Points Programs

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Five Questions for Starting a Customer Loyalty Program

Katherine Smith wrote an article on what you need to know about customer incentive programs back in February that I felt had some great ideas for what needs to be thought about before starting a loyalty reward program. This week I would like to take a look at her five questions you should ask before starting aloyalty program and provide some background on why this is important to ask and also provide realistic expectations on beginning your loyalty reward program.

1. How is the rewards system structured?

If you have not started a loyalty program in the past, you may not have an idea of how to structure a new loyalty reward program. When you answer this question, you should be looking to find out how much budget you are willing to allocate for the project and what people will have to do to participate and earn rewards through the program. If you have run a loyalty reward program in the past, you may be able to use the results from this incentive program to determine how to set up your next initiative.

Some loyalty rewards systems are designed so that customers can only participate once they have already been qualified to earn rewards. Other loyalty programs are set up so that all distributors or customers have an account created initially when the program begins. Depending on how you structure your customer rewards program, you will want to select a rewards program provider that can set up your program the way you intend for it to function. Reward program providers tend to have their own proprietary software for running incentive programs and so you will want to make sure that what you have planned can be executed by the provider you decide to partner with.

2. Should you use an incentive program as part of a campaign that educates your clients or employees further?

Smith makes an important point when asking this question as you should always be looking for ways to increase awareness and possibly even sales at the same time. Although you may initially set up your reward program to provide rewards to distributors or customers who make qualifying purchases, the reward program could also be used to recognize and reward referrals from existing customers.

Another way to educate your customers further would be to add short quizzes and surveys on yourcustomized incentive website. As participants fill out these forms, they are able to learn about your company and earn additional rewards. Quizzes can help your customers to become brand ambassadors and surveys can help to ensure your customers are satisfied and provide you with feedback to improve your offerings.

3. What are the tools you will use to measure progress and track how far or near you are to the objectives of your incentive marketing campaign?

Monitoring your customer loyalty program’s progress is vital to its success. You should make a plan with a potential reward program provider up front to find out how you can access reports. For all of my clients, online reporting is available around the clock but our account management teams also make an effort to provide reward reporting throughout the program.

After your loyalty rewards program has kicked off, you should be monitoring the percentage of active participants who have logged in at least once. Until you are able to reach a majority of people logging in, you should find out if additional effort is needed to communicate the incentive program. For one of my customer loyalty programs, a weekly update is sent to each participant including their account totals, website and login information. For a different client of mine, the company decided to send out personalized letters to each participant who had a reward balance but had not logged into the program yet. Once your loyalty rewards program has a majority of participants who have logged in, you can ease up on the frequency of your reporting and move to a monthly or even quarterly reporting schedule.

4. What is your campaign theme?

Award program themes are important in making the loyalty program enticing and interactive. I have blogged a few times on deciding on a theme for an incentive program and when selecting a theme, the bottom line is to make sure that it reflects your corporate philosophy and mission.

5. What is the time line for your incentive marketing program?

Once you have selected a reward program provider, it is vital that you set up a realistic timeline to get the program up and running. For the programs I have helped to set up, this can take as little as a couple of days to at most three weeks. The difference is usually how much preparation has gone into setting up the loyalty reward program. It is not uncommon for our business development representatives to work with potential clients for weeks on planning the program before they are ready to set a kick off date and get started on the incentive program.

Once you have worked through these five questions, you will be well prepared to select a reward provider to set up the program and put it in action. Katherine Smith’s original article has many more questions than just these five and is a great read to prepare yourself for setting up a customer loyalty program for your company.

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