How do I build a customer loyalty program?
TL;DR
Decide what action to reward (purchases, referrals, reviews, social posts), pick a reward type (points, perks, tiers), set the redemption math, and pick software. Simpler programs outperform complex ones. Start with 1-2 actions.
Detailed answer
- 1.Step 1: Define the desired customer behavior.
- 2.Step 2: Choose a reward structure (points-based, perk-based, or tiered).
- 3.Step 3: Set the value math (e.g., $1 spent = 1 point, 100 points = $5 off).
- 4.Step 4: Pick a platform that fits your scale.
- 5.Step 5: Launch with a clear in-store and online communication plan.
Common mistakes
- 1. Making the program too complicated for customers to understand in 10 seconds.
- 2. Setting reward thresholds so high that no one redeems.
- 3. Not tracking the impact on repeat purchase rate.
What to do instead
Start with a single behavior (e.g., visits) and a single perk (e.g., 10th visit free). Measure for 90 days, then layer in additional behaviors.
Move beyond points. Modern loyalty rewards customers for sharing, reviewing, and referring — not just spending. This drives both repeat business and new customer acquisition.
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