Four Steps to Launching a Loyalty Program

Structured programs can help you grow your business, retain customers and trump the competition.

By Roger L. Brooks

Opinions expressed by Entrepreneur contributors are their own.

Two key ingredients for small business success are encouraging customer loyalty and promoting purchase behavior. One way to accomplish these is by creating a loyalty program -- a tailored marketing plan that rewards customers for their participation.

These programs can range from simple punch cards (i.e. buy six muffins, get a seventh free) to store-branded credit cards that reward redeemable points.

There are distinct advantages to having a formal loyalty strategy in place, including having a means to maximize opportunities and to grow your business in a more strategic and viral way.

The most exciting thing is that you can build the program at your own pace, on your own budget and to your liking. Once your program is firing on all cylinders, you'll develop a deeper and more meaningful relationship with your loyal customers which, in turn, should provide you with insights that will allow you to strategically outshine your competition.

Let's get started. Here are four practical tips for starting your own loyalty program:

1. Build a solid loyalty-strategy plan: This is where your creativity comes in. All components of the program should be clearly considered and vetted, such as timing, branding, value-proposition, attractive incentives and rewards, loyalty currency (points, cash-back, discounts, coupons, etc.), and marketing channels.

You don't have to reinvent the wheel, look to companies that have a solid loyalty program in place for inspiration and ideas. For instance, the Neiman Marcus loyalty program makes excellent use of attractive incentives, while Subway offers a good example of a program based on loyalty currency.

Prepare a calendar of events and timetable to successfully complete the plan. Talk to your vendors and suppliers about providing assistance to showcase their products or services in exchange for supporting your program.

2. Embrace a loyalty mindset company-wide: There needs to be a philosophical change in the way your company views loyalty for your employees, vendors and customers. Starting at the highest level, it's crucial that each department within your small business fully understand, support and embrace the loyalty strategy that you're going to unveil.

Once your plan is in place, provide training at all levels within your business. The training program should be an ongoing and mandatory employee obligation. This will offer the highest possible success rate to impact your company's bottom line.

3. Set up your systems: Depending on the sophistication of your program, you'll need to ensure that the proper systems are in place to effectively run your loyalty program. There are many tasks to consider, including the process of enrolling, identifying and tracking your loyalty customers. In addition, you'll want to consider having flexible software in place in order to efficiently set up promotions, run reports and add or delete program options at your preference.

Vendors such as Valutec offer loyalty software and a variety of gift and loyalty card services, from card design to transaction reporting. Start by talking to your point-of-sale provider, credit card processor, your IT staff and vendors for software recommendations. Note that the cost of getting started can vary drastically by industry, so be sure to do your homework.

4. Market and launch your loyalty program: After putting the pieces together, it's time to promote and launch your program.

Depending on the size of your small business and its geographic footprint, you may want to consider a soft launch or pilot launch prior to releasing the program to your entire customer base. This will allow you to work through any potential snafus.

Either way, be sure to allocate plenty of time to drum up interest prior to going live. This can be achieved through in-store promotion, online promotion, receipt messaging, e-mail, text and social media.

One option you may want to consider is assigning a team to focus on specific action items to boost membership, such as a special sign-up day that promises incentives for instant enrollment (a free product or service paid by a sponsor or manufacturer).

Once the program has launched, your customers will be curious about how the program works. It is your job to display and explain the program rules in a simple and concise message. Put your best offering forward as your customers will want to know exactly what the program offers them and why they should enroll.

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