Over the last few years, marketers have seen a rise in the popularity of customer loyalty programs as a tool for increased customer engagement. For some, this customer retention strategy has led to great success, while the other 77% of transaction-based programs fail in the first year. Obviously, there is some serious room for improvement when it comes to running a customer loyalty program.

Hoping to make your life easier and make sure you aren’t a part of that 77%, we have put together 5 tactics to help you get the most out of your customer loyalty program. In this article we will explore both the need for a customer loyalty program and best practices for maximizing its impact on your audience. Let’s take a look.

customer loyalty program

The need for a customer loyalty program

While you may have heard of businesses using a custom loyalty program, if you haven’t attempted to utilize one already, you may not see the necessity for one. For one, there is the commonly cited customer retention statistic that it costs anywhere from 5-7x more to attract a new customer than retain an existing one, meaning it is in your budget’s best interest to invest in attracting loyal customers.

However, a much more interesting statistic for those thinking about starting a customer loyalty program is that loyal customers spend 67% more than new ones. Not only do customers that are loyal cost you less money, but over time they will provide a higher ROI as well.

I’m not sure about you, but any program that has the potential to increase profits this way is worth getting involved with. Unfortunately, it’s not enough to simply have a customer loyalty program, you also need to run it well. Fortunately, we have 5 tactics for doing exactly that.

(1)  Reward referrals

One of the key goals of any customer loyalty program is to increase word of mouth referrals and create a community around your brand. An easy and effective way to get the word out and encourage this is by rewarding referrals. For instance, you can offer a free item or session every time someone invites a friend that becomes a customer.

According to Forrester Research, 70% of U.S. consumers say they trust brand and product recommends from friends and family. Not only that, but customers are 4x more likely to buy when recommended by a friend. So not only do your customers have a powerful voice when it comes to their friends, but if those friends become customers, they will likely be loyal customers too.

Each of these statistics provides evidence why you should reward your customers for bringing in referral business. This can both help you reduce churn rate and increase customer retention across the board, so make it a priority.

customer loyalty

(2)  Mix up the rewards to keep things fresh

The second tactic or technique for maximizing your customer loyalty program is to mix up the rewards your customers receive in order to keep things fresh. For example, while something like a free Starbucks gift card after 5 visits might be appealing to some people, other offerings might do a better job with other parts of your audience.

By keeping different rewards available to use when the situation calls, you are able to tailor the customer’s experience to their needs. When your audience feels that you care enough about them to give them exactly what they are looking for, they are far more likely to stay with you down the road.

(3)  Create engaging messaging

The next tactic we have for keeping around customers with a loyalty program is by creating engaging messaging. Customers are only going to engage with you and get involved in a program if they really feel as though they are a part of your brand’s community. By creating messaging that is engaging and relevant to them, you are much more likely to have a successful program.

Now, whether this messaging is sent through SMS, push notifications, email, or some other channel isn’t important. What is important is customers not only feel as if you care about them, but that they get the feeling you want them to be more engaged. As far as which channels to use, let’s take a look at #4.

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(4)  Promote the program through all possible channels

Another fatal flaw of customer loyalty programs that we see again and again is the lack of promotion around them. After all, how are your customers going to get involved with a loyalty program that they don’t even know exists? The way to maximize your program here is by promoting it through all possible channels.

We already mentioned channels like SMS and email, but places like social media and at your physical location can be just as important. Each of these different mobile marketing tools can increase engagement and make sure your audience knows about your program. While you don’t want to be annoying, your customers shouldn’t have to look far to find it.

loyalty program

(5)  Solicit feedback

The last tactic we have for improving and getting the most out of a customer loyalty program is to solicit feedback from your audience. Not only is this vital to determining the success of your program, but loyal customers will tend to be more honest about what they need from your company.

In the same way that you should use multiple channels to promote your customer loyalty program, you should do the same for getting feedback. Since this isn’t something customers will usually seek out on their own, it’s up to you to bring it to them in order to capture those user engagement metrics.  

Conclusion

At this point, we hope that you have a better understand of customer loyalty programs, the need for one in our present market, and how to maximize your own program to the best of your ability. All that is left is for you to get involved with a program and start making a difference in the lives of your customers. Why wait? Start today!