A loyalty program could help you engage customers and generate sales.

Developing loyal customers could be key to boosting business in 2021. After more than a year of social distancing and an ever-present pandemic, many customers are craving connections and a return to normalcy. That means now may be an ideal time to introduce a customer loyalty program. These programs help you engage your customers and show them you care with various perks and rewards, while helping you get to know them better, so you can improve your service in the year ahead.

Here’s what you need to know about creating a loyalty program that could benefit you and your customers.

The case for loyalty programs

Many business owners are prioritizing customer engagement during the ongoing COVID-19 crisis. That’s not surprising, considering it’s usually less expensive to maintain a current customer than to acquire a new one.

Loyal customers not only keep spending with you but they’re also likely to refer friends and family, who are more likely to shop based on a word-of-mouth referral than other types of advertising.

And loyalty programs may be one of the easiest ways to take your customer relationships to this next level. According to research, 52 percent of people who like a company will join its loyalty program if one is offered. These programs help create a feeling of community and add a personalized touch to your transactions.

Action: To help build out the word-of-mouth advertising that comes naturally from loyal customers, consider a loyalty program that includes a referral bonus.

How to build a loyalty program

When it comes to logistics, you can either use a pre-built loyalty plan or create your own from scratch. Your options may also vary depending on which sales systems, websites, programs, or applications you use.

If you decide to go with a pre-built plan, there are a number of off-the-shelf providers that offer different types of programs, including points systems, tier-based offerings, referral systems, and more. Pre-built plans tend to offer analytics and a way to track customer accounts as standard features.

Action: Search online for pre-built customer loyalty programs. Different tech and business blogs often curate “top 10” lists that highlight the most up-to-date and best-in-class programs.

Alternatively, you could create a custom system in-house. While this requires more technical expertise, it also allows you to come up with a customized program that perfectly suits your business goals and your customers’ preferences. A customized loyalty program can also help differentiate you from competitors.

Action: Loyalty programs are a great way to collect customer data, which can help you improve your business. Tell your customers why you are asking for their personal information; this helps build trust and may make them more willing to share.

Selecting the right type of program

Consider how the program will fit in with your broader business goals, as well as your customers’ preferences.

  • Retail locations that benefit from volume might try a (digital) punch card to help generate return business. Decide whether it makes more sense to reward number of purchases or dollars spent.
  • Service-based businesses might consider a discount for bulk purchases (like a package). This helps you lock in revenue now and better plan for the future, while your clients lock in a lower price.
  • Giveaway-style loyalty programs can help your customers feel appreciated regardless of your business model. What you give away can vary from exclusive content to merchandise.

Action: Loyalty programs aren’t a replacement for customer service. If you offered free samples or holiday coupons prior to enacting a loyalty program, keep those initiatives going.

So I have a loyalty program. How do I promote it?

One of the biggest missteps small business owners make is not publicizing their loyalty programs.

It’s important to:

  • Announce your loyalty program and reference it regularly in any communications with customers (emails, social media, or even on your receipts).
  • Explain how the program works. Be clear about the perks and any fine print.
  • Brand your program. Remember that the big picture goal isn’t immediate sales generation but loyal customers. (Ultimately this should generate sales, too: customers with an emotional connection to a brand spend significantly more.)

Loyalty programs can be a great way to build lasting bonds with your customers at a time when those bonds are more important than ever. Remember that the goal is to help your customers by giving them access to deals. But you’re also helping your business out in the long term by building loyal and engaged client relationships.

Sources: Harvard Business Review, Qualtrix, Yotpo, G2, Patriot Software, LoyaltyXpert, Motista