewards, and not just in terms of “size” or “value.”

Mix it up a bit. Offer some sweepstakes and lotteries to engage your customers who are into these types of games. Offer some more concrete or tangible giveaways for people who are more into receiving simple tokens of appreciation every now and then.

And of course, offer the digital rewards like points and even social media mentions for people who like that kind of stuff. If your demographic is varied, what they want to get out of your loyalty program will vary as well.

Make sure that your loyalty program accommodates the needs of just about everyone within your demographic.

Collaborate With Other Companies

Have you ever heard of coalition programs? These are loyalty programs that are made up of strategic partnerships between two or more companies. Of course, the companies that you are collaborating should offer products or services with overlapping interest.

That is why it’s important to understand what your customers are looking for, so that you can find a partner that is a good fit and can provide them with things that they might be interested in, but you cannot provide to them on your own.

For example, if you are a company that sells musical instruments, you might want to partner with a company that sells concert tickets. You are both working with music fans as your main customer base, but offer different, albeit somewhat related, products and services.

Offer Personalization Options

Not only should you be offering a variety of rewards and options in your loyalty program, you should also enable your customers to let their preferences be known. This type of approach also allows you to run A/B tests within your loyalty programs by giving your customers a choice between several options at each step and monitoring what they choose.

It’s a good idea for testing both low and high-value customers and gauging what types of rewards interest each group most. This type of approach also makes it easier to offer coalition programs very naturally.

And at the end of the day, everyone likes to have more options than one.

Learn Through Your Programs

Remember, these loyalty programs are offering just as much value to you as they are to your customers. They provide a perfect avenue for gaining very detailed insights into your customer base.

A customer loyalty program that is run well can often offer you more information about the motivations of your customers than any survey would be able to do.

Using the information you gain from your customer loyalty program will not only help you to create better loyalty programs with more widespread participation, it will also offer you business intelligence that can help you in just about every other facet of your running and marketing your company.


Once you have developed a program that you believe could be a good one, don’t keep it a secret. Many companies underestimate the importance of publicizing and promoting their loyalty programs.

What good are loyalty programs if no one knows about them? Talk about them whenever possible and most importantly, make it very easy for customers to learn about them and get informed about the value they provide.