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9 steps to a profitable loyalty program

March 20, 2017

Moving from basket case to basket size – the 9 steps to a profitable loyalty program.

by Tim O’Grady, KnowitAll Loyalty Systems

One of the main objectives of a loyalty program is to motivate members to buy more when they are shopping, what is often termed “increase their basket size”. This is a realistic outcome for many successful loyalty programs, increasing ‘basket size’ of members by up to 40% over non-members.

To ensure your loyalty program is not a ‘basket case’ and is profitable for your business and meaningful to your members there are 9 important steps to consider.

Step 1: Objectives 

  • Set specific objectives for your program.
  • Besides rewarding your loyal customers it should also be about keeping existing customer returning more often and spending more – increasing the basket size.

Step 2:Commitment 

  • Gain commitment to the program from the business owners and front-line team.

Step 3: Who is the loyalty program for? 

  • Work out which customers you want to reward for their loyalty.
  • Your team is also part of the program – so get them involved.

Step 4: Type of loyalty program

  • There are many of kinds of programs including the well-known ‘points for purchase’ that provide rewards based on spend (points) accumulated. There are also programs that simply surprise and delight customers with rewards they are not expecting.
  • Do your research to work out what works for your customers and for your business.

Steps 5 and 6: Member experience and technology (loyalty engine) 

  • Your loyalty engine is the heart of your program. Once you know the type of program you want, ensure you have an engine that is simple to implement and manage your member engagement and experience.

Step 7: Launch and ongoing communication

  • Work out your launch plan and ongoing communications.
  • The loyalty engine (step 6) should give you the ability to send out relevant and personalised communications to your members.

Step 8: Return on Loyalty

  • This step is about finalising the investment vs the return to ensure you have a profitable program.

Step 9: The 3 M’s = Measurement, Maintenance and Motivation 

  • Maintenance is about giving life to the program so that your business, your team and your members are motivated to participate for the long term.

In summary, to move from “Basket Case to Basket Size”, these 9 steps will give you every opportunity to develop a loyalty program that is profitable for your business and meaningful for your members.

For the past 5 years, KnowItAll Loyalty systems has been helping businesses design and deploy loyalty programs using the ‘9 steps to a valuable loyalty program’ methodology. They now service over 240 retail stores (from single store to larger groups) with nearly 750,000 members enjoying the benefits of simply strucutured loyalty programs.

To find out more on how to develop a valuable loyalty program, contact Tim O’Grady at tim@knowitall.net.au for a no-obligation chat.

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