Creating a Customer Loyalty Program

4 ways to retain clients, increase revenue & design a system for success.

Parents often face a dilemma: How do you give older children ample attention without neglecting your newborn? It’s a balancing act that takes a thoughtful mindset and strategy. The same can be said for entrepreneurs who strive to create a successful sales operation by cultivating a customer loyalty program that entices new clients without ignoring a faithful base.

Many companies use points programs to encourage loyalty, where purchases lead to points that customers redeem for discounts on later purchases. However, customer loyalty expert Jackie Huba (Opens in a new tab), author of Monster Loyalty: How Lady Gaga Turns Followers into Fanatics doesn’t believe points programs garner the best results.

“Points programs are there to bring customers back, based on the points and rewards they have available, but that’s not loyalty,” explains Huba. “They are just incentives for customers to return. Loyalty is at a higher level and involves engaging loyal customers who keep coming back to also help them find new customers through word of mouth or referrals.” A winning loyalty program will inspire a small business’s most faithful shoppers.

Here are four suggestions on how to start and maintain a successful program that will leave your clients coming back for more.

Understand your base. A return customer program must identify who and what you’re dealing with. Huba suggests small business owners use a survey technology like Net Promoter Score, found in various customer experience management software programs. This calculation measures a customer’s willingness to recommend a company’s products or services and gauges their overall loyalty to your brand. The metrics will provide you with customer insights including areas of improvement, benchmarks for growth and a better understanding of how to direct your customer engagement.

Identify your VIP customers. Customer incentive programs should make your clientele feel extra special, especially those who spend the most and keep coming back. Invest in software that will identify and monitor “VIP” customers and communicate with them often through direct mail or email to ensure they know your mission and intentions. Then consider inviting them to join a customer advisory board or exclusive ambassador club. Take Loretto, Kentucky-based premium bourbon company, Maker’s Mark, for example. Their Ambassador program offers loyal customers invitations to exclusive events, personalized elements for their bottles and holiday gifts in exchange for providing feedback and sharing their preferences with others. “These folks will become loyal advocates for your business just because they were asked for their opinion,” says Huba.

Get social with it. Don’t be afraid to engage with customers. Huba has seen success when smaller retailers ask customers to take a photo using or wearing a company’s product and post it with a customized hashtag. “Whoever has the most creative photo gets a discount,” says Huba. “These customer engagement programs will increase loyalty because you can see the people who are out there talking about you. Any customer who takes the time to do something for you is your most loyal fan. Social media can be a great way to identify these customers.”

Assign a team to own it. After you’ve chosen a customer loyalty program that fits your needs, make sure you have employees or contractors to produce, execute, promote, and maintain it. Launch in a trial stage to a segment of your customer base to see how things work, which will allow you to fix any potential problems that may arise. “Make sure you have the resources and personnel to manage the program because the last thing you want is to roll things out, something goes wrong, and there’s no one to help customers resolve their issues,” says Huba.

Your customer loyalty program should be tailored to your base’s needs. Think outside the box and discover more meaningful ways to engage your clients, especially those who have been with you since the beginning. They can be the secret sauce not only in acquiring new customers but in taking your business to the next level.