Creating A Loyalty Program That Works

Loyalty programs are everywhere you look. At the airport, gas stations, grocery stores and coffee shops, every retailers seems to be offering some perk to its frequent customers. More and more business are recognizing the value of these programs in retaining existing customers. Why? Because it’s a cost effective and a vital component of maintaining a competitive edge in today’s marketplace.

Data shows that it costs business 5-10 times more to acquire new customers than sell to existing ones. Additionally, existing customers spend an average of 67 percent more than new customers.

Consumers have also come to expect loyalty programs, especially from larger retailers. Good rewards programs are wildly successful; they can be the reason that a customer always flies with Jetblue, or purchases all their cosmetics from Sephora.

Technology has broadened the landscape of these programs, offering opportunities to optimize, enhance, promote and gain insights. New tools can be utilized to target customers, define the rewards that they’re after, and keep them coming through your doors for years to come.

There are four steps to crafting the perfect loyalty program for your business:


Industry type plays a big role choosing a loyalty program. Business owners will want to ask themselves the following questions:

  • Do customers have to choose your business each time they make a purchase, or are they locked into a subscription for a set period of time? Subscription services are better suited to a referral rewards program as opposed to a typical reward for each purchase.
  • How similar is your product to competitors? Competitive industries stand to benefit from unique rewards programs.
  • How often do customers need to buy from you? The more often customers need to come back, the more merchants stand to gain from loyalty programs.
  • What is your average ticket price? This will determine the value of the rewards offered.

Armed with this information, business owners will also want to look into who’s buying.  Identifying the most loyal customers, generally the top 10 percent, will deliver tremendous insight into one’s target market. Loyalty programs should be designed with this demographic in mind.


Rewards come in all shapes and sizes. Choosing a program that is aligned with the business’s particular goals and industry is the key.

Club cards offer discounts or freebies with each visit. This is most suited to businesses that are frequented less often, such as upscale restaurants.

Points programs have points that are accumulated with each purchase and can be redeemed for goods or prizes. This is ideal for businesses that are visited more often, such as grocery stores.

Perks programs offer free delivery or special services to members. Many of these programs require a buy-in or minimum spending amount. The key to the success of these programs is when benefits are appealing to customers and communicated clearly.

Most importantly, rewards should be easy to redeem. Claiming rewards should be an enjoyable experience, not a process.

It may be helpful to research what direct competitors are offering their customers and considering a similar approach.


Once a program strategy and infrastructure has been planned and implemented, it’s time to communicate those benefits to the target market.  This can be done in person and online.

In stores, cashiers can invite customers to participate at checkout.  In general, employees should be ambassadors of the programs. They should understand it fully and be able to relate its value to customers.

Another way to reach customers is through online marketing. Emails, text messages and social media are great ways to reach customers about the program and explain its benefits. Survey customers that are participating in the program to gain insight on the user experience and perceived value of the rewards.


Loyalty programs don’t just keep patrons happy. They’re also a powerful tool to gather information on purchasing and customer buying habits to help you shape your business strategy.

Based on this data, a business can gain insight on what customers are interested in, and which promotions appeal to them.

Loyalty programs have been a successful strategy for Amazon and Google, and smaller companies can use it as a way to eliminate waste in their advertising efforts and be more effective marketers.

Fidelity offers a loyalty program add-in for its payment processing services. To increase your repeat customers and leverage the data of customer buying patterns, call (718) 782-2823.