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Designing a successful loyalty program

Whether your loyalty program is “official” or informal, complex or super user-friendly, it is critical that you think it through thoroughly at inception, and pay close attention to its ongoing execution and profitability.

Whatever your plan, six factors loom critical in any loyalty effort:

  1. Successful loyalty plans are strategic
  2. Trade offs are required to attain financial goals
  3. Objectives must drive program strategy
  4. Identify how program design delivers value
  5. Leverage best practices of industry leaders
  6. Align loyalty programs with customer relationship management goals.

Let’s take a closer look at the structure and value of those six factors:

1. First, set goals around a primary business objective that will drive customer impact – things like increasing the frequency and size of purchases over a defined period. Then evaluate whether potential benefits are sufficiently compelling to drive such behavior and, pivot-ally, whether your employee training and customer communications yield awareness, curiosity and action.

2. The trade-offs come when you decide which customers are targeted and, by process of elimination, which you deem less valuable. No business can be all things to all audiences; your loyalty program doesn’t have to excite or engage less-profitable customers, it should be focused on encouraging profitable customers to buy more and more frequently, and to recommend you to colleagues and friends.

3. Once defined clearly, your objectives must be distilled into a strategic message that is simple and sustainable over time. Now that you’ve defined your most-coveted market segment, decide how specific message elements can be tweaked to broaden or narrow the appeal of your loyalty strategy.

4. Collection and evaluation of anecdotal and statistical information will tell you how best to leverage your loyalty program at point of sale, in PR, advertising, online marketing and social media. And, whether your POS is face-to-face or geekishly technological, training, implementation and evaluation are central to the plan. Loyalty is secured (or not) and augmented (or not) at that critical moment of truth when your customer turns her money over to you.

5. Look around you. The leaders in your industry not only have already defined their loyalty strategies, but the very success of those strategies define what you must do. Yes, it helps if you’re creative, but you needn’t entirely re-invent the wheel. Look at your companies unique value proposition to create a differentiated value proposition that will matter to YOUR customers.
6. The sales data you collect and the stories shoppers relate – directly to your employees, in focus groups and on social media outlets, for example – constitute the testimony of customers on the efficacy of your efforts. Find experts who can tell you how best to collect, analyze and use that testimony: You’re not in a court of law, but you are, after all, seeking the “conviction” of your clientele.

A loyalty program fails – like any element of your marketing and growth strategy – if it does not deliver positive ROI.

A new loyalty effort may launch with optimism and enthusiasm, but often fails to deliver for any of several reasons. For example:

  • Your target audience and supporting data may not be clearly defined and organized
  • Employees who don’t receive adequate training may lose their enthusiasm
  • Miscommunication of procedures and rewards may inadvertently sabotage success with key objectives.
  • You had a plan to launch the program, but not a plan to manage the customer life-cycle from new member, to active member, to highly engaged to loyal brand advocate. In the end, the loyalty program lapses into auto-drive and, instead of changing customer behavior, you reinforce the various negative conceptions you were trying to overcome.

Conversely, success is achieved by paying heed to the details of your customer loyalty program, from birth, through implementation, and on to review and re-evaluation. Loyalty is NOT an auto-pilot function … it’s a matter of 24-7-365 care and feeding.

CLICK HERE for an illustrated presentation with more information.


Photo by Elaine Y