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Definitive Reference Guide for a Successful Loyalty Program

Brett Tadlock

VP of Customer Engagement

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  • Most successful businesses today have focused their marketing efforts on acquiring new customers to maintain steady growth overtime. As a matter of fact, they miss to realize that existing ones give them cost effective ways of expanding their business. Acquiring new customers cost much more than making sale to existing ones, besides existing customers are more likely to make purchases in comparison to newly acquired ones. Therefore, many businesses today have shifted their focus on customer retention through successful loyalty program.

    Companies launch their brand loyalty programs to retain customers in a mutually beneficial business cycle. Such campaigns include many activities that are adopted to increase loyalty of customers for your brand. This Nextbee’s definitive reference guide will give you a fair idea on loyalty programs.

    To understand how our program works download Nextbee’s PACE document.

    Nextbee PACE document


    What Makes Successful Loyalty Programs important for Your Business?

    eBay is planning to launch its loyalty program in Germany in second half of 2015. This program is said to be in testing phase now. Titled as eBay+, this program focuses on sellers and will assist them in generating sales through existing consumers and also to acquire new ones.

    Let’s analyze above example and why suddenly eBay is planning to launch its loyalty program. Generally startups, as a thumb rule, focus on acquiring new prospects. However, as your business establishes, focus should shift to retention of customers.

    Recently, studies have revealed that cost of customer retention is approximately 7-10% less than the cost of acquiring new consumer. According to the study, 5% increase in customer retention has potential to boost your profits by 25% – 125%.

    Customer retention increases your direct sales volume due to repeat visits and purchases made by your existing consumers. Besides, your loyal consumers serve as brand ambassadors of your business as they indulge in loyalty campaigns to increase brand affinity.

    Building Strong Customer Retention Process

    Given that, you are constantly growing within fiercely competitive marketplace, objective of successful loyalty programs should attend to concerns of your consumers. There may be few important underlying reasons why your customers are not staying with you. Most important ones are unhappiness of consumers with the quality of service they get, unhappiness with quality of product or preference for other competitors over you.

    But, before you settle down on drawing board to chalk out your brand loyalty programs, gather, study and analyze available data to understand customer expectations. Analyzing such data help you to develop compelling and successful loyalty programs to attract buyers for repeat purchases and brand awareness activities.

    Another, very important fundamental theory states that every business caters service to different types of consumers and therefore there is no such right-thumb rule plan to adopt. Therefore, you should be prepared to develop customized loyalty campaign according to customer’s expectations, their buying behavior – which is influenced by regional, social, financial and demographical factors, etc.

    Tools and Procedures That Really Work

    Developing a successful loyalty program require specialized tools, tactics and procedures. There are many such useful tools which can help you build effective loyalty program to foster customer retention. Few popular tools preferred these days include features such as exciting rewards, tracking software, engagement activities, personalized and promotional offers, social recognition badges, social media promotions, exclusive VIP club model, turnkey widgets, gamification, etc. In today’s market with digitally advanced consumers you have options to utilize platforms like online portals, websites, social media channels, email or content marketing, etc, for optimizing your loyalty program.

    During development phase analyze and utilize customer data to pick right mix of tools for customizing your campaign. While making any changes or taking decisions, always think from the buyer’s perspective. Employ Customer Relationship Management (CRM) tools and other tracking software to understand customer behavior. This will help you to identify factors that stimulate consumer’s buying decisions.

    Systematic Stages of Successful Loyalty Programs

    Just like other business decisions, development of successful loyalty program needs comprehensive planning and proper execution. Here are systematic stages your brand loyalty program should march through:

    Understand Your Customers:

    Guessing right loyalty program strategies isn’t feasible from the outset as every company has different business objectives. However, by understanding customer behavior and their purchasing history, it won’t be that difficult for you to decide a near perfect brand loyalty program to augment sales through existing customers and brand marketing activities such as referral sharing or social media sharing. Therefore, customer data should be gathered, studied and analyzed properly before execution of plan.

    Segmentation of Customers: 

    In business cycle, every customer belongs to a specific phase. These phases can be segregated on various criteria, however, classification on the basis of purchasing history is said to be most effective one. Segment your consumers on this criterion and put your high purchasing customers into an elite group and develop promotional offers accordingly. Similarly, there are customers which are almost on the verge of switching to other competitors. By segmenting consumers, you can develop specialized campaign features for every identified segment. Customize your communication tools instead of sending generic email templates and messages to every single user.

    Create Sensible Loyalty Program:

    Remain careful while choosing your loyalty program, as it is always advisable to select features and tools for your program, which make real sense in accordance to your business. Besides, keep your program convenient for customers. For example, don’t create a program in which rewards look improbable and out of reach of users. Such program is more likely to distract buyers than attracting them. If you have an easy and quick reward cycle in loyalty program, engagement of customers will be unarguably much better.

    Be Reachable To Customers

    Focus on staying available to your customers in the time when they need your assistance. Your unavailability may leave your consumers irritated, which is a major factor why many customers become dormant. It is advisable that you create multiple contact points to offer assistance to consumers through modes like online chat, emails, call center, etc. Paying attention to customer’s need and employ quick communication process to enhance their lifetime value and render reliability to your brand loyalty programs.

    Optimize Technology

    Technology has great impact on any successful loyalty program. Technology basically takes care of two facets – customer and business. In context of customers, technology helps you to integrate easy and ready-to-use features which can be used by anyone with least training. On other hand, from business perspective, technology ensures accuracy, reliability and performance of program.

    Tracking, Feedback and Improvement

    Long term objectives of successful loyalty programs are not limited to one time planning and implementation. Tracking, collecting feedback and scope of improvement are important factors that help you to create adaptive and successful loyalty program. Include tracking software to track various user activities and analyze salient features to understand their instinctive behavior. Similarly, collecting feedback can also help you to identify customer’s expectations from your business. These tools help you to improve your program according to inputs received from activities of existing consumers.

    Always remember your customer comes first for you all the time. In a loyalty program, it’s all about knowing how your customers are feeling, rather than only focusing on your business.