Customer Loyalty Programs Should Be Right for Your Business

What are the best practices for setting up a rewards program for my customers?

Almost every business today has some type of customer rewards program, and it’s never been easier to gauge effectiveness given the tracking and reporting analytics available. While testing, learning, modifying, and iterating can eventually lead to an effective program, there are certain guidelines to follow when creating or modifying an existing program to improve it.

First, understand that what most programs are trying to do is build loyalty. This is different from a short promotional campaign to increase sales, so anything you create should be done with the goal of developing a relationship that promotes customer longevity. This leads to the first consideration, which is to know the customer and understand what is relevant and meaningful to them when it comes to rewards.

Don’t assume that just because other people in your category are offering travel perks doesn’t mean that’s what your customer wants as a reward. Often companies will replicate what others in their category are doing because they assume it’s right, and it’s also easier than doing your own research. It’s a mistake, and you can create a better program by doing the homework to find out what’s most relevant and meaningful to your customers.

If in doubt, communicate. Clients may not want a one-size-fits-all approach.

The more you can customize your program to your customers, the more valuable it will be to them, but that comes with a caveat. Don’t make your program complicated and difficult to understand and use. You may think you have a great personalized program, but if your customers can’t easily understand and use it, it won’t be successful.

As not all customers are of equal value to businesses, ensure that rewards are commensurate with the degree of loyalty displayed by customer behavior.

Another factor to consider is making it easier to review, comment on, and recommend products and services. This drives customer engagement and ultimately is the essence of creating a great program.

Glenn Karwoski is an adjunct faculty member at the University of St. Thomas Opus College of Business.

Joseph P. Harris