Thinking About Launching a Loyalty Program? Consider These Five Components Before Making a Decision! Part One


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Finding the right mix of requirements for a customer to participate in a loyalty program versus the reward payout to help grow that existing customer base and bring on new customers is the “secret sauce” of loyalty. In a pair of posts, we will discuss some of the benefits of a loyalty program, and five important areas of consideration when planning a launch – program structure, operations, platform selection, and vendor selection. In part one of two we will look at benefits and program structure.


Many would argue that the primary goal of a customer loyalty program is retention. However, there are many other aspects that bring tremendous value to the business to consider. Along with retention there will likely be an increase in sales. More customers staying means more customers buying.

Dependent upon the program structure, companies offering a loyalty program also have an opportunity to gather more robust customer data. Some examples of the advantages to collecting this data are shown below:

1. The influx of customer data often equates to the ability to examine customer segmentation and generate more advanced predictive analytics.
2. Loyalty programs coupled with sales and marketing promotions can even allow manufacturers better insight into production needs.
3. And, for those businesses that suffer through seasonality in the marketplace, the data captured can serve as a mechanism to develop targeted sales and marketing efforts to engage customers during non-peak times.
4. Perhaps the most satisfying benefit is more meaningful customer engagement. Loyalty can open the door to more personalized dialogue, thus a more personalized relationship.

Program Structure

Process The desire to segment customers and provide custom programs or specialized treatment for those that are considered to be target or key accounts is natural. However, it is imperative that the program baseline not only be easy to explain and understand from a customer perspective, it should also be easy to administer from the vendor perspective. Therefore, the baseline to participate should be the same, regardless of the customer level. The customer benefits or reward value delivered can then be tailored to the level of customer. This will entice the low and mid-tier customers to ante up to get to the next level in the program.

Be certain to leverage the distribution partners if operating in a B2B channel. Many times, distributors voice the “What’s in it for me?” attitude. Loyalty programs can aid in squashing that mentality. Distributor sales reps are, and should be operating as, an extension of the manufacturer’s sales team. Hold them accountable for selling not only the product or service, but also the loyalty program. Consider developing a matching program where they earn only when their customers buy and earn.

Next, be certain to evaluate the requested customer inputs against the desired reward outputs. Try to develop a win-win for both the company and the customer. As an example, if the company desires better customer data, make data reporting a requirement to participate in the program. From a redemption aspect, do customers want or need more training, or diagnostic assistance, business planning and budgeting tools, or monetary rewards like financial assistance with industry events or dues? If so, make those items available for them to redeem.

Finally, define the program. Will it be points based? If so, based on what kind of transaction? Is the program geared toward individuals, households, teams, companies? Over what time period – annually with points expiring every year, or accrued over many years without expiration? Accrued in year one and available for redemption in year two against the next year’s purchases? Will the rewards be cash or rebate based or hard/soft goods?

Please check back soon for the next installment where we’ll cover operations, platform selection, and vendor selection.

Tricia Desso-Cox, MM
Tricia has over 20 years of experience in customer service, 15 years user training experience on several platforms and processes, 10 years of business operations management, master data management, business process design and business analyst/project management work. Her credentials include a Masters in Management, Bachelors of Science in Business Management, a Green Belt in Six Sigma, and the Microsoft Sure Step Certification.


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