Create A Customer Loyalty Program

The objective of any loyalty program is to establish long-term relationships with your customers so that they are motivated to continue to buy from you. According to marketing firm, Colloquy’s loyalty census released last year, membership in U.S. customer-loyalty programs has reached 1.8 billion, up from 1.3 billion in 2007. The census showed that the average U.S. household has signed up for 14.1 loyalty programs, but only participates in 6.2 of them.

One of the more successful loyalty programs is the Emerald Aisle, National’s fast lane for frequent renters that not only gets them from plane to car faster than most competitors can call up their rental agreement, but also gives renters their pick of any car on the lot once they arrive. National’s special service is not only free, but available in 56 cities. The “reward” program earns a loyal customer one credit for each rental, with seven credits earning a free-car day — but the VIP speed-through service is what motivates return customers.

The three most frequent reasons for customer non participation in loyalty programs are:

  1. the complexity of earning rewards
  2. the need to carry a separate card which is stamped or punched on each visit
  3. the reality or perception that the program carries no consumer benefit

According to Consumers Against Supermarket Privacy Invasion and Numbering (CASPIAN) products sold at supermarkets with card-loyalty programs in the past decade — including Kroger and Albertsons — tended to be priced 28% to 71% higher than products at card-free competitors like Target.

Test your loyalty program concept on your best twenty-five customers before you launch. A new loyalty program should grow steadily over the first two years, while a mature program should generate inquiries at a monthly rate of 4 to 5 percent. It is important to set as your goal the creation of some kind of innovative value-added offer for at least one segment of your membership base each quarter. Innovative, meaning something different in style and substance from anything you’ve already done. Whenever the results begin to slip, tackle the benefits structure with fresh eyes and open ears. Talk to members and include them as creative partners in the program. Ask them what they like and dislike about your program, and what kinds of recognition and rewards they would like to experience.

Explore posts in the same categories: CRM, Email, Online Marketing, Online Reputation, Web traffic

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2 Comments on “Create A Customer Loyalty Program”

  1. emorydigital Says:

    Steve-great news & tips for digital and direct marketers on the state of loyalty programs. A loyalty porogram I created for Fashion Bug credit card customers with direct mail and in-store promotion more than 20 years ago converted over 40% of the card member base to loyatly customers in the first year. We created an offer they couldn’t refuse-store coupons equal in value to the cost of membership. The result-more frequent store visits and higher average puirchases (and no increase in cost to the customer!).

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