The Anatomy of Successful Customer Loyalty Programs

A customer loyalty program is kind of like dangling a carrot on a stick in front of a turtle. The difference is that the customer gets to eat the carrot from time to time. And if your business is a grocery store then they can eat carrots all the time.

 But, as usual, I digress.

 Today we’ll take a look at some customer loyalty programs. We will start with where the idea came from and how they have been implemented. We will also discuss how they can help your business. Don’t underestimate the effectiveness of a customer loyalty program, everyone loves getting something for free in exchange for something they had to buy anyways.

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 Customer loyalty programs have been put into use by airlines, perhaps most famously, but also by hotel chains, rental cars, online retailers and more. Look no further to the excellent Paul Thomas Anderson movie “Punch Drunk Love” starring Adam Sandler to see how some Airline loyalty programs worked.

1) The best customer loyalty programs are simple point systems

 Take a look at the most successful customer loyalty programs – frequent flyer miles and customer loyalty programs for online retailers like Ebay’s Ebay Bucks. They’re based on simple point systems. If you fly a certain number of miles, you get a certain number of points. With Ebay bucks, you earn a fixed percentage of points based on how much you buy. These systems are tried and true, and you can run into trouble if you begin offering complicated schemes like a 50 percent bonus on Wednesday afternoons between three and five o’clock.

2) Charge your customers for special services.

 Maybe a point based system isn’t your thing. That’s totally fine. Instead, you can charge your customers up front for special, prime services. Take Amazon, for example, who actually calls their service Amazon Prime. Ninety nine dollars a year gets you two day shipping and more free television than you could ever wish for. It keeps customers coming back to amazon because they want to get their money’s worth of the free two day shipping, so they buy stuff all the time, often, probably products that they don’t need just so they feel like they’re getting the most out of that hundred dollars. If you don’t think a point system would work for your company, this is another good option to consider.

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3) Turn it into a game

 People are competitive by nature and if you turn your customer loyalty program into some sort of game, the inner sports fan in all of your customers will be clamoring to win. It could be a contest or a sweepstakes, but ensure that they have to connect with your company in some way to enter. For example, with every purchase or service bought from the company, they receive a sweepstakes entry. This has worked very well for companies like McDonalds which has its Monopoly sweepstakes every year, which drives competitors to their stores in droves.

Implement successful customer loyalty programs at your company can be fun, simple, and not very expensive. The upside are tremendous as well. The sooner you implement a customer loyalty program, the sooner you’ll see lines outside your stores and dollars in the cash register.

Amy Clark is the Lead Author & Editor of IWantItNow Blog. Amy established the Customer Engagement blog to create a source for news and discussion about some of the issues, challenges, news, and ideas relating to customer service, support and engagement.