What does an effective online loyalty program structure look like?
There is no specific formula for designing a good customer relationship management strategy that works best in all contexts. However, there are some important structures that you should always keep in mind when designing your loyalty program to give your customer the best experience possible :
Think about your loyalty programs' cost structure
It is often a good idea to have the costs of the rewards vary depending on their value. This way, people will feel like they are getting the best deals on your site.
However, it can also be a good idea to create rewards that are more expensive for better value. This way, you can create a sense of prestige and exclusivity around your program instead of just something everyone can have access to.
Loyalty programs should not erode your margins, as such, you should always try to find a balance between the value of your rewards and their costs as well as how many people you want to be able to access them.
A good way to manage loyalty program costs is to be aware of the following:
- The cost per customer metric
- Low, medium, and high-value customers, as well as those who fall in between these different levels of profitability.
Define your objectives and KPIs
It is important to define your objectives and KPIs before creating a loyalty program. This will help you figure out what type of rewards or actions you want to incentivize.
It's also crucial to establish these, as well as experiment with ways of quantifying them so that you can distinguish whether your program is effective or not. For instance, if you want to encourage more frequent buyers on your site, you should measure how many customers purchased within a certain period after they signed up for your program. This way, you can monitor whether or not the program is effective at increasing this metric.
In addition, you have to measure the ROI of your program to determine whether or not it is worth it for your business. If you can't measure the effectiveness of a program, then there's no point in having one, to begin with