Steps to Create a Customer Loyalty Program

Posted by Mudassar Ali on September 23rd, 2018

Before diving right into the specifics, let us help you analyze the situation and determine what is best suited to your company’s needs and current status.

Some Facts about Loyalty Programs

Some particulars regarding loyalty programs are:
•    If you keep an existing customer, the costs associated with it are about five times less as opposed to gaining a new one.
•    New customers always have their guard up and tend not to fall into the pit of excessive/expensive purchasing right away. However, loyal customers can be easily coerced into buying your brand’s expensive products due to the level of trust.
•    Only 20% of all the customers are generally responsible for over 80% of a company’s revenue.


Is This Really What Your Business Needs?
As previously stated, you need first to evaluate whether implementing a loyalty program will be a strategic move for your business or not.
The very first thing that you need to determine is the value that a single customer holds for your company and also the costs associated with acquiring a new one. This way, you can easily decide whether you need to put in more money for the development of new customers or for retaining and developing the existing ones.


What the Process Entails

Step 1: Study Your Existing Customers
It is recommended that before commencing with anything, the first thing you need to do is to analyze your existing customers so that you can gain substantial insight into what your strong suit is and also what your audience is actually looking for.
Some questions to ask are:
•    What type of products pique the customers’ interests?
•    How pleased are they with our company?
•    How can we improve our business relationship?

Step 2: Evaluate Your Products
Ask yourself the following:
•    Are our company’s products good enough?
•    Are they worth the investment?
It is highly crucial that you be honest with yourself in this situation. If a certain product of yours lacks the basic qualities, then you can’t expect to salvage it through a customer loyalty program.

Step 3: Create Your Specific Loyalty Program Goals and Analyze Them
You need to set your goals from the very beginning of the program. For example, if your company’s average customer purchase is three times per year, you can set a goal of 4 times a year.

Step 4: Determine Costs
The cost of a loyalty program tends to vary significantly depending on the industry, market competition, etc. The main costs that you should take into account are:
•    Technical, organizational, and personnel infrastructure
•    Development, storage, and shipping of rewards

Step 5: Study Other Loyalty Programs
Always keep an eye on your competition. If you want to develop an unparalleled customer loyalty program, then you need to do your homework. Consider asking the following questions:
•    How does the competition coordinate their customer loyalty programs?
•    How are these programs established in other industries?
•    What can we learn from the success of existing customer loyalty programs?