How to Create a Loyalty Program

Hello and welcome back to my blog! In today’s post, I will be focusing on how to plan out a Loyalty 3.0 program, tying in all that we’ve learned about gamification, big data, and motivational techniques into 4 essential steps to effectively market to your target audience. As part of our assignment this week, we had to read the eighth chapter of our textbook, Loyalty 3.0, written by Rajat Paharia, entitled “Planning Your Loyalty 3.0 Program”, which I will be pulling information from periodically throughout this post. With that out of the way, let’s get into it!

Setting the Foundation

When going about creating a loyalty program, it is not enough to simply have an idea and begin designing. By taking the time to plan out an effective strategy, you will be able to save yourself a significant amount of time in the long run and start with a solid business foundation that you can build off of to accurately address your target’s specific needs. Planning is the first step. It helps “lay the groundwork by identifying the problem and the proposed solution, figuring out the ROI, and getting buy-in from the rest of your organization so that you can move forward” (Paharia, 2013, pg. 190). During the planning process, you will ultimately identify your problem, analyze your audience/ audience behaviors, establish KPI’s, get a feel for the market/ your competitors, and calculate your ROI.

Establishing your problem and understanding your target and their needs is crucial to creating a strong loyalty program. As we know, “a good loyalty program always delivers high value to its customers” (Verma, 2022, para. 8). Narrowing down your target’s demographic, psychographics, and motivations will provide you clarity on what techniques to use that will resolve their problems effectively. This may include gamification techniques like tiers, badges, or points. Or you may decide to use big data AI recommendation software to personalize customer interactions with the brand, who value curated experiences. 

Putting Your Plan to Practice

Putting all of this information into practice over the past few weeks has been extremely fascinating. Recently, I was given the opportunity to work with a few of my classmates to create a tiered, points-based loyalty program for a local Lynchburg coffee shop, entitled the Flour District. Throughout this process, before jumping into the design of the loyalty program, we first identified their target audience and associated behaviors. This allowed us to gain some valuable insights that influenced the techniques we would utilize in our design further down the line. 

We targeted Gen. Z women who were existing customers with a high purchase frequency. We found that they valued brand authenticity, were passionate about cooking/ learning new culinary skills, and sought various ways to socialize and find community after graduating college. Based on these insights, we decided to focus our efforts around promoting the brand’s cooking classes through a tiered, points-based system. Through the program, customers could earn points and unlock new levels and new rewards after purchasing from the brand. These rewards included discounted and even free cooking sessions for them and their friends to be able to learn a new skill while simultaneously creating new, lasting memories with each other. 

Citations:

Rajat Paharia. (2013). Loyalty 3.0 : how big data and gamification are revolutionizing customer and employee engagement. Mcgraw-Hill Education.

Verma, N. (2022, May 15). What does it take to create a highly effective loyalty program? | Deloitte Digital. Www.deloittedigital.com. https://www.deloittedigital.com/us/en/insights/perspective/customer-loyalty.html