How to Create a Customer Loyalty Scheme That Works

have you got a loyalty scheme for your customers? Here's how it should be put together
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By Jess Dixon

It can cost up to five times as much to attract a new customer as opposed to retaining an existing one! With numbers like that, it makes sense to focus on customer satisfaction and retention at least as much as you focus on bringing in new leads for your business. 

If you’ve ever had a points card for a particular store (such as Nectar from Sainsbury’s or Clubcard from Tesco), or if you’ve ever collected one of those little stamp cards to get a free cup of coffee, you’ve been part of a customer loyalty scheme. 

But loyalty schemes aren’t just for huge companies! They can also work incredibly well for small businesses. The benefits include happier customers, higher retention rates, and even a boost to your customer acquisition figures. But how do you create one that works? Here are a few tips to get you started. 

Set your objectives

What do you want your loyalty programme to achieve? Are you trying to acquire new customers, retain existing ones, boost your average order value, or attract more of a particular type of customer? 

Before you do anything else, get crystal clear about your goals and objectives. Make sure they’re SMART – specific, measurable, achievable, realistic, and time-bound. 

Make sure it aligns with your customers’ needs

What do your customers come to you for, and what is it about your business, products, or services that they value? Make sure your reward programme and the perks you offer align with that. 

If in doubt, you can always ask your customers what rewards they would like. Hospitality businesses, like restaurants and cafes, can offer discounted or free food and drink – for example, “collect 9 stamps and get a free coffee,” or “keep your receipt and get a free dessert on your next visit”. Retail businesses might offer free shipping, a store-wide discount for repeat customers, or a special free gift with purchases over a certain threshold. Software providers might give customers a free month’s subscription as a thank you for their loyalty after six months. And so on. 

Keep it simple

Unless you have a huge budget, you’re probably not going to do anything very expensive or complex like building a rewards app. For small businesses, it’s best to keep things simple. This means more customers will take you up on it. It also makes things more cost-effective. 

Physical loyalty cards can be great for primarily brick-and-mortar businesses, particularly hospitality businesses. Ecommerce retailers and online service providers can automate their email marketing system to send out discounts and rewards after a certain number of purchases, or their ecommerce platform to add bonus products once a purchase reaches a certain threshold. And so on. 

Think about what is simplest for both you and your customers, and then do that. Adding a huge layer of additional complication will just waste time and probably mean that less customers will use your loyalty scheme. 

Use a software tool to help you 

There are software tools out there that can help you set up your loyalty scheme quickly and easily. Swipii allows you to reward customers with points when they pay with their debit or credit card in your store. It costs £19 per month. Loyalzoo costs from £19 to £79 per month and allows you to reward customers at the point of sale using just a phone number or email address. And Reward-It provides a platform for you to set up a points-based reward scheme. It costs £25 – £60 per month, depending on which package you go for. 

Launch a pilot version of the scheme first

If you want to try out your loyalty scheme before you commit to it completely, announce it initially as a three-month pilot programme. This gives you time to test it and see how it works. If it goes down brilliantly, you can extend it indefinitely. If a few things need tweaking, you can amend them and try again. And if you hate the whole thing and want nothing more to do with it, you can get rid of it at the end of the trial period!

Be generous

Remember that the point of your loyalty scheme is to make your returning customers feel loved so that they keep coming back to your business again and again. That means you need to make sure the loyalty scheme is actually rewarding them enough to make it worth their while. No-one wants to join a loyalty programme only to feel like they’ve been tricked into spending more money. 

Therefore, make sure your rewards are worth having and relatively easy to obtain, at least at the lower levels. A tiered system can work well, because then you can have a level that is accessible to most people, and a level with deeper discounts or bonus perks for your best customers. 

Have you tried a loyalty scheme?

We’d love to hear your ideas. What did you do, and how did it work? Let us know! 

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