No matter what industry you’re in, you’ve probably heard of or directly interacted with some form of a loyalty program—whether for employees, customers or both. On the employee side, certain companies will offer finder’s fees for referring new business; on the customer side, brands dish out typical rewards with dollars or percentages off your bill or even free items like an entrée or clothing accessory. These are the Starbucks Gold Cards, Delta Sky Miles and Chipotle rewards of the world. There’s even a new system that you’ve probably seen floating around social media, where folks can sign up to be a “brand ambassador” to receive discount codes for following.

As the years have passed, loyalty/rewards programs have become increasingly commonplace—especially with the rise of technology in email marketing, social media and phone apps. But before these things were even as prevalent as they are today, loyalty-type programs have been around for some time. And when executed properly, they yield pretty impressive results.

Why run a loyalty program?

We’ll get into the nitty-gritty of the numbers that prove customer loyalty programs—when done correctly—are super-effective, but at the end of the day, it’s simple: rewarding your most loyal customers strengthens their loyalty to your brand. When you treat them well with unique incentives, exclusive offers and special events, they feel valued and motivated to continue to engage with you. This can help build community and camaraderie with your clientele and increase word-of-mouth advertising and organic promotions on social media from your followers, which is especially helpful for smaller businesses.

According to a 2016 European study, referred to by Annex Cloud:

• Customer loyalty programs increase overall revenue by 5–10%
• Members spend 5–20% more than non-members on average
• Members buy 5–20% more frequently than non-members

Plus, the more customers you retain, the better your bottom line. According to the advisory firm Bain & Co. Indeed, increasing customer retention by as little as 5% can boost profits anywhere from 25–90%. Now that’s nothing to overlook.

How to run a loyalty program

If your brand is interested in starting a rewards program, you’re probably wondering where to begin. It can (and will) feel overwhelming at first, no doubt. Thankfully, Team TIS has been around the block with this process and can help you out. Let's begin by calling out some of the specifics to getting started.

First of all, make sure your brand is SOLID!

Is your brand in a solid position to launch a loyalty program? This is a key element in successfully executing your program. It is absolutely critical to have key stakeholders within your organization who understand the ins and outs of your brand, and who fully support its values, mission and vision. Without a solid brand foundation, feeling confident in who you are and how your customers feel about you, a loyalty program will not yield the results you wish. Simple as that.

Establish your primary objectives.

If you and your key stakeholders feel grounded in your brand’s current position in the market, then you're ready to dive into the next step. Before you jump into the bells and whistles of your loyalty program, you’ll need to establish the primary objectives of the program. Loyalty programs take a significant amount of investment: time, money and resources. What’s your return on investment (ROI), and what are your key performance indicators (KPIs)?

• Feedback on how your brand is performing, how it stands against its competition, if it’s staying relevant or not?
• Increased visitor frequency from your loyalty members or guests in general?
• Increased spending per visit—more food and drinks purchased, more expensive items, etc.?
• Referring new business to increase brand recognition and bring on more loyal customers?

Or maybe you have another KPI in mind. If so, that’s great. Just make sure you define these before you get too deep into developing your program.

Identify your brand ambassadors.

Depending on the type of loyalty program you’re interested in running, your brand ambassadors may vary. For example, if you’re creating a program like Chipotle Rewards (where any customer can sign up for the app to earn points with every visit and receive free or discounted items), then defining a set group of brand ambassadors may not be necessary. However, this most likely won’t be the case for a small business planning a more involved loyalty program.

If your customer loyalty program will be engaging folks directly—the true brand ambassadors you recognize and know by name—then the process is more complex. There are a few ways to choose your brand ambassadors, such as:

• Applications or surveys: You can share this on social media, email and on your website, inviting customers to fill out an app to become a brand ambassador for your company.
• Data collections: Platforms like MailChimp, social media insight tools and reservation sites allow you to really dial into your most frequent, valuable customers.
• Good ol’ fashioned in-person relationships: If you’re in the space often, then you probably recognize your repeat customers. Approach them directly to join your loyalty program during their next visit.

No matter how you identify your brand ambassadors or how loyal they are to you, they’ll always ask, “What’s in it for me?” That’s where our next step comes in.

Set clear expectations and benefits for your brand ambassadors.

Delivering the expectations, requirements and benefits will ensure you have a committed group of brand ambassadors on your side. This also defines guidelines for your team internally to ensure you’re following through with your promises. The expectations you set should directly correlate with your KPIs, and the rewards you offer your brand ambassadors should be unique—items or opportunities that your average customer does not have access to.

Examples of rewards/benefits:

• Branded items/swag
• Store discounts
• Exclusive perks, e.g. ability to make reservations on a day or time not widely offered
• VIP events like tastings, fashion shows, private dinners… depending on your industry

Examples of expectations/requirements:

• Giving positive, word-of-mouth marketing for your brand
• Providing feedback and completing surveys on a regular basis
• Alerting key stakeholders of gossip or any problems that arise
• Committing to specific event attendance

As we mentioned, communicating these elements of your program will be absolutely critical to running a successful, results-producing program.

Three other important considerations:

Oh yes, there’s more. Don’t disregard these other important factors that play into a customer loyalty program. 

1. A brand ambassador program is a lifelong commitment. Your team must be aware that this is an ongoing relationship that must always be fostered and paid attention to.
2. Make sure you have someone in a dedicated role to manage and organize the program as well as coordinate activities and rewards.
3. Your team should always be working toward cultivating the program with new, valuable ambassadors.

And again, we truly cannot stress this enough—your brand MUST be solid in order to run a successful program and nurture ongoing relationships with your brand ambassadors!

Need help to launch a customer loyalty program?

Don’t feel like you have to do this on your own. The Image Shoppe is here to help strategize your loyalty program, get it off the ground and create any assets you may need, like branding, research, email marketing, Facebook groups, event organization and more. Start off 2020 with a game plan—contact me directly to get the discussion rolling.