CRM Article

How To Use Your CRM To Create A Customer Loyalty Program

CRM Tips Series 1

15th March 2023

Creating a customer loyalty program is an essential step for businesses to retain customers, increase customer lifetime value, and promote brand advocacy. A customer loyalty program is a marketing strategy that rewards customers for their repeat purchases, referrals, and engagement with the brand. The program is typically designed to offer incentives such as discounts, cashback, exclusive offers, and rewards points that can be redeemed for products or services. To create an effective loyalty program, businesses can use a customer relationship management (CRM) system to track customer purchases and reward points, design tiers and point systems, develop rewards, launch the program, and monitor performance.

 

Benefits of a Customer Loyalty Program

A customer loyalty program offers several benefits to businesses, including:

  1. Increased Customer Retention: A loyalty program encourages customers to continue doing business with a brand in order to earn rewards. This, in turn, increases customer retention and reduces customer churn.
  2. Higher Customer Lifetime Value: By incentivizing customers to make more purchases and engage with the brand more frequently, a loyalty program can increase the average customer lifetime value.
  3. Stronger Brand Advocacy: A loyalty program can also strengthen the relationship between the brand and its customers, leading to increased brand advocacy and positive word-of-mouth marketing.
  4. Valuable Customer Data: By tracking customer purchases and behavior through a CRM system, businesses can gain valuable insights into their customers’ preferences, buying habits, and engagement patterns.

Step-by-Step Guide to Creating a Customer Loyalty Program using a CRM System

1  Define Your Program Objectives

The first step in creating a customer loyalty program is to define your program objectives. Before creating a loyalty program, you must identify what you hope to achieve with the program. Are you looking to increase customer retention, drive more purchases, or build brand advocacy? Your program objectives should align with your overall business goals.

To define your program objectives, consider the following questions:

  • What do you hope to achieve with the program?
  • What are your business goals, and how can a loyalty program help you achieve them?

What metrics will you use to measure the success of the program?

 

2  Choose the Right CRM System

Choosing the right CRM system is essential for creating an effective customer loyalty program. You will need a system that can track customer purchases and rewards points and provide detailed analytics on customer behavior. When choosing a CRM system, consider the following factors:

  • Ease of use: The CRM system should be easy to use for both you and your customers.
  • Scalability: The CRM system should be able to scale as your business grows and your loyalty program expands.
  • Integration: The CRM system should integrate with other systems you use, such as your e-commerce platform or marketing automation tool.
  • Cost: The CRM system should be cost-effective and offer features that align with your business needs.
  • Compliance: The CRM system should be GDPR compliant and respect customer privacy.

 

3  Define Your Loyalty Program Tiers and Point System

A customer loyalty program should have multiple tiers that offer increasing rewards based on customer behavior. For example, a basic tier might offer 1 point for every dollar spent, while a premium tier might offer 2 points for every dollar spent.

When designing your point system, consider the following factors:

  • Simplicity: The point system should be easy for customers to understand and use.
  • Attractiveness: The point system should offer meaningful rewards that incentivize customer behavior.
  • Feasibility: The business should be able to offer rewards without incurring significant costs.

To define your loyalty program tiers and point system, consider the following questions:

  • How many tiers will your loyalty program have?
  • What behavior will customers need to exhibit to move to higher tiers?
  • What rewards will customers receive at each tier level?
  • How many points will customers need to earn to redeem rewards?
  • How long will points be valid for?

Answering these questions will help you design a loyalty program that aligns with your business goals and customer needs.

 

4  Develop Rewards

Rewards are the heart of a customer loyalty program. They provide customers with an incentive to continue doing business with your brand and encourage repeat purchases. Rewards can take many forms, such as discounts, free products or services, cashback, or exclusive offers.

To develop rewards, consider the following factors:

  • Relevance: The rewards should be relevant to your customers’ interests and preferences.
  • Value: The rewards should offer value to your customers and be worth their time and effort.
  • Variety: The rewards should be varied, so customers have a choice of what they want to redeem.
  • Exclusivity: The rewards should be exclusive to loyalty program members to make them feel special and valued.
  • Feasibility: The rewards should be feasible for your business to offer without incurring significant costs.

 

5  Launch the Program

Once you have defined your program objectives, chosen the right CRM system, designed your loyalty program tiers and point system, and developed rewards, it’s time to launch your program. To launch your program, consider the following steps:

  • Communicate with customers: Communicate the launch of your loyalty program to your customers through email, social media, or in-store signage.
  • Train employees: Train your employees on the program’s benefits, rewards, and how to enroll customers.
  • Enroll customers: Enroll customers in the program and provide them with information on how to earn and redeem rewards.
  • Monitor performance: Monitor the performance of your loyalty program through your CRM system and adjust it as necessary.

 

6  Monitor and Optimize Performance

The final step in creating a customer loyalty program is to monitor and optimize its performance. By tracking customer behavior and loyalty program analytics, you can gain valuable insights into what’s working and what’s not. This will help you optimize your program to achieve your business goals and improve the customer experience.

To monitor and optimize performance, consider the following steps:

  • Set KPIs: Set key performance indicators (KPIs) for your loyalty program, such as customer retention rate, average order value, and customer lifetime value.
  • Analyze data: Analyze loyalty program data through your CRM system to identify trends, patterns, and areas for improvement.
  • Test and iterate: Test different loyalty program features, such as rewards or point systems, and iterate based on performance.
  • Solicit feedback: Solicit feedback from customers through surveys or focus groups to understand their experience with the loyalty program and identify areas for improvement.

 

Conclusion

Creating a customer loyalty program using a CRM system is an effective way to increase customer retention, drive more purchases, and build brand advocacy. To create an effective loyalty program, businesses must define their program objectives, choose the right CRM system, design their loyalty program tiers and point system, develop rewards, launch the program, and monitor and optimize its performance. By following these steps, businesses can create a loyalty program that aligns with their business goals and customer needs while improving the customer experience.