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3 Tips for Starting Your First Loyalty Program

Posted by jtolman to on March 12th, 2013

According to research reported in Inc., your returning customers spend, on average, 67% more than first-time customers.  Acquiring new customers will cost 5 to 10 times more than selling to a current customer. Long story short: if you’ve accepted their credit card once, you’ll want to find a smart way to get them back again.

In order to capitalize on the significant financial benefits inherent in keeping customers coming back, 65% of marketers have implemented a customer loyalty program.

If you’re ready to start your first customer loyalty program, be sure to do it right.  Find out who your customers are and what they want in a rewards program – and give it to them in a way that will provide value over time.

Find Out Who Your Customers Are

The first step in creating any customer-centric plan is to determine who, in fact, your customers are.  The profile of your average customer will tell you their age, gender, household size, shopping habits, purchase history, and more.

  • Do they visit your store once a week, or once every six months?
  • What are they buying?
  • How much are they spending?

You can pull information from your POS system (if you have a physical store, as well) and your customer mailing list; you can also gain more details by asking customers to complete a short survey.  The more data you have on your customers, the better.  This data will help you decide what kind of loyalty program will appeal to your customers, provide them with the most value, and keep them returning to your business.

Decide on a Rewards Structure

There are many ways that you can structure your loyalty program.  The best structure is directed towards your specific customer profile, offers realistic and attainable rewards, and is easy to understand.  Based on your customers’ needs, choose from the following options:

  • Many grocery stores offer rewards members a lower price on specific goods.  The items you provide a discount on should be those the customer is likely to buy.  If most of your customers are vegetarians, offering a member discount on beef won’t keep them coming back.
  • A points-based program can be a simple way to offer an incentive for customers to return.  Make sure the points system is transparent – 1 point per dollar spent, for example – and realistically attainable.  If customers have to earn 1,000 points before they receive any benefits, they won’t participate.
  • Tiered systems are appropriate for industries that aren’t conducive to discount or points-based systems.  These systems increase customer rewards over time.  Again, make sure that the rewards in each tier are both valuable and attainable.

The most important aspect is that your program is accessible to customers, according to

Promote Your Program

A loyalty program cannot fulfill its purpose – getting customers to return to your store – if no one knows about it or signs up for it.  For that reason, it is important to promote your new program and offer incentives for customers to join.

  • Feature your new loyalty program in your business’s print, media, and online advertising.
  • Place signage around your business that explains the new program, the structure, the terms, and how to sign up.  Enable customers to sign up online on your website or social media pages.
  • Run a promotion to kick-start the program and bring customers into your store.  Offer a free gift to the first 100 customers who sign up, double rewards points for the first month, or run a raffle in which one new member will be chosen to win a high-value gift.

When putting together your business’s first loyalty program, don’t go for the first cookie-cutter solution that you find.  The best programs are designed with your specific customer in mind. Give them what they want from a rewards program, and they’ll give you more of their patronage.

Megan Webb-Morgan writes for leading B2B resource,  She focuses on a number of business related topics.  Follow Resource Nation @ResourceNation and on Google+!