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Choosing the Right Customer Loyalty Program

It’s a big decision, choosing the right customer loyalty program. Here is a short list of things you will want to consider before you start the process.

It’s a big decision, choosing the right customer loyalty program. On one hand, you want a program that works for you – that delivers the data you need about your core clientele and meets your business objectives.  On the other hand, it must retain the customers you have and attract the ones you want.  That’s a massive ask for any element of your business, let alone one that you likely have to hire out through an RFP to acquire.

Below is a short list of things you and your team will want to consider before you start the process of looking for a customer loyalty program partner.

What Are Your Business Objectives?

Would you like to acquire new customers? Retain your current customers? Create raving, loyal fans of your brand? Increase your customers’ spend per visit?  Increase your customers’ visit frequency?

A good loyalty program can do all of these things, but you have to establish a priority and business metrics to measure success for it to work. Identifying what represents “success” for your program helps you see the bigger picture and pinpoints a target.

Customer Loyalty

You may not always like what your customers will tell you, but the information they provide can help you improve and grow your company.

Where are Your Customers, and How Do They Interact with You?

Catherine Walts, Xceleration’s Marketing Manager, explains how this knowledge helps you determine the scope of your program: “Is your customer base local, regional, national, or global?” Walts asks. “Are they purchasing mostly in-store or online; if online, are they doing it from their laptops or mostly their mobile devices? Are they engaging with your social media? If so, which platforms are they engaging with? All of this information can help with your tactical executional elements and communication vehicles for your loyalty program.”

Competitive Assessment

Knowing what your competition is doing, Walts says, can help you determine what you need to do to set yourself apart.

“What can you do or offer that differentiates from your competition? Don’t be afraid to be different.”

Program Design

No two loyalty programs are alike. Now that you have the research and know what your goals are, you can go about the task of determining what type of program will meet your needs.

There are two types of customer loyalty programs:

Transaction-based: Punch-cards for repeat customers are a good example of transaction-based customer loyalty programs.  These will keep your customers coming back but may not gather enough data for your needs. Some digital or app-based transaction programs are still based on how much the customer spends with you, but they don’t offer rewards for taking surveys, social media interaction, and other activities that can give you some insight into their habits and preferences.

Engagement-based:  Much more involved than transaction-based programs, engagement programs encourage your customers to make your brand an important part of their lives. In addition to their spend with you, members earn points by interacting with your brand on social media, completing surveys, signing up for newsletters, or completing their personal profile. Many customers will offer you all the information you seek in exchange for rewards. These programs pay off both ways in that you get what you want (data) and the customer gets a personalized experience and emotional attachment to your brand.

But beware, Mark Houck, Xceleration’s Director of New Business Development warns. Collecting data in this day and age is a slippery slope.

“Stick to collecting only essential information like name and email to build your database,” Houck says. “After they are members, you can solicit additional feedback like preferences, buying habits, etc.”

If you’re new to the customer loyalty game, consider starting with a transactional program or a smaller engagement program, then build on that as you gather more data and learn more about what your customers need and want.


Your company is unique. Don’t settle for a cookie-cutter program, find one that is flexible enough to bend to your requirements but robust enough to deliver the goods.

Finally, once you have landed on your own requirements, you can start the search for a program provider. We’ll discuss what to look for in a Customer Loyalty Program vendor in our next blog.

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