Part 3 of 5: Must-Haves of an Effective Loyalty Program

This is the third in a five part series on what you should consider in implementing an effective loyalty program. GetOne would love to hear from you if you have anything you think we overlooked or if you have any questions.

3) Do the Math

Ineffective Use Case: Chris set up a digital loyalty program in his sandwich shop to reward regular customers and encourage new visitors to return. He decided that each sandwich purchased would be worth 1 point. After 50 points, a customer receives 50% off the next meal.

photo credit: <a href="">Dave Dugdale</a> via <a href="">photopin</a> <a href="">cc</a>

photo credit: Dave Dugdale

In order for a loyalty program to be successful, customers need to feel confident that they can and will receive the rewards you offer. In the example above, a customer would need to eat at Chris’s shop 2 times each week for almost 6 months – all for a savings of only a few dollars. An offer like that does little to inspire even the most loyal customers to sign up.

Attainable rewards are those perceived by a customer to be reachable in a reasonable amount of time with a minimum amount of effort. By measuring the value of the reward with the estimated time period required to receive it, a business can map out a successful loyalty program.

Questions to ask when setting up a rewards system include:

  • How many points does it take to be eligible for a reward?
  • What is required to earn a point?  Points can be earned per visit or per dollar(s) spent.
  • If points are purchase-based, is there a minimum amount that the customer must spend per purchase to receive a point? A maximum number of points per visit?
  • What is the minimum amount of time that must pass between visits?
  • Are points automatically redeemed for a reward at a certain level? Can customers instead choose to “save” points for different rewards at different point levels?
  • How long will it take the average customer to be rewarded?

Here’s just one example of a well structured loyalty program.

Effective Use Case: Alex decided to install a loyalty program in her boutique cupcake shop. To simplify matters, she assigned one point per cupcake  purchased. After 10 points, customers could receive a free cupcake of their choice, or they could save their  points for a tour of the bakery, complete with taste-testing, at 20 points.

By avoiding the pitfalls illustrated in this 5 part series on Must-Haves of Effective Loyalty Programs, you can create a system that fits your business and works for you.

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From “Five Must-Haves of Effective Digital Loyalty” by Maria Khodorkovsky

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