Posts Tagged ‘Loyalty Program’

Loyalty Program Best Practices for Retailers

March 26th, 2010 Irfan Shaikh No comments

What are the benefits of a Loyalty Program?

Consumers today are very discerning when it comes to purchasing items or spending their hard earned incomes on goods and services. They are always looking for that something extra they can get from retailers.

Furthermore, customers want different things. Often, companies employ marketing strategies that seem to target a generally assumed customer aspiration, often fall flat because customer wants are now highly varied and extremely segmented.

In today’s business climate, it is now, more important than ever to maintain a close relationship with your customers. As costs to acquire new customers increase, generating continuous revenue from your existing customer base becomes an essential requirement to survival.

One way of building revenue from a steady customer base and encouraging repeat business is to establish a loyalty program.

A loyalty program allows sales and marketing teams to track more granular information of specific customer desires, track consumption behavior and other essential metrics that help determine a focused sales and marketing strategy. In turn, it helps companies build promotional campaigns that have higher probabilities of customer participation and potential up-sell.

What are the essentials of a successful Loyalty Program?

One essential component to a successful loyalty program can be summed into one word – Rewards.

Airline frequent flyer programs, another example of a loyalty program, provide incentives to travelers to buy airline tickets from their preferred airlines over others even if the tickets are slightly more expensive, because of the free reward flights.

It is important to provide rewards that consumers perceive with considerable value.

Another component of a successful loyalty program is referrals. DirecTV has a recurring referral program for existing satellite TV subscribers where they offer US$50.00 for every successful new customer referral. And to add further motivation, the referred new customer also gets US$50.00 for signing in.

There are other important reward components that make a successful loyalty program such as exclusive affairs or events where only elite members are invited. There are other programs that involve charging a fee for participation. In some situations, this reinforces a perception of exclusivity and value, which further persuades consumers to join.

What a Loyalty Program should not be.

An important aspect of a loyalty program is the perception of exclusivity and privilege. This is what customers value as much as the rewards they receive. Discount coupons, like the ones offered in grocery stores do not really encourage participation as it contradicts the perception of exclusivity or high value.

Loyalty Programs need to promote value as opposed to savings, and the goal is to build desirability. Desirability encourages consumers to keep coming back for more.

What is required to make a loyalty program work?

One requirement to making a loyalty program work successfully is to be able to acquire customer information several ways. What is indispensable to participation is to simplicity. This means making it easy for customers to join in. Examples of ways how customers can join are:

  1. In-Store Retail Point-of-Sales
  2. Online presence
  3. Focused Mailers
  4. Phone Inquiries

Another requirement is the ability to track where consumers sign up for the program. This helps identify which conduit provides the largest amount of participation. This makes it easier for your marketing team to focus scarce financial resources to areas that provide the most results.

Indispensable to all this is the technology to collect all this information. The information collected will allow your sales and marketing team to break down the details into meaningful analytics and help your team understand your customers better and find ways to increase their patronage of your goods and services. And even encourage your customers to patronize more profitable goods and services.

With the implementation of state-of-the-art technology, your team can build campaigns and promotions that will further encourage participation. The tools that are part of this technology will help them track the success of the campaign, provide them meaningful information to improve their strategies and build better products and services that your consumers desire.

Case Study – Cold Stone Creamery

Cold Stone Creamery, a company founded in Tempe Arizona, has over 1,400 stores and 30,000 employees worldwide.

Early on, the company saw a need to consolidate their Birthday Club promotional program and develop a process that will help build stronger relationships with their customers.

They recognized that implementing a fully featured, internally managed customer relationship management system tied to an online front-end web presence would provide benefits beyond their current promotional program. It would not only provide easier, more meaningful access to customer data but reduce the cost of expensive promotional efforts that provide ineffective participation from consumers.

Using Microsoft Dynamics CRM, they are able to create a fully automated system that efficiently tracks customer information as well as participation, and with the information they receive from customers, provide sought-after products and services that provide that perceived value to consumers and encourage consistent patronage and build better connections with their customers.

If you want to learn more about how Microsoft Dynamics CRM can help build customer loyalty, email us at to get on our email list for valuable tips or to ask us any questions in general.

This post is written by Irfan Shaikh. Irfan is a Certified Microsoft Dynamics CRM Specialist with Ignify. Ignify is an Inner Circle Microsoft Dynamics Partner who specializes in Microsoft CRM with over 10,000 CRM users. Ignify has built our reputation on product and industry knowledge as well as providing long term value to our growing and diverse Customer base. If you are seeking assistance to maximize your efforts with your Microsoft CRM project contact Ignify at 562-219-2000 or email us at