Loyalty Program Strategy: 6 Top tips to Align with Business Goals

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Loyalty Program Strategy

Last Updated: April 2024

Do you know that members of top-performing loyalty programs are 77% more likely to choose your brand over the competition?

If you want to stand out from your rivals, you should essentially know the importance of Loyalty program strategies that can alter the behaviors of specific customers by implementing some core tactical mechanisms.

The two mantras for perfect customer service are 1. the ability to identify your customers and 2. to interact with them seamlessly. Without implementing loyalty program strategies you will find yourself staggering at any of the two mantras mentioned.

64% of companies say their loyalty program is the best way to connect with customers.  Moreover, there is enough evidence for the benefits, costs, and effects of customer loyalty programs. 

That’s why we have identified and shortlisted 6 best practices for you to implement:

1. Data insights to better understand your existing customer base

Data Insights
Image source – saasquatch.com

Never pass up an opportunity to learn more about a customer because it can significantly improve the quality of the customer’s experience and satisfaction. Best loyalty programs accomplish this by providing a menu of services or treatments, each of which reveals something about the consumer. 

Of course, the point of gaining insight is to put it to good use. As a result, the finest loyalty programs are often linked to their owners’ customer databases and handled in such a way that important customer data is not only collected but also used to boost sales and improve customer experience. 

For example, for businesses offering financial services, loyalty programs take advantage of the insights for identifying people who might pick an incentive for long-term behaviors, or for their entire lives. For an online business, conducting simple, one-question surveys could earn points, particularly when linked to specific online transactions.

Customer data, for example, can be utilized to boost sales by constructing statistical models that identify the top customers and prospects, as well as the most effective touch cadence across the customer lifecycle.

2. Openness to make your reward program stand out from the crowd

Image source – inkbox.com

Let’s put it straight, transparency is important!

Customers desire openness, which means they want your service or program to function with other services or programs. From store incentive schemes to frequent flyer miles, openness is unavoidable in loyalty programs of all kinds. That’s why customer demand is driving the evolution of all customer loyalty programs into more open designs.

On the other hand, many coalition programs administered by third-party intermediaries, fail to provide specific customer transaction information to point issuers, thus undermining their value to the companies that join.

For a marketer, the main advantage of a loyalty program is gaining insights about individual consumers. Therefore the more choices the consumer-member has, the better—but only if supplying these choices undermines the marketer’s ability to gather customer knowledge. 

Transferable points and awards give committed customers more control over how they use their program winnings. By doing so, you may improve customers’ loyalty to your business by acknowledging that you understand what they want, in addition to providing fixed prizes and points.

For example, Inkbox honors its customers by offering them inkbucks for each purchase. They offer their loyal customers two types of discount codes: percentage and dollar-based, collecting these souvenirs will make a customer complete the milestones they have fixed. This, evidently, works like magnetism in customer retention.

3. Modularity to enhance customer service


A successful loyalty program should be divided into modules, allowing users to mix and combine components according to their personal tastes. Modular offers are a cost-effective way to allow customer-driven personalization without resorting to full (and expensive) customization. 

Organizations can create multiple alternatives to critical parts of a program, such as a member qualification, and provide clients with a menu of guided options to choose from.

For a loyalty program to work effectively across different channels, such as the web, a mobile app, and a physical store, it must be modular. Whether inbound client requests come via the internet, the call center, or the point-of-sale system, mechanisms for earning or redeeming points must be simple to integrate into a company’s back-office systems.

Furthermore, a sophisticated marketing strategy for a loyalty program improves customer service by providing diverse sets of choices for different groups of customers based on their value—so that no one chooses from the same set of options. For example, anyone who has ever reached the gold or platinum levels of an airline frequent flyer program knows that the awards available at these levels differ from those available at the basic level.

4. Relationship Management to quickly reward loyal customers


Rather than the products offered, the channels employed, or the regions served, all loyalty programs are governed by the customer connections involved in the programs. 

By assigning certain consumers to specific managers or management groups, chief marketers can link their loyalty program’s goals with their organization’s goals. These customers should then evaluate those managers based on their beneficial impact on customer behaviors. This will not only be a stimulus for actual loyalty program success, but it will also convey a clear signal that the development of each client segment is necessary.

Here are some ways to excel in the relationship management with your customers:

  • Real-time Resolves: Relationship management demands paying attention to clients in real-time, rather than at the end of a billing cycle or during a mail-order period. For a retail organization, this requires connecting the point-of-sale system to the loyalty program so that customers can receive real-time offers and messaging during purchase transactions.
  • Apologies, please: If a service glitch occurs, apologizing to affected consumers becomes more important than ever. This apology could include a compensation offer in the form of a reward to your loyalty program. This way the offended consumer will surely feel better. According to studies, when a customer has a service problem resolved quickly or receives an apology, the relationship with the business improves. The faster the reaction, the greater the customer satisfaction!
  • Social media rapport: Businesses engage in social media platforms to improve interactions with customers who participate in loyalty programs, even forming communities of customers with similar interests.  Such social media engagements definitely result in leveraging customer relations and improving customer engagement. 

5. Simplicity to improve the customer experience


Customers will be more engaging and trusting in a program that is flexible. It’s preferable to limit your incentive offers to those that can be given consistently rather than incorporating features that can’t be counted on. Companies that fail to deliver on their loyalty marketing strategy’s promises risk damaging their brand’s reputation.

For example, when a frequent flyer wants to redeem miles and is upset by the dearth of “mileage” tickets available, his faith in the airline’s brand suffers, and his likelihood of repurchase suffers as well. 

While it’s critical to manage the distribution of free and discounted products in a cost-effective manner,  keep away from giving deep-discount rewards if you can’t make them available to the large majority of loyalty program members. 

Simply saying, be simple and creative with your loyalty program rewards.

6. Upgrade the status of your customers


Highlight the thrones that you make for your loyal customers and make them stand out from the rest!

People enjoy sharing and feel special when they are a part of something unusual or significant or when they are given special status. You can apply the same to your loyalty program as well. You can start by creating an exclusive club of your best loyalty program members

Another approach you can employ is to introduce a VIP program. This is something that a lot of hotel chains implement. You can specify certain criteria, like minimum points, money spent, orders placed, or client referrals that a customer must meet in order to be considered for the VIP program. 

Let’s go through the example of Starbucks ’ VIP program:

Starbucks has one of the most basic but effective VIP programs available. Starbucks Rewards delivers a distinct experience in two tiers (Green and Gold). Despite the attainability for regular coffee customers, the Gold tier enriches the experience with personalized cards and complimentary beverages. The Gold Card is effective because it is customized, real, and represents the customer’s dedication to the business.

Image source: starbucks.com

Bottom Line

Companies with strong loyalty marketing programs grow revenues 2.5 times faster than their competitors and generate 100-400% higher returns to shareholders (HBR), says statistics. 

We have done the leg work of shortlisting the six best practices for you to pick and adapt. And we voluntarily want to ring a warning bell stating that 63% of Millennial and Gen Z shoppers will not commit to a brand that doesn’t have a loyalty program which means it can be a considerable fiasco if you fail to acknowledge the indispensable importance of loyalty program strategies.

You can also employ Saufter services and gain loyalty from users. It is a customer service software that can help you automate and scale your customer support.

And, please remember that “Once you create a loyal customer base, it’s tough for a competitor to take that away.” – Joseph D Mansueto



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