How to Build an Effective Customer Loyalty Program

What is customer loyalty and why is it important? In short, maintaining customer loyalty employs strategies and tactics to keep as many of the same customers coming back to your business. It’s important because it can cost businesses up to 25 times more to get new customers than it does to keep current ones.

Loyal customers are ones that are expertly familiar with your brand and your products, often make repeat purchases, can spread positive comments about your business whether through social media or word of mouth, and help you attract new customers. 

All customers are important, but the ones that consistently invest in your business should be your targets when building a customer loyalty program or plan. In order to successfully launch a customer loyalty plan you need to focus on the three R’s.

Rewards

Rewards are the most basic, yet highly effective tactics that keep customers coming back. Customers enjoy rewards presented as tangible gifts from your business. These can include discount coupons, a free product, or anything that makes them feel as though you are presenting them with a token of your gratitude for their business. 

This makes them feel appreciated without tanking your revenue. One big problem with rewards programs is that people often forget about them after a while, but there are actions you can take to help prevent that

Excellent Customer Service

For people to want to participate in additional ventures for your business, like rewards programs, you need to prove your worth to them. Exceptional customer service should be standard practice, especially when you want to keep current customers who on average spend 67% more than new consumers.  

Act on Feedback

Plenty of businesses see customer feedback as irrelevant. However, it can actually help boost your consumer base. When customers complain online or in-store, take a moment and reflect on their perspective. 9 times out of 10 it’s probably a petty grievance, but that 1 customer might be onto something. It’s always important to listen and respond respectfully whether you agree with a customer or not. 

Relevance

The average American takes part in 16.7 customer loyalty programs, and of those programs, most people only engage with 7 or fewer of them. Why? Usually, because they’re not consumer-centric. The primary problem with most reward programs is that they are too ubiquitous. When someone is a frequent customer of your business, they want to feel as though they are an important piece of your company, and want their relevance reflected in their rewards.

If your program automates rewards that are the same for everyone, not only do none of your customers feel special, but none of them are getting a personalized incentive to keep coming back. Loyalty programs track customer data and it’s quite simple to gear rewards based on previous purchases customers have made.

Sephora, for example, leads a loyalty program that many customers enjoy. If someone buys a $100 face cream, their next reward wouldn’t be a sample of a $20 lotion, but instead, a sample of the product they frequently buy. 

Another tactic is to offer customers choices. Younger generations prefer choosing what they want instead of accepting an offer; allowing them that freedom and personalization play into the strategy of a customer-centric program which is bound to perform better than one that isn’t. 

Recognition

Recognition is establishing who your “best customers” are. Show them that they are more important to your business than other customers. Think of this third “R” as a way to show already loyal customers that you appreciate their devotion by giving them more. Better rewards, and honorary titles on their profile (premium member, gold customer, etc.) 

Recognition helps you elevate customer service by providing it outside of the institution. Recognizing your customer helps build a relationship between them and your brand. The closer a customer feels to a brand the more likely it is for them to become an organic brand ambassador by sharing on social media or word-of-mouth. 

Long-term customer loyalty is a difficult part of business, but it’s one where the benefits are endless – more engagement, more sales, and more like-minded consumers.  

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