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It's a basic instinct to look at major conglomerates like Starbucks and Amazon and believe that customer loyalty programs are far-reaching. How can a small business create the apps, legal protections, high-end integrations, and internal systems that these brands have?

However, the myth that customer loyalty needs to be expensive or complex must be busted.

Any business can take advantage of a customer loyalty program to grow their company. Here's how to expand your brand's reach and improve customer retention. 

How To Create A Loyalty Program

What's the Buzz about Customer Loyalty?

According to a study conducted by the Garnet group ⅕ of a brand's existing customers are responsible for 80% of its future revenue.

In plain words, you don't have to look for greener pastures, if you can use relationship marketing to tend to your current one

Additional research shows that customer loyalty can be passed from one generation to another, with each tier tightening the bond as 63% of millennials have similar brand loyalties with their parents.

So with a loyalty program, you're establishing customer retention for years, and generations, to come.

Why Use a Rewards Program to Foster Customer Loyalty?

Customer satisfaction does not equal customer loyalty.

Here's a cartoon that illustrates this concept:

customer-loyalty-cartoon

However, with a loyalty program, you actively engage and reward customers to make repeat purchases.

This gives you some control over your customer's loyalty and allows you to influence it through the rewards you provide.

How to Grow Your Business with a Loyalty Program

1. Give More than Just a Discount as Rewards

Many loyalty programs fail miserably because they only offer a basic discount based on a predefined spending limit.

While consumers love discounts, as they're easy to access via coupon downloads or other technological solutions. Your loyalty points should offer more than a quick discount if you want to stand out from the crowd.

Starbucks for instance uses a dedicated mobile app to run its loyalty program. By earning loyalty points, their customers can get free drinks on their birthdays, order ahead to avoid waiting in line and can get free refills.

Rewards that tie into the reasons consumers became customers, and that go beyond generic offers (discounts), are what bring about business growth via a loyalty program.

These types of perks are prevalent in millennials who prefer instant return and convenience. Since millennials are behind $600 billion in spending annually, it is crucial to cater to them to achieve growth.

2. Offer Customers a Deeper Connection and Meaning

A loyalty program that provides perks will no doubt pull in new customers and keep current ones. But a reward program that takes a stance on social issues is more capable of building loyalty in consumers than nice perks alone.

With the world constantly changing and global anxiety on the rise, people are on the lookout for opportunities to take part in social initiatives that give back meaningfully.

Customers that participate in such loyalty programs not only enjoy the perks you give them but feel connected to the social initiatives that they are supporting indirectly.

A superb example of such loyalty programs is Lyft's Round-up program. The rewards program lets users round up their trip fare and donate to a cause they choose.

Riders all that within an app! This lets customers build a deep connection with the brand with just a few swipes. By offering an emotional incentive to your loyalty program you'll be able to boost customer commitment and retention in the long-run. You'll also attract new customers as ⅔ of buyers will purchase from brands who have such social programs over those that don't.

Hence, create an emotional connection in your customer's experience by including a cause into your loyalty program.

3. Use Brain Power via Gamification

The primary reason people stay loyal, whether to a sport's team or a lover, has almost nothing to do with how they feel about the team or individual.

It's their brain.

Sports teams, for instance, initiate a tribal survival mechanism. And romantic love taps into the rewards and addiction center of the human brain. In both cases, there's an unbreakable loyalty that cannot be explained logically.

Similarly, you can develop such loyalty in your customers by accessing certain brain structures through gamification. This is far more effective than any of your competitors’ ad campaigns.

By turning any experience into a game, you can influence a customer's personal motivation to finish a task, such as purchasing from your store. This is valuable especially when it relates to loyalty programs that offer rewards based on certain actions, like getting to a particular membership level after spending x amount of dollars.

You've probably experienced this before with hotel loyalty programs that redeem loyalty points by allowing you to have a free night at one of their properties or partner resorts. Similarly, airline loyalty programs allow you to redeem points via free flights.

However, there are other ways to gamify your loyalty program:

  • Badges: Many loyalty programs give badges for customers completing certain challenges or tasks like spending a particular amount of money within a specified timeframe or taking part in a 30-day challenge.
  • Performance Graphs: Performance graphs help your customers to track their progress in the game that you've created for your loyalty program. This serves as motivation and helps to build their engagement with your business.

Conclusion

Growing your business with a loyalty program doesn't have to be a complex or expensive project.

When you do it right it can reap amazing benefits for your brand. If you aren't sure how to begin or even what to offer as a reward, consider interacting with your current customer base via a basic customer survey to see what they'd want to see in a rewards program.

About the Author(s)

raul-galera

Raul Galera is the Partner Manager at ReferralCandy and Candybar. He's been working in the tech sector for the past seven years and works to help small business owners create loyalty programs and writes about marketing, tech, and e-commerce.

Partner Manager, ReferralCandy
person gives loyalty card to cashier