Loyalty programs for customers have proven themselves as a positive way to gain customers, and more and more companies are adding them to their business models. When it comes to design and implementation of rewards programs, too many companies treat rewards as short-term promotional giveaways or specials of the month. When approached in this way, they create some short-lived motivation for customers, but will not build a loyal customer.

What does it mean when we say that a customer is “loyal” to a brand? Does it mean they’re a repeat purchaser of the brand? Or does it simply mean they like it? In other words, are we talking about physical actions, or does “loyalty” refer to a state of mind? -Don Peppers, CX Speakers LLC

How can companies build customer loyalty?

  • Differentiate them from competitors
  • Generate significant demand by customers
  • Demonstrate superior value

Being loyal to a company or brand can be described as meaning that you prefer its products, services, or brands over others.

Delivering increased value to profitable customers turns them into loyal customers; and that loyal customers become even more profitable over time. -Louise O’Brien, Harvard Business Review

Great loyalty programs must have a long term perspective. The full value of a rewards program is only actualized when a customer’s habits are sustainably loyal. This shift typically only occurs when the company has developed a programs that clearly has long-term benefits for the consumer.

Remember, a loyalty program is a competitive strategy. Do your competitors offer a more desirable alternative? Does the program align with company capabilities? Will your customers value the program? Will they continue to utilize it in the long term? Any rewards program that does not satisfy these types of questions are unlikely to succeed.

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