Starting a business is easy, but ensuring customer loyalty is the key to continued profitability. Businesses initiate customer loyalty programs to help bring people back; however, not all programs are created equally. Determining the right loyalty program for your business can be difficult.

Choosing a Customer Loyalty Program

Here is what to keep in mind when choosing a customer loyalty program for your buyers:

Points Based Programs

Points-based programs offer the most intuitive model. Customers earn points. Those points are accumulated. Accumulated points can be used toward a free item, discount, or some other reward. These are the easiest systems to set up generating 73% of loyalty programs. If you intend to focus on e-commerce as well as in person sales, points can be tied to social sharing or other actions that drive traffic to your site. This makes them an easy way to cross-promote your company.

Tiered Based Programs

Tiered systems offer small rewards at the outset with increasingly valuable rewards as purchases continue. Often, these are used for high commitment, higher cost products and services. Since these are products and services people purchase less often, tiered systems solve the problem of gratification needing to take place over a long period of time. The goal of these is to ensure that people recognise purchase value for small tasks and learn that the long game to high reward is achievable.

Community Reward Programs

Community reward programs help smaller businesses work together to promote one another and pool resources. Often, coalitions of arts groups and other businesses with common values drive these types of customer loyalty programs. These programs can involve a basic discount program or an electronic card system like the one from Next Payments. Working with affiliates helps customers feel more loyal to your business. As members have credited points not just when they shop at your business but when they frequent your affiliates, community reward programs generate business creating an interconnected business model.

Pure Lifestyle Programs

Pure lifestyle programs target small but loyal demographics. Instead of looking for them to simply repeat purchase, these strategies reward subgroups for the way in which they interact with your company. For example, the Home Depot Pro Xtra program allows discounts and special offerings as well as services for professional contractors. Lifestyle programs focus less on the rewards themselves and more on creating a sense of community with the brand. This means that those who go to Home Depot will have a connection to that brand as opposed to a competitor like Lowes. Both may offer customer loyalty programs, but each will create a different sense of community within those appealing to different contractor demographics.

 

Finding the right customer loyalty program for your organisation means understanding your organisation’s values. If you are a small, local business looking to build within a local economy, a community based reward system might work best. If you’re trying to cross sell between digital and brick-and-mortar, a points-based system might be best. Understanding where the loyalty programs align with your business model is the starting point.