Selecting, Implementing, and Designing a Loyalty Program for Your Business

Last week we explored the question "How well do loyalty programs work?" and determined that the answer is that they work exceptionally well! Now you're probably wondering how and where to get one (the answer is not your local supermarket, we checked). In this article, we'll explore different types of loyalty programs and how to choose one for your business.

Loyalty Program: The first steps

Loyalty programs come in many different shapes and forms, and each can be beneficial in different ways depending on the business and its objective. One crucial factor to consider before even beginning the journey of loyalty program selection is to consider your business objectives seriously. Ask yourself one simple question:

What primary purpose will this loyalty program be serving?

This question is crucial in allowing you to navigate the choices you will make along the way in a way that ultimately benefits your business.

The types of loyalty programs

1. Points

The points-based system is a simple customer pays upfront to receive points that can be redeemed later. This is one of the earliest known loyalty programs available to humans (dating back to the 1700s with copper tokens) and is very simple.Pros: Simple to understandLow barrier to entryEasy way to collect dataLow riskCons:Same value regardless of customerPurely transactionalDoes not offer a unique experienceCan be costly to build and implement initially

1. Tiered

Another one of the oldest known loyalty programs and one that offers a more unique experience than its predecessor is the tiering system. As a customer engages more with a brand, they begin to receive improved benefits that can come in a variety of shapes and forms.Pros:More personal experience due to customizabilityMakes the best customers feel the most valuedEncourages constant engagement and interactionVIP customers are less likely to leaveCons:Downgrades may result in the loss of customersA more complex system requiring more capital and upkeepThe bottom tier may be a barrier to entry for some customers

1. Cashback

Another simple rewards program that offers exactly what the name implies is cashback on every purchase. Similar to points, except instead of points that are a bit more flexible, cashback simply gives you “cash” to spend in the store on other products.Pros:Similar to the points programVery simple to implementCan drive additional sales through the redemption of pointsCons:Similar to points (slightly less flexible than points)Undifferentiated from competitors

1. Multi-brand Programs

Multi-brand programs often operate with a points-based or cashback rewards system, and added benefit is offered to customers through the ability to redeem points at a variety of other brands.Pros:Distribution of program building and operations costs amongst partnersEasy expansion of customer baseEasier and faster to earn rewardsCons:Brands become an undifferentiated mass making their loyalty programs homogeneousCustomers can redeem points with other brands

1. Punch Cards

Another exceptionally simple program that does not require much explanation, the punch card, is a system that offers a reward after a certain number of purchases. This is used frequently in the food and beverage industry, especially (Free sandwich/coffee after x punches)Pros:Low cost for BusinessEasily understood by customersCan be a good way of engaging customersSimilar benefits to points and cashbackCons:Difficult to prevent manipulation with physical cardsRewards may be given without real needsHarder to capture customer dataDoes not build loyalty very well

1. Fee-based Programs

An increasingly popular program that is being utilized more and more frequently is the premium model. Customers can pay a fee or membership and gain access to a wide range of privileges and beneficial services.Pros:Puts the power completely in the customer's handsCustomers pay upfront, providing immediate capitalInstant engagement gives gratificationHighly engaged customers become more engagedImproved data collectionCons:High barrier to entry for lower value customersRequires more open channels of communication with the customer baseTakes a specialized skill set to operate and keep functional (may require a dedicated team)

1. Hybrid

As straightforward as it sounds! It’s the utilization of a combination of different programs together to create the perfect program for your customers.Pros:You can get all the pros of a variety of different programs and sometimes cancel out one weakness with the strength of another programCons:Can be very costly and complex to implement as a system

Loyalty Programs: Choosing a program

Now that you have an idea of the wide variety of loyalty programs available, and armed with the direction you want to take the loyalty program of your company, we can dive into the process of choosing one. We’ll break down the process into three main steps:

1. In-house vs Outsourced
2. What you want to offer clients
3. Resource management
4. Functionality & Integration
5. Main reward/benefit
6. Ease of use
7. Range of functions
8. Ease of integration
9. Other considerations
10. Software backend
11. Data & analytics

In-House Vs Outsources

The first step of consideration that you need to take is the decision to build the program yourself vs. outsourcing it to a company that is already established in this industry (like us, Gameball! More about that later tho 🤐). This decision will play a huge factor which is why we have a whole blog post on this step alone. Basically, the decision comes down to two main factors.What you want to offer your clients & Resource managementIf you want to offer clients something that is so completely unique you need to build it from scratch, then in-house will be the only way to go. Besides that, you should seriously consider outsourcing as building a loyalty solution can be an incredibly difficult and time/resource-consuming task.

Functionality & Integration

Once the primary decision is made, we can break down the program into the components that will come together to form your loyalty program. Which are the following:Main reward/benefitThe primary reward and benefit offered by your loyalty program, make sure you’re choosing the most lucrative one for your customer base.Ease of useFigure out the complexity or simplicity of your program. Perhaps you are a small coffee shop that wants it to be exceptionally simple for your customers to rack up points and track their progress. Or maybe you’re a tech giant with a customer base that likes more complex and in-depth analytics, thus making your interface more complex and intricate. Make sure to focus on what the customer needs the most.Range of functionsBuilding on the last point, take some time to figure out what additional features are needed for a fully immersive experience for your customers. What tools can be implemented to create a more personalized and unique experience? Consider things such as Tiering and special rewards for certain actions here.Ease of integrationFinally, consider the ease of implementing this into your business and determine what steps you will need to take to do so!

The Gameball Solution

The process of creating and implementing a loyalty management system is not easy. The amount of detail that goes into this process is painstaking and can take months if not years, of hard work to perfect.Up to this point, we’ve provided a lot of the knowledge that comes from years of working on customer retention and loyalty management software to help you on your journey, but we can help you even more.Gameball is the software we’ve been working on for years meant to help businesses grow by providing them an extremely easy and fast way to implement a Loyalty management tool (That does way more than just that, but we’ll get to it in a second).Gameball can be implemented as easily as a single click for Shopify stores or WordPress-built websites and offers you a suite of tools to help your business grow. From in-depth analytics to gamified loyalty programs, an online wallet, and even omnichannel messaging, it is an all-in-one tool to help you unlock your growth as you’ve never done before.That’s all for today folks! Keep coming back for more little blocks of text to help your business become the best it can be 😁