Customer loyalty is not a luxury or an option, it is paramount. A business that fails to build a loyal customer base will struggle. The struggle will emanate in part from the fact that recruiting new customers is costly. It also is compounded by the fact that failing to retain customers compromises business strategy formulation. As much as customer loyalty is that important it is ironic that customer retention is typically harder. Signing up customers is relatively easier and any business can achieve even using subjective methods. Since customer loyalty is instrumental to your business let me help you in designing a good customer loyalty program.

Basics Of Customer Loyalty Programs

Customer loyalty is all about customer retention. In business, you want a situation where every customer (or most of the customers) you get to remain. Customer retention is pivotal to repeat purchases which are core to revenue and planning purposes. A customer loyalty program is a deliberate initiative put together to inspire and drive customer loyalty. Typically it is a time-bound program with specific deliverables that are regularly monitored and evaluated. It is also common for customer loyalty programs to be characterised by discounts, special offers, and giveaways as well. The approaches are of course not cast in stone; informed by empirical research you can come up with infinite possible types of customer loyalty programs.

What Constitutes A Good Customer Loyalty Program?

Multiple Ways For Customers To Sign Up And Engage

I have seen that most businesses use one core sign up platform. For example, most businesses limit sign-ups to just in-store. However, this limits the business-customer interaction to just working hours. You can only sign up a limited number of customers per day if doing it in-store. A good customer loyalty program must use an omnichannel approach. This means a customer must be able to signup, follow up, and ask anything through more than one channel.

Possible channels to use are in-store (probably physical sign-up forms), voice calls, SMSes, WhatsApp, and email. This means any engagements between the business and the customer must be consistent across these channels. Even if the customer uses different channels over time there must not be redundancy or inconsistency.

Why is this a big deal, you might wonder? This is because if you are not careful, the rolling out of a customer program can achieve the opposite. Typically customers do not want to be bothered about giving their details. They also do not want to struggle when it comes to making queries or follow-ups. Being requested to avail details, making queries, and follow-ups are inevitable in a customer loyalty program. Thus the use of many communication channels helps streamline the process.

A Comprehensive Check-List

A good customer loyalty program must have a number of must-have attributes. It starts with having a catchy name that is relatable and memorable. What is in it for the customers? That is where the catch is. Ensure several benefits are spanning from the sign-up stage to being a member.

Diversify and spread out the benefits such that more people are eager to take part. Making the program interactive and feel like a gaming experience. People generally love gaming or contests so make it have that feel. See to it that the costs of setting up the program are outweighed by its fruits. A customer loyalty program will mean nothing if you incur costs that are never recovered.

Use print and electronic media to publicize the program. Use branded wear, signage, and IEC material to make the program visible onsite and otherwise. Carefully plan a program launch, which if done well can generate a lingering public awareness. Rigorously monitor and evaluate the rollout – at the very least daily. In principle, at the end of each week assess how the program is performing.

Do Not Be Over-Ambitious – A Real-Life Example

I am speaking from experience here and my thrust is to warn you of possible pitfalls. In 2020, I worked at a certain notable Zimbabwean agribusiness for 8 months. It was a short term contract and my sole focus was customer data collection, management, and analysis. This was all geared towards rolling out a newly introduced customer loyalty program. The basic idea was that customer details would be used to generate digital customer cards. The cards would be swipe-ready such that when a customer walks in they get it swiped when they buy. The idea was that a customer would get discounts on every product once they carry the card. Discounts would start from 1.5 depending on the product. Customers signing up would also automatically enter them into monthly draws where prizes would be won.

The program was initially meant to just run for 2 months – but later on, stretched to 8 months (and to this day it is still running). Why was that so? The marketing department was over-ambitious. They did not take time to do some background research to see how this could potentially roll out.

Due to the dual pricing aspect, there were complications with discounts. Discounts would appear for RTGS payments and not the USD ones initially. By the time that was rectified most customers had lost interest already. The payment system rounds off decimal points in USD e.g. US$13.23 is US$13 due to change issues. Yet most discount scenarios were some cents, thus a discount could end up not really being a discount. For example, a 1.5 per cent discount on a product price of US$22 is US$0.33. The new price becomes US$21.67 which the system rounds off back to US$22.

The cards were being centrally processed in Harare which meant there were delays. This brought frustrations on the part of customers most of whom stayed out of town. At the end of the day, no meaningful customer retention was seen even months into the program. The grave mistake was being over-ambitious and not foreseeing potential hurdles that emerged later. I am sure this will serve as a learning example and that you will not be a victim of such incidentals.

There is so much to discuss but I am sure this article has been helpful. Customer loyalty programs are a perfect fit for customer retention, and more. Roughly 8 out of 10 people signed up in a customer loyalty program are most likely to make repeat purchases. Do remember that a customer loyalty program might not be enough in itself. The tenets of offering good quality products or services still matter. The tenets of treating customers right still matter. The tenets of actively addressing customer concerns still matter.