What Are the Best Tips for Developing Loyalty Programs?

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  • Written By: Maggie Worth
  • Edited By: Jenn Walker
  • Last Modified Date: 20 January 2020
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It is an accepted axiom of business that it is easier and more profitable to keep existing customers than to gain new ones. Loyalty programs are programs developed to build customer loyalty and increase customer retention. Examples of such programs include frequent-buyer discounts and free item offers after a set number of purchases. Tips for developing solid loyalty programs include understanding what customers value, making customers aware of the program and its benefits and designing a program that the business will be able to sustain.

In order to create effective loyalty programs, businesses must provide rewards that customers find to be valuable. To do this, the business must understand the customers. One way to find out what customers want is to analyze data, such as purchase histories.

Another option is to ask the customers directly. This can be done in a multitude of ways. A business might use survey methodology, either through electronic or print surveys or by conducting customer focus groups. Other businesses might set up customer suggestion boxes or use email or social media to ask customers what types of rewards they most want.


Once a business understands what customers find valuable, it can set up an appropriate program. This might include members-only coupons or sales, free items with purchase or free shipping offers for online purchases. Restaurants and coffee shops, for instance, often offer punch cards that are good for discounts or free items after the purchase of a set number of items. Other programs allow customers to earn points for each purchase, and such points are generally redeemable for merchandise, airline miles or other perks.

Customer loyalty programs cannot be effective unless customers know about them. Businesses must make customers aware through direct mail or email campaigns, by posting signage at registers or on websites, or by announcing programs on social media sites. It is important to give customers complete information about the program, including how to earn rewards, what they can earn and what restrictions might apply.

Another major factor to consider is the sustainability of the program. Businesses should ensure that customer rewards will not be a financial burden. They should also be sure that they have an accurate way to keep track of what customers earn as well as an efficient way to distribute rewards. Businesses that are unable to maintain their loyalty programs likely will find themselves with frustrated customers.



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