Loyalty program in the company - what is its purpose?

Service Business

Before we even start working on this topic, it is worth answering the question whether our company needs a loyalty program? There is a general statement that already more or less 4 visits by the same client during the year can be the basis for introducing the program in the company. There is also a false belief that it is worth introducing and investing in a loyalty program only in the case of a network of product or service companies. In fact, even a local and small business, such as a local coffee shop, can encourage customers, for example, to collect points for each coffee purchased, and then, when collecting the appropriate number of points, it is exchanged for a company mug for free. This is one example of a simple mechanism of operation of this type of program, however, it should be remembered that a loyalty program consists of several important elements, which are discussed in the article below.

Loyalty program - what is it?

According to the classic definition of Philip Kotler, author of the book "Marketing", a loyalty program is one of the promotion tools used in sales, in which customers are rewarded depending on the frequency of purchases and their size. However, as most of us have already convinced, today many companies have definitely extended the terms of participation in the program and reward participants of such programs for many different activities, for example for recommending products or services to another friend, as is the case in the Eastend.pl store.

It is also an increasingly common practice for companies to treat loyalty programs as channels of communication with loyal customers. For example, companies display promotional messages on the receipts of such customers or establish constant and lasting communication with these most loyal customers by sending personalized promotional codes.

Loyalty program in the company - what is its purpose?

Before we start building a loyalty program in the company, it is worth answering the basic question, namely - What is its purpose? It should be remembered that increasing sales and turnover are significant benefits, but should not be considered as the main factor for the implementation of the program.

The goals of such a program can be built according to various criteria. For example, short-term goals: increased frequency of purchases or visits; long-term - establishing a lasting and better relationship with the customer or more generally: increasing brand awareness.

How should a loyalty program be built?

After setting the goal of creating a loyalty program, there are a few more important points that should be developed when creating a program:

  • who and how can join? - at this point, we must specify who will be able to join the club, i.e. whether they will be all those who wish to do so, or whether they will be people who meet certain membership conditions, e.g. the first purchase for a specific amount. At this point, you should also answer the question of who is our target group, i.e. to whom we direct messages encouraging to join the loyalty program

  • system of allocating points and rewards - the most popular form of the loyalty program is the points program. It consists in collecting points by customers for specific activities, such as: purchasing for a specific amount or recommending the company's products or services to a friend. These points can then be redeemed for rewards, other company products, or simply redeemed in the form of a shopping voucher. At this point, it is necessary to determine, for example, for which amount of purchases points will be awarded, but such a decision should be agreed with the company's sales and accounting department.

  • way of communication - at the very beginning, you should also define how we will communicate with our clients, and then with members of the loyalty program.The company must select the appropriate communication channels, i.e. find places of contact with the client and through them conduct all communication and marketing activities.

  • analysis of activities - summary of activities will allow for the preparation of an even better tailored offer, firstly to the needs, and secondly, to the purchasing habits of customers. Based on information about the frequency of purchases, amount, type of products purchased and many other data resulting from the profile of subscribers and their purchasing behavior, we can make a thorough analysis of the effectiveness and form of the loyalty program.

Implementation of a loyalty program

It is necessary to prepare all of the above assumptions, but the loyalty program must be properly implemented. The entire process of its introduction may take about six months, and its improvement will continue due to changing market conditions.

It should be remembered that a loyalty program should be primarily a way to establish a lasting relationship with the customer or build brand awareness, and not a response to the actions of the competition.