Creating a solid customer loyalty program for your business has the potential to lead to an unprecedented rise in sales and, as the name suggests, create consumer loyalty amongst your devout followers. Investing in a loyalty or rewards program is a sure way to improve your sales budget. Read our blog on What is the cost of implementing a loyalty program?

Step 1: Research & Objectives

Research may sound obvious, but arguably the most   important step, when conducting research your company should be able to answer these two questions; a) What do  your customers want? and b) how to reward. Research can be in the form of questionnaires, anecdotal or by simply observing your customers.

It’s important to have a clear objective for a loyalty program.

Is your objective to improve retention by rewarding existing customers? Or Is the objective to win new customers, grow revenue, and market share? Or a combination of both?

Step 2: Identify your target audience & Set your goals

Now the fun begins, use the research you have conducted identify customers that have that potential to spend more, but choose not to. Customer loyalty programs work best when the purchase cycle is short, and customers can receive their rewards ASAP.

Set targets that you would like to see, be ambitious but realistic. It is important to note that the primary focus of a customer rewards program is to build a lasting relationship with core customers that will eventually turn them into loyal customers in the long-term.

Step 3: Set a budget and stick to it

This differs from business to business and sector to sector. The main question is how much are you willing to invest in your customers and how much can you potentially get in return for that investment? Some costs to consider include research, creation of infrastructure, storage and shipping of rewards, cost of rewards, technology, promotion and communications and opportunity cost.

Step 4: Rewards Rules & Rewards

Reward rules determine what action a customer must take to qualify for a reward. Transactional rewards programs are very popular with supermarkets and retail brands. Customers earn points for every €/£/$ they spend. Many customer loyalty programs reflect the importance of digital and

social media and companies will reward customer for sharing content. Other buying behaviours that reap rewards include payment by direct debit, accepting e-invoices, payment upfront and many more.

Rewards can be anything from cash-back to cinema tickets to future discounts to experiences. They should reflect the type of business, frequency of purchase, the value of that purchase and the objectives set out for the programme.

Step 5: Technology

What type of technology should be considered for a customer rewards program is dependent on many factors including the frequency of transactions, the objectives of the loyalty programs and the deployment of rewards. Other factors include the type of data that will be collected and the roll of digital engagement. Service stations and supermarkets tend to use points-based technology, which often requires integration into the company’s epos.

New technologies are always emerging particularly with the growing importance to reward customers for the digital engagement with the brand. Technologies such as gamification and image recognition are becoming increasingly popular among FMCG rewards programs. Technology plays a critical role in the success of any rewards program and it ability to achieve its key objectives.

Step 6: Market and launch your customer loyalty program

Depending on how big or small your business is (or what sector you may find yourself in), you may want to consider a pilot before making it available to everyone. This will allow you to iron out any potential kinks.

Either way, give yourself enough time to generate a buzz around the program before going live. Your company can achieve this through promotional events in-store, receipt printing, e-mail, online promotions, text messaging and social media.

Once the program has launched, your customers will want to know how it works. It is essential to communicate this and explain the program rules in a simple and concise way.                                                            Step 7: Review the program incrementally

Now is the time to put your feet up and let the program take care of itself, WRONG.

Once your customer rewards program is up and running, it’s important to gauge if it is doing what you and the research predicted it would. Is your target audience interested and signing up? If not, why? Are there barriers stopping customers from enrolling and if so, can these be eliminated?


Customer rewards programs are a great way to turn your casual buyers into frequent buyers, or your loyal customers into you all star customers. Not only can customer rewards schemes increase loyalty, but ultimately increase sales in the long term, something of a win-win for businesses and customers alike. When launching a loyalty program, by taking the time to conduct the right research and planning, a well thought out loyalty program is one of the most powerful programs to

entice your current client base into sticking with you and even spend more.

Posted in Loyalty & Rewards