5 Best Practices of a Winning Loyalty Program Strategy for Retailers

Pople Rewards

Building a solid relationship with loyal customers is the most precious thing a business desires to gain after experiencing your products and services. The research from Bain & Company proved that the 5% rise in retained customers increased profits up to 25 % – 95%, showing the significant impact and effectiveness of customer loyalty in business. Additionally, existing customers are found to be prepared to spend 2.5 times or about 67% more than new customers on any product.

Building a loyal customer base not only attracts more potential buyers but also brings revenue and profits to the business. Here are 5 top effective ways for businesses to promote loyalty program strategies and evaluate their efficacy.

What is An Effective Loyalty Program Strategy? Why Does Your Business Need It?

The term ‘loyalty program’ refers to strategies that assist firms in establishing long-lasting relationships and retaining their customers by ensuring their loyalty towards the company’s products and services. Therefore, how can an effective loyalty program strategy benefit businesses?

  • Increase the customer retention rate and boost sales:
    With an effective loyalty rewards program, customers intend to repeat purchases to gain more loyalty scores that generate steady business income. In addition, your customers will be involved in various company activities like tracking reward points or an upcoming points accumulation program, promoting interaction with the company. Hence, it will give you a highly competitive advantage to stand out from competitors.

  • Support in customer referral marketing:
    Loyal customers will be critical in a word-of-mouth marketing strategy that will bring you numerous free leads.

  • Boost brand recognition and create strong connections among faithful customers:
    New customers can trust those famous brands with many loyal customers to make a purchase decision while ignoring others.

  • Gain more valuable customer insights:
    It becomes difficult to gain customer preferences, purchase behavior, and needs, as many customers will never openly share if they do not trust. Only once they trust your customer rewards program, you can enhance products, services, and marketing strategies with their data.

The following part will share 5 best practices for developing a successful customer rewards program. Keep reading!

5 Best Practices to Promote Loyalty Program Strategy

1: Understand Your Existing Customers

Two Woman Talking

Customer data plays a critical role in driving expansion through all parts of a company’s growth process. Understanding our current customers well is the starting point for establishing good customer loyalty programs. Gathering customer data can significantly promote the loyalty program in several ways:

  • Tailor the unique loyalty rewards, benefits, and engagements in line with customer’s needs and interests. Additionally, you can control if the loyalty rewards are good enough to retain customers for a long time and then have specific strategies to set up a program to minimize customer churn and satisfy them.

  • Launch targeted customer loyalty marketing campaigns based on customer segments. You will provide them with relevant products, special promotions, personalized advice, recommendations, and reward programs. The high customer retention rates will increase with the effectiveness of campaigns.

  • Adjust and improve customer loyalty strategy easily with consistent customer data, including purchase behaviors, needs, and wants. It gives many chances for businesses to sustain and build lasting customer relations.

A POS system with loyalty program management helps retailers manage and use customer data effectively, thus understanding more about their references to tailor effective customer loyalty marketing campaigns for each group customer segment.

2: Enhance Customer Service And Customer Experience

shopping with card

Retaining customers to optimize your loyalty programs always goes hand in hand with enhancing customer service and experience. According to Yieldify’s report, 74% of e-commerce brands are increasing their efforts to improve service and retain customers rather than attracting new ones. This practice will bring benefits to promoting loyalty program strategy as follows:

  • Build customer satisfaction, retention & advocacy: Customers are also more likely to be attracted to your unique customer rewards program only if they have had an excellent experience in total.

  • Reliable service and products- build trust: To achieve loyalty, trust that leads to loyalty must be present when building customer relations and fulfilling promises of loyalty rewards program.

  • Solve customers’ problems and handle their complaints with a perfect service: As soon as all the questions and problems that arise while using a loyalty reward program are solved for the benefit of the consumers, they will stay loyal and remain dedicated to repeat purchases.

Nowadays, utilizing a retail management system is a wise choice for medium-sized and large businesses to deliver better omnichannel customer experiences. Not only managing loyalty programs but retail management software will also help businesses save time and reduce errors to streamline online and offline business operations with inventory management, CRM, purchasing management, and order fulfillment.

3: Keep it Simple and Easy to Access

talking business

Any marketing strategy always aims to ensure that all customers can easily access and use the products or services that the company provides. So, the loyalty reward program must be optimized so that customers can easily access and comprehend how to register and participate. As a result, your loyalty program will cut down on any problems they can encounter, making it easy to accumulate and obtain rewards. From there, they can introduce or suggest to new customers your customer rewards program based on what they experience.

Some tips for you to keep your loyalty program easy to use are as follows:

  • Do not use technical terms and request too much information when registering.

  • Clean up and synchronize your program for all media like traditional stores, websites, and mobile applications…

  • Develop an online communication platform where customers receive and are satisfied with their questions/issues resolved quickly and dedicatedly by customer service.

4: Give Customers Unique and Valuable Rewards

vip card

Depending on the priority purpose of the loyalty program you plan, such as attracting new customers or increasing revenue, you should consider and choose the appropriate types of loyalty rewards to make customers satisfied and feel appreciated. about what they deserve. There are many types of loyalty rewards that you need to know:

  • Discounts - the most popular rewards
  • Free shipping or special deals: Buy one get one…
  • Bonus points for referring others or writing feedback
  • Free products or samples
  • Cashback on total spending
  • Tiered membership with corresponding reward
  • Birthday and anniversary gifts

No matter how many types of rewards you choose, remember that you should focus on quality and make them impressive and stand out from the competition. So how to set your loyalty reward apart in the highly competitive market? Here are some tips:

  • Comparative research of competitors to stand out.

  • Tailor award systems according to behavioral, need, and expectation approaches.

  • Consider offering temporary or seasonal incentives.

  • Commit to exactly what loyalty rewards you provide and highlight special incentives so the customers realize the difference.

  • Surprise your customers upon receiving the rewards or gifts, such as sending notifications via WeChat or Viber.

  • Hold events for V.I.P. or top membership.

  • Celebrate your loyal customers on social media.

  • Evaluate and update regularly.

5: Adjust and Make Improvements

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As the unpredictable changing of customers’ preferences over time, continuously improving loyalty programs is critical to:

  • Meet evolving customer needs.

  • Continuously catch market trends and exceed customer expectations with attractive customer loyalty programs to beat your competitors.

  • Minimize errors or interruptions, ensuring a good experience every time it is used.

A few ways you can improve your loyalty program while still keeping in regular touch with customers are:

  • Do surveys, feedback responses, or engagement in social media posts to identify the aspects of your loyalty program that your customers like most.

  • Carry out a SWOT analysis compared with competitors to discover an area for innovation.

  • Push your new features/rewards by sending SMS/MMS online to the customers.

How Can My Business Measure The Success of The Loyalty Program?


Repeat purchase rate

Remember to track customer repeat purchase frequency regularly. The higher the ratio, the more consumers interact with the brand and stay loyal.

Repeat Purchase Rate = (Number of repeat purchase customers / Total Number of Customers) × 100.

Retention rate

Find out what percentage of customers retain and remain loyal to the brand for a certain period. A higher rate shows that the loyalty program works effectively and vice versa.

Retention Rate = (End Customers/Beginning Customer) x 100.

Referral rate

The rate reflects how loyal your clients are, as they will willingly advocate for your services and bring more people into the company.

Referral rate = ( Referred customers/ Total customers ) x 100.

Wrap Up

Loyalty programs have become another critical link in sustaining the further development of the business and enhancing relationships with customers. These five best practices of our customer loyalty strategy would help to retain customers, stimulate referrals, and ensure your business’s overall success.

Remember that the backbone of any progressing and evolving business lies with its loyal customers, which forces it to improve its product quality and customer care. Furthermore, using customer communication tools such as integrated AI technology from EzTalks that are cost-saving and effective, such as text messages, faxes, or phone calls. Start promoting your customer loyalty program in just a few steps by registering now!