5 Smart Strategies to Build a Successful Customer Loyalty Program

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Posted by Robin Johnston on May 1, 2018 7:00:00 AM
Robin Johnston

Your goal as a marketer or salesperson shouldn't be to make a single sale—it should be to build long-term relationships with prospective customers.  Why?  Well, for one thing, on average about 80% of your sales come from the top 20% of your customers.  For another, it costs about 5 times as much to attract a new customer as it does to retain an existing one.  The better you are at retaining your best customers, in other words, the more profitable your business will be. 

Effective Customer Loyalty Programs Increase Revenues

Customer loyalty programs are increasingly pervasive for one simple reason—they work.  They work because consumers like them.  Consider for example these metrics from CMO:

  • More than 75% of consumers currently participate in at least one retail loyalty program
  • Almost half of consumers have joined a hotel loyalty program
  • About 40% of consumers are part of an airline loyalty program
  • Loyalty marketers on average receive about $12.00 in earned media for every dollar they spend
  • Loyal customers on average spend about 70% more than new ones

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Successful Loyalty Programs Don't Just Happen

If those stats appeal to you and have you thinking about a loyalty program for your business, here's the first rule of thumb:  you can't wing it.  The most successful customer loyalty programs are built on a foundation of sound marketing practices, including the following 5:

  1. Don't put all your eggs in the discount basket:  people like getting discounts, but there's a huge difference between a discount strategy and a comprehensive loyalty program.  Although offering a discount might induce a prospective customer to make an initial purchase, you need to engage with that customer effectively over time to gain their long-term loyalty, demonstrating that you care about their individual needs and are willing to help them solve their problems.  And, of course, there's another problem with offering discounts:  some of the customers who take advantage of them would have bought your products anyway.
  2. Make your customers feel special:  gaining your customers' loyalty is all about showing that you know and care about who they are.  That means you need to provide the kinds of experiential rewards (as opposed to purely monetary ones) that touch their emotions.  This could include giving your loyalty customers exclusive access to certain rewards, like special product offers and events.
  3. Make it personal:  increasingly, the most successful loyalty programs are leveraging customer intelligence to personalize the loyalty experience.  If, for example, you sell recreational gear and know that a segment of your customer base is into mountain climbing, you could send exclusive climbing gear offers to those customers (and make it clear that you're doing so because you're aware of their interest).
  4. Align the extent of rewards with customer engagement:  loyalty programs shouldn't be one-size-fits-all.  To build increased loyalty over time, you need to increase the rewards you offer based on what (and how much) your customers buy.  For example, you could use a hierarchical system in which increased buying offers access to tiered levels (say, silver, gold and platinum loyalty levels), each of which offers more rewards than the one beneath it.
  5. Continually measure results:  not every loyalty initiative works—or works as well as you would like it to.  That means you need to constantly monitor results, preferably by associating your loyalty program with strong analytics.  Among the metrics you need to consider are those associated with return on investment—said differently, you need to know if each aspect of your loyalty program is making more money for your business than it costs.  If, using analytics data, you discover than a particular initiative is generating revenue, double down on it.  If, on the other hand, a strategy isn't panning out, tweak or eliminate it.

Successful customer loyalty programs (like other successful marketing initiatives) increasingly depend on access to accurate customer data.  Said differently, you need to know who your customers are and how they behave in order to meet their needs.  That's precisely what an increasing number of forward-leaning businesses are doing.

To learn more about the ways our smart Wi-Fi landing page, presence analytics, intelligent marketing and managed services can help you drive more sales and grow your business, schedule a demo today.

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