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How to start a loyalty program in 3 steps

Small Business: Market Your Business

Learn how to start a loyalty program

Customer loyalty programs make customers happy and help your business. They encourage customers to continue shopping or using your services by offering things like discounts, free merchandise, etc. 

If you don’t offer a customer loyalty program, it’s never too late to start one. Here are the steps: 

Step 1: Know your loyalty program options 

Loyalty programs can take many forms. Here are a few of the more common program types:

Punch card: Businesses can offer punch cards that motivate customers to rack up purchases. A customer’s card is marked when they spend a certain amount or make a purchase. Once the card is full, customers get a discount or free item. Punch cards don’t require new technology or a large budget. Simply a card with the number of punches you require, then print it and pass it out — just be sure to offer a reward customers will love spending toward.

Email list: Email marketing is an inexpensive and effective tool for small businesses. Encourage customers to sign up for your insider email list, in exchange for special offers and discounts that aren’t available elsewhere. Not only can you get creative about the offers you send out, but you can also track whether customers are opening your emails, clicking to learn more or redeeming the offers.

For a more exclusive program, use your customer relationship management software to keep track of customer spending, and invite those who spend the most to join a premium loyalty program that yields bigger rewards.

Membership card: Consider giving branded membership cards to program members. Often, a membership card looks like a debit card and can be swiped to get discounts or track rewards. There are many loyalty card services that allow you to design cards with your logo and colors, as well as track customer behavior. Through membership cards, you can record data like how much customers spend and how many times they visit.

Third-party apps: If you don’t have the time or resources to build a loyalty program from scratch, consider a third-party app. They’re already established, and they make it easy to go digital, especially if you’re not sure how to get a mobile rewards program started or track the activity on it. With consumers using their mobile devices in fast-growing numbers, having a phone app is a convenient way to communicate with customers. Plus, customers don’t have to worry about keeping track of or carrying around a separate card. Some good options for small business owners include:

Once you've decided which option(s) work for your business, move on to the next step. 

Step 2: Entice customers to sign up

To gain loyalty members, it's crucial to get the word out about the program and its benefits. Promote it in-store, on your website, on your social media pages, in your directory listings and even on your receipts and printed materials. Highlight the benefits that loyalty members will receive, such as a faster checkout, discounts or something else specific to your business.

To encourage people to sign up, make sure it’s an easy and quick process. Experiment with incentives. For example, you might include a package or membership up front that makes customers feel exclusive or special. 

Additionally, entice through excellent customer service. Demonstrating in every interaction that you care about your customers will warm them to your business and help build a trusting relationship. And when they have a chance to interact with you through a rewards program, they’ll be more likely to take you up on it.

Step 3: Reap the benefits of customer loyalty programs

With so many companies offering similar products, a loyalty program is one way to stand out in the crowd of competitors and to keep customers after a sale. Loyalty programs give people a reason to come back, while also making them feel valued.

When a customer registers for a loyalty program, their information is recorded into your company’s database (meaning that you’ll have access to customer data and trends). You’ll be able to see customer preferences and buying behavior, which is great for segmentation and targeting specific customers for certain promotions or sales. And you can use this data to create an even greater post-sale customer experience.

You can also look forward to improved communication thanks to your loyalty program. When there’s a new product, sale or promotion, loyalty program customers are easier to contact and more likely to read the information, which can lead to greater profits. With a loyalty program, people are more likely to visit your business to use their rewards, and more likely to spend on other products once they get in the door.

Beyond all of this, having a customer loyalty program allows you to reach a greater audience with your branding. Whether your loyalty program exists entirely online or incorporates tangible items like punch cards, be sure to include your branding. When audiences encounter your logo, colors, typefaces and tone of voice in your loyalty program, that will continue to reinforce the value of your brand.

A customer loyalty program in action 

Let’s turn to an example that demonstrates the importance of strong branding and how a loyalty program can help you get there: Morrison's Irish Pub.

Morrison's uses business cards to spread the word about the restaurant, but it's the newest card that's worth noting: lunch punch cards. Along with a business card, punch cards are something customers can easily slip into a pocket and always have on hand. Morrison’s punch cards encourage repeat lunchtime traffic, which was one of the pub's goals when it was featured on Small Business Revolution.

The way the card works is simple — and easy for your business to reproduce!: Card holders get a punch for each lunch entree and, after 10 punches, they get a reward in the form of free food. 

It may take some trial and error to get a program up and running, but it’s worth it. See which incentives and formats (print versus digital) are most popular with your customers. Check which offers people interact with more, and analyze the data from customers to continuously improve your loyalty program. Once you discover what works for you, you’ll be able to keep your program running with minimal effort and build lasting relationships with your customers.

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