When you set out to create a loyalty program, there are two major questions you want to ask:

  1. How do we engage prospects and brand-new customers?
  2. How do we create perks for important, tenured customers?

You may not know the answers to these questions immediately, but your customers definitely do. So, talk to them. Hold focus groups, send surveys, and find out what matters to them. What will surprise or delight them?

You may find that customers don't think getting a 15 percent discount is as exciting as getting an actual product. It's common for people to join loyalty programs more for the unique benefits than for any discount. Companies that give you something free--like Sephora's Beauty Insider rewards--understand that getting an actual gift has a different psychological effect than getting an email with a code for 15 percent off. Sephora now has 17 million members just in North America, and those members account for 80 percent of their sales.

Your rewards program is destined to flop if your customers aren't excited about getting, or using, their rewards. Talk to them, figure out what they want, and incorporate it into your plan.

Published on: Feb 17, 2019