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Do customer loyalty programs work?

By Justine P. Castellon |

Here are the steps and basic framework for getting your customer loyalty rewards program started and running efficiently:

1. Analyze and capture customer information. Make it a point to identify the types of your customers and the specific purchases they make. Start with what the marketplace is telling you—what your loyal customers want, how they buy, and what motivates them. Use these data to come up with a loyalty program that not only meets your objectives and targets but also delivers a return on your investment in the program.

2. Track customer behavior. Group your customers by type so you’ll know clearly where your business comes from and how to sell to them more effectively. This will also allow you to react and respond differently and purposively to each group.

3. Develop a customer contact plan. You need a contact plan to provide you with a broader view of the program. It will make you see where your activity time is being spent, and will allow you to identify areas of commonality and areas where you can gain leverage.



4. Raise customer expectations. Build excitement by letting customers know exactly what rewards they can expect and how to earn them.


5. Manage points and redemption. Invest in technology to automate the recording of your customers’ purchases and rewards points. These will allow you to easily monitor what makes your customers keep coming back. No retention solution would be complete without the continuous monitoring and tracking of your most valued customers’ usage patterns, purchasing behaviors, and redemption rates.


6. Communicate. Formally launch your loyalty program and clearly communicate its value to your target customers. This effort will include developing and distributing introductory kits, membership cards, online and offline registration, sign-up events, direct marketing, and internal staff training.


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