Creating a Customer Loyalty Program: Rewarding Repeat Business

Every business, large and small, succeeds when they have returning customers who provide repeat business. In order to keep those customers returning, a business needs to foster loyalty. Quality products/services and excellent customer service are fundamental to creating that loyalty. However, a customer loyalty program is an effective way to help further encourage customers to return to your business rather than a competitor. We’ll explain what kind of customer loyalty programs foster true dedication and encourage repeat business by rewarding your customers.

The What and Why of Customer Loyalty Programs

Today, customer loyalty programs aren’t something new. In fact, they are fairly common, being offered by many businesses from your major chains to your local café. Their profusion is simple to explain: customer loyalty is important. 57% of customers and clients spend more on brands to which they are loyal. 71% of customers say loyalty programs are an important part of their relationship with businesses and brands. In turn, businesses that show the most loyalty can grow their revenues at 2.5 times the rate of their competitors. Loyalty programs are especially effective in e-commerce for their convenience, where they can increase average order quantity by 319%!

Quality is Key for Building Loyalty

Before creating a customer loyalty program, we should understand what true customer loyalty means. Many businesses today offer loyalty programs which often provide rewards such as discounts or exclusive items. The average customer is enrolled in just over 14 loyalty programs, but they are only active in less than half. They might be enrolled in multiple loyalty programs, but they are only loyal in their actions and business to a few. So while a loyalty program helps to secure that repeat business, customers say that price, quality of services/products, and trust are the essential basis for generating real loyalty.

True Loyalty is a Reciprocal Relationship

Offering a loyalty program means little if customers don’t feel that you are loyal to them in return. Customers only feel true loyalty if a business shows as much care in what they offer customers or clients as what the customer wants. True loyalty, including customer loyalty, is built on a reciprocal relationship of trust. That trust comes from honesty, reasonable pricing, an intuitive and accessible website, and quality services and products. Other critical strategies include being personable and engaging with your audience as well as listening to them to develop personal connections. The loyalty program is that extra incentive that reminds customers of their loyalty for that quality. It fosters dedication because a loyalty program acknowledges the support it receives from those customers’ repeat business.

How to Create a Successful Customer Loyalty Program

Not all customer loyalty programs are created equal. Some are cumbersome to use. Others are just not rewarding, leaving them unused. With many loyalty programs out there, you want to create one that customers feel truly rewards their continuing relationship with your business. This will help ensure you see an ROI as customers keep returning to purchase your products or services. There are a few essential guidelines for creating an effective and rewarding loyalty program that helps encourage repeat business:

• Points Based Systems – Overall, customers prefer points-based loyalty programs. These systems give customers points for every purchase they make, possibly offering further points for certain kinds of purchases. Customers can then use their points to receive discounts, exclusive offers, or even redeem free products. Customers like points systems because they can see the reward in each purchase, and they can track how close they are to their next discount or offer.

• Balanced Rewards and Redemption Offers – Even if a points system is encouraging, the rewards or redemption offers need to be substantial. They will stop engaging with the program if they rarely or never feel rewarded. However, you do not want to reward so much that your loyalty program starts costing your business more than the repeat business is generating. This is a delicate balance. You will need to determine by looking at current customer behaviour and other industry standards.

• Frictionless and Intuitive – Be sure that your loyalty program is easy to use, understand, and redeem from. If it is confusing or cumbersome to redeem a reward in process or restrictions, customers will simply not engage with it.

• Personalization, Curation, and Customization – Surveys have shown that personalization is extremely important to customers for them to engage with loyalty programs. This includes curated or customizable offers as well as personalized communications that might include such curated offerings.

• Offering Experiences – Customers are no longer just interested in products or services. Instead, many have become interested in brands and businesses offering experiences. Loyalty programs are an excellent way to offer such experiences to your most dedicated customers. For example, rather than receiving a discount or free products, rewards can also be lessons or attending an exclusive event. Such offers also help to foster a community among your loyal customers and can be a great way to encourage user generated content on social media.

• Loyalty Tiers – Lastly, loyalty tiers help to further reward repeat business. Depending on how frequently a customer purchases products (usually based on the previous year), they go up in the loyalty tier. The higher the tier, they receive better incentives or rewards. For example, the highest loyalty tier could receive free shipping or flat discount. These provide your most loyal customers with extra rewards. It also also encourages others to seek the rewards for their repeat business.

Loyalty Is What Makes You Stand Out

You should now understand how with a strong basis in trust for your products and services, you can create loyalty that fosters a strong connection. A customer loyalty program is key to encouraging and rewarding customers for that repeat business. However, that loyalty program needs to stand out by being intuitive and personable. If you’re ready to add or reinvigorate your e-commerce’s loyalty program, be sure to contact Rosewood Marketing’s web design and digital marketing teams.