5 Tips for Setting Up a Winning Loyalty Program

5 Tips for Setting Up a Winning Loyalty Program-640x360

Loyalty club memberships in the U.S. are at a record high, with 3.3 billion people enrolled in some type of customer reward program — an increase of 26% in two years, according to a new study by Colloquy.

Yet many people belong to loyalty programs and never use them. While American households have an average of 29 memberships each, only 12 are actively used, Colloquy found. 

Still, such programs can pay off. A study of 1,000 small businesses found that 64% of businesses with customer loyalty programs said they'd been effective, reports AdviCoach.

So how can you make your loyalty program stand out — and be one that customers actually use? 

1. Make it easy

Too often, companies make "the relationship between points and tangible rewards complex and confusing," says Lindsay Kolowich in Hubspot

Instead, consider a program where the number of points equals the number of redeemable dollars, she suggests. This kind of one-to-one relationship is much easier for customers to follow and motivates them to buy more.

Complicated or time-consuming redemption procedures turn customers off, as well. Avoid having too short a time period for point redemption so customers have time to use them.

Tiered systems — with VIP levels depending on how many points a consumer has earned — are commonly used to encourage more purchases. But again, the program needs to be set up simply. Higher levels should be reasonably easy to reach so customers don't become discouraged.

2. Make it fun

Use creative language and imagery to reflect your brand's personality, advises Alex McEachern in Sweet Tooth Rewards.

Instead of simply referring to "points" earned, he suggests a brand-related name. His favorite: "Pixi Dust," used by makeup retailer Pixi Beauty.

Also consider using graphics to portray points in colorful, memorable ways — as gold coins, or, in the case of Pixi Dust, as colored splotches that resemble specks of magical dust. 

3. Consider giving up cards

In this digital age, who wants to tote yet another credit card-sized piece of plastic or add another fob to an overloaded key ring? As Entrepreneur points out, digital-rewards mobile apps like Belly, Punchtab and Perkville let customers use their smartphones to access rewards points.

Not only are such programs easier for many consumers to use, but they're also fairly inexpensive to operate.

4. Offer unusual rewards

Discounts on your products and services are certainly logical benefits to offer, but consider offering more unexpected rewards, too — such as experiences.

For example, TOMS Shoes loyalty club customers can win trips to meet the CEO or travel on TOMS charity trips. Urban Outfitters customers can host their own fashion shows at store locations.

Other ideas include giving time. Think about housecleaning or yard work services, health and fitness services such as gym classes, or charitable donations in the customer's name.

5. Combine efforts

Are there other businesses you could pair with to offer a combined loyalty program? Macy's joined with Mobil and seven other vendors for its Plenti card, which combines points to give customers better chances to rack up rewards. Customers also don't have to worry about tracking separate loyalty programs.

Lorna Collier is a Chicago-area writer whose articles about business and technology have appeared in the AARP Bulletin, Intuit Small Business Blog, Workforce Management, Crain’s Chicago Business, CNN.com, USNews.com, the Chicago Tribune and many others. You can find at @lornacollier. 

All content provided herein is for educational purposes only. It is provided “as is” and neither the author, publisher nor Triad Digital Media, LLC d/b/a Triad Retail Media warrant the accuracy of the information provided, nor do they assume any responsibility for errors, omissions or contrary interpretation of the subject matter herein.

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