Steps to Building an Effective Loyalty Program

January 22, 2021

Although quite common nowadays, there are still general steps to be taken for a loyalty program to succeed. Help your brand grow its community with these steps!

Brands who often stay in a superficial level with their customers and fail to commit to mind the importance of emotions and sentiment in growing their businesses almost always never make it big in their industries—or at least, they don’t provide a lasting impact. That’s why loyalty programs are super in these days! Not only does it recompense loyal customers, but it also helps businesses get insight into market drivers, allowing them to craft strategies in the process.


Some brands often undervalue the name of their loyalty programs, which is the very first mistake they could ever commit. To create an impactful program, the name itself should capture the essence of your products and services, and excite possible entrants into your community.

To name your program right, try to relay an overarching emotion that you wish to breed within your community. It could be a nod to your brand’s cause, what your business is best known for, a winning product feature, etc. For example, there’s Adidas’ 3Stripes, which calls to mind exactly one of the first few things customers notice about the brand—their logo’s notable three stripes. Another is Workout Empire’s Sassy Army which spells “bold and edgy” and nailed exactly the community it caters to.

Finally, make sure that you hook prospect members of your community with your name’s wit and cleverness. You wouldn’t want to be just another generic loyalty program, do you?


Call this the “bait” of your rewards program. A program will never fly successfully if your customers don’t find it attractive in the first place, so make sure that your program is beneficial and offers something compelling and relevant to customers. Encourage their engagement by tapping into something deeper.

Take the time to develop an overarching program goal. Aside from the points and perks you are willing to offer, what do users get in the long run? Some brands offer to relay a portion of their earnings to meaningful causes. This is one way of humanising your brand and allowing customers to feel connected; it gives their activities purpose and your relationship with them more meaningful, attracting repeat purchases and persistent loyalty.


Connecting this point to the first, your loyalty program must also know and understand the customers it wishes to build upon. Aside from the psychological drivers we’ve discussed on the previous article, you must also understand other aspects: the purchase behaviours and trends, what among your products your customers love the most, the customer lifespan, how fast they make payments, and the overall customer satisfaction. Statistics or consumer research can help you get all these and it’s your duty to craft a personalised loyalty program that takes into consideration all of these points from your customer’s perspective, which leads us to the fourth point.


Use the information you have on customers to develop your rewards. Think about how to connect consumer insight into your brand goal and how your rewards could eventually benefit them. The rewards must be relevant to your customers; its utilities should be comprehensible from the get go and must give them something they haven’t seen from others yet.

Finally, don’t be afraid to mix and match rewards based on your customers’ preferences!


Make sure that both you and your community clearly understands the ins-and-outs of your program and what it gives them upon and beyond registration. Clearly set the specifics of your rewards system by asking some of these questions:

  • What activities are connected to what rewards (i.e. points for referrals, creating a website, making additional purchases, writing reviews)?
  • How often do they get to purchase or spend the accrued rewards?
  • Will it be streamlined across branches (for offline retailers) or only available at a select store?
  • Are the accrued points convertible to other useful, tangible stuff like groceries, gas, additional item, etc.?

Make sure your customers understand how they could earn from your loyalty program. The key is not only about clarifying the reward specifics, but also anticipating what rewards would be beneficial and exciting for your customers.


Two years ago, CrowdTwist released a study that foresaw an increase in investment in customer loyalty program budgets by 2017, and this is because of the rising interest towards customer loyalty. Now, brands across industries seem to be involved in some form of rewards program. And while engagement in these programs are lucrative, some brands go financially overboard with their initial release, often blind to the budget constraints that might get in the way. So before you get excited, remember to set your budget based off your incentives first.

Don’t expect to breakeven on the first year; according to some analysts, the financial return usually comes around the second or third year of the program’s existence. Take this time to analyse exactly what aspects of the program are actually working and where to put more of your money in. The increments lets you have a breathing room for your loyalty program to grow without being daunted by the possible financial setbacks.


Here comes the tricky part—partnering with a rewards program software that makes your loyalty program possible.

Now, there’s a whole bunch of loyalty program softwares that promises to help you design your loyalty program. Go to Google and type in loyalty program softwares and you’ll be met with thousands of search results. It’s easy to get overwhelmed at this point, but remember that when choosing your software, make sure to see whether the offers correlate perfectly with the goals you defined for your brand. This makes it easier for you to narrow the list of prospective softwares and leave only those that are relevant to what you want to build.

Do this by browsing the features they have. A good loyalty program software should help you determine the rewards that best suit your community. It should also be clear about what actions it allow administrators to make for their brand’s community, or whether they allow you maximum capacity to tailor-fit the rewards based on your market insights. Reports are also important in this scenario; your chosen software must also provide you with a consolidated data on your community so you could spot trends in activity and make necessary adjustments based on the data. The sign-up process must also be easy; don’t let users be daunted by complicated registration processes which could potentially turn them away.

In the end, what would distinguish your loyalty program from the others is your ability to make it primarily for your customers and not for profit. Sure, everyone’s end-goal is to earn from repeat purchases, but digging into your customers’ need for connection makes your loyalty program journey worthwhile and not only lucrative. The invaluable insights you get from loyalty programs are also worth all the legwork that comes with setting it up.