Implementing Customer Loyalty Programs & Incentives

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  • 0:03 What Is a Customer…
  • 0:46 Implementing a Loyalty Program
  • 2:23 An Example
  • 4:32 Lesson Summary
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Lesson Transcript
Instructor: Tara Schofield

Tara has a PhD in Marketing & Management

In the competitive marketplace, it can be difficult to build loyalty with customers and keep them coming back to your business. Implementing a customer loyalty program and offering incentives can help build your repeat business.

What Is a Customer Loyalty Program?

A customer loyalty program is a plan that a company implements to offer bonuses or rewards to repeat customers. Often called a rewards program, it might come in the form of a discount, free products, or special offers or events that are only available to members of the program. The goal is to encourage customers to return to a business, buy repeatedly, and be a loyal customer to that company.

Some programs charge a fee to become a member, while many programs are free to join. Members are often given a card or membership number to identify them and keep track of their membership. If you've ever been given a little card to put on your keychain, you're likely a member of a customer loyalty program.

Implementing a Loyalty Program

A company can create a program that's specific to its business and market. Likewise, customers' preferences must be considered when organizing a program. There are several steps to consider when implementing a customer loyalty program.

First, determine the format of your program. Will it be a loyalty card, similar to what you find at a grocery store, or is a 'buy 10 get one free' plan better for your business? This is a common program for restaurants or coffee shops. Maybe your best option is a paid membership that offers product discounts, similar to what Barnes and Noble offers. Take time to determine which type of program works best with your company and will be most motivating for your customers.

Second, design the program. Work out the details of how your program will work. Will there be limitations or products not included in your offer? Are there time restrictions? Will you reward clients for word-of-mouth advertising? This is the chance to think through the logistics of the program and ensure the program is win-win; a win for your business and a win for customers.

Next, announce and market the program to your clients. You might create fliers to hand out in your business and to email to your customers. Don't forget online and social media options, too. You can reach your customers through your Facebook and Twitter accounts as well as Instagram and Pinterest. Use every resource at your disposal.

And, finally, measure the effectiveness of your program. After the program has been established, review the successes and the weaknesses to determine what changes need to be made. The program will likely evolve over time and will shift as your business grows and your clients' needs change.

An Example

Let's look at an example. Say you own a beauty salon in a busy strip mall and are consistently busy. While you're pleased with the income you're earning, you see huge opportunities for growth by increasing repeat business. You determine you need a customer loyalty program. You call a staff meeting to walk through the steps of implementing a rewards program.

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