I’ve always been passionate about creating loyalty programs. It’s a valuable way to connect with and learn from your customers while delivering concrete business results, especially as customer acquisition costs rise. Before implementing a loyalty program, my team and I spend significant time contemplating these essential questions:

  1. Customer value proposition: Why would our customers want to join this program? How can it enhance our engagement and connection with them?
  2. Business impact: How will we measure this program’s effect on customer retention, frequency, incrementality, and advocacy? What’s the return on investment? And what’s a reasonable timeline for achieving this?
  3. Management and profitability: Who will oversee the program within the team and ensure that we factor in all the costs, identify efficiencies, and drive profitability?
  4. Best practices: What loyalty programs do we admire, and why? We examine our industry and other sectors.
  5. Pilot market: What market will we pilot in? Note that programs don’t work universally across the globe. It’s essential to customize tiers, rewards, and consider currency, points liability and robust fraud management as we scale.
  6. Tech stack integration: Which loyalty program tech stack aligns with our current and future business needs and seamlessly integrates with our direct-to-consumer ecosystem?
  7. Data collection: How does this program fit into our data collection initiatives? What consumer insights do we hope to gain clarity on?

Next, it’s important to think about how our customers earn rewards:

  • Spend: Customers can earn rewards by spending a total accumulated amount over time (drives lifetime value and can increase average order value) or by spending a certain amount today to receive specific rewards (to boost AOV).
  • Share: Earning rewards can also involve actions like writing a review (drives user-generated content and SEO), sharing personal data on their birthday (drives personalization), or referring a friend (helps with customer acquisition costs).

Finally, what are the customer benefits of the program:

  • Savings: Customers benefit from savings, which could be in the form of a specific dollar amount off or a percentage discount, along with gifts with purchase, etc.
  • Services: Benefits can also include free shipping, early access to new products or sales, free alterations, and more.
  • Experiences: Customers can get invited to in-person events, become part of a like-minded community, gain access to a personal stylist, provide feedback on new products, etc.

For me, two loyalty program pillars are transparency and commitment. When changes to the program are made, we communicate with care and provide ample notice. It’s essential for our customers to feel genuinely valued by our brand. Trust can be earned but it can also be lost in a nano-second if we neglect the importance of maintaining a positive relationship with our customers. Thus, we focus on creating joy. This helps ensure that our brand shines.