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How to Set Up a Customer Loyalty Program

Date Updated: June 23, 2021

It’s actually much easier to convert existing users than it is to find new ones. According to a recent Bain & Company analysis, a 5 percent increase in customer retention rates translates to a 95 percent boost in profits. Even with unparalleled service and high-quality products, you still need to incentivize users to keep coming back. One of the best ways to do this is through a customer loyalty program that allows you to engage, nudge and track all of your existing users.

1. Pick a Branded Name

The first step involves choosing an official name for your customer reward program.

2. Offer Real Value

There’s no secret — shoppers know that after providing you with their details, you’ll eventually reach out to them.

  • Discounts can and do work.

  • Free subscriptions to ancillary services

  • Cashback rewards and other monetary incentives

  • Accumulated points that lead to a free item or service

  • Free tickets to local concerts, games or events

3. Make Enrollment Easy

If you run an e-commerce site, this step is practically automatic since you capture each user’s contact details the moment they buy something online. If you run a brick-and-mortar shop, keep all enrollment forms as simple as possible, too — the less information you request, the higher your conversion rate will be.

4. Leverage the Endowed Progress Effect

In a landmark study, researchers discovered that creating “artificial advancement” could help significantly boost customer loyalty program enrollments.

5. Use a CRM Platform

Some of the better CRM tools also come with useful analytics that can help you visualize things such as shopping frequencies, purchasing habits and the lifetime value of each customer in your database.

The ROI of Customer Loyalty Programs Is Too High to Ignore

It costs a fraction of what you currently spend on traditional customer acquisition. Given that existing users are easier to convert (and spend more), the ROI of your loyalty program investment can be huge.

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