How To Identify If Your Business Is Ready For A Loyalty Program

A loyalty program is a rewards program that encourages customers to make repeat purchases in exchange for freebies, points rewards and discounts.

We’ve heard a lot of loyalty program success stories from brick and mortar stores.

For example, Red Robin claims to be one of the best burgers of America with astounding sales. In 2018, the F&B establishment boasts of a total revenue of $315.4 million.

Their loyalty program encourages members make a purchase 5 times and get a $20 reward on the next visit. It’s a simple tactic but it gets people in the habit of returning to the restaurant regularly.

Not surprisingly, customers love to get rewards for regularly purchasing from the stores they love. They’re also looking for brands that give them perks and discounts to get more for less.

Having said that, how do you create your own loyalty program? How do you identify if your business is ready to start? 


Here’s how to know if a loyalty program fits with your business:

1. Does your business rely on repeat purchases?

The point of a loyalty program is to reward customers for repeat purchases.

If you sell items that customers buy often like food, clothes and makeup, then a loyalty program is fit for your business model. However, if you sell items that are bought yearly such as cars, laptops or other items that aren’t easily replaced, then having a loyalty program doesn’t seem beneficial.

For example, customers of Panera – a bakery cafe – use the loyalty program app because they regularly buy bread and coffee for breakfast.


2. Can you maintain the cost of the rewards?

A good loyalty program has a lot of cool rewards and offerings, which costs money.

Once you offer a rewards like prizes, freebies and discounts make sure it fits your budget. You have to be ready to give the freebie to most of your users.

Pizza Hut’s UK loyalty program rewards customers with a medium slice pizza once they’ve spent about £70. This lets them profit from their customers in spite of the freebie.


3. Is it for the long-term?

It’s no secret that customers love to collect points and hoard them for a long period of time.

People love to collect points in the hope of receiving a bigger reward in the future.

Having said that, a loyalty program isn’t easily terminated. If you decide that it’s time to let it go, a lot of your members will feel betrayed and disappointed. In fact, ASOS customers felt disappointed after the brand ended their A-list loyalty scheme.



Having said that, a loyalty program must be something that you can commit and maintain for a long time.


How to get started with a loyalty program

Once you’ve decided to create a loyalty program, how do you get started? Here are the steps that you need to follow:


1. Pick your rewards

Think about the rewards of your loyalty program.

As we’ve said previously, it has to be something that you can afford and maintain.

For example, Nordstrom’s rewards program is based on a customer’s spending level.

It’s a win-win situation for the business because it encourages customers to spend more to qualify for better rewards. And while these rewards would cost Nordstrom, they also make more sales.


2. Create your own loyalty program

Next, create your own loyalty program.

We recommend using CandyBar which allows users to create a digital punch card loyalty program.

All you need to do is create a free account, choose your rewards and set up the cashier page in your store. Afterwards, set up the web page that customers will use to check in.


3. Encourage customers to enroll

Obviously, you have to increase membership and encourage people to join.

Promote the program in your website, social media pages, physical stores and encourage your staff to promote. Don’t forget to make the sign-up process quick and easy for customers.

For example, Sephora’s Beauty Pass rewards program has a fast and easy registration process.

Simply provide your basic information or connect with Google.


4. Keep it interesting

Keep your loyalty program fresh and interesting by rewarding customers for a variety of brand-related actions like watching your videos, liking your social media pages and referring customers.

This keeps your loyalty program interesting and builds the habit of checking out the app or your social media pages for promos and offerings.

For example, Frank Body – an Australian skincare company – has a loyalty program called ‘Hotel Pink’. They let customers earn more points by interacting with the brand by leaving reviews, posting user-generated content and sharing promos on Facebook or Twitter.


5. Explore partnerships with companies

Another way to make the loyalty program more appealing is to partner with businesses.

Increase the value of your points by exploring partnerships with brands related to your products and services. Co-branding is one way to expand your customer base, get discovered by new customers and add variety to your reward offerings.

For example, Nike’s loyalty program has partnerships with Classpass, Apple and Headspace.

By purchasing Nike’s products, customers can earn four months of Apple music or earn fitness class credits from Classpass. Headspace – a guided meditation app – ships exclusive playlists for exercises and guided runs for Nike’s customers.



Here’s a recap of what we’ve learned:

  • Before you start your own referral program ensure that it fits your business model and that you can maintain the cost for your rewards. Once you get started, there’s no turning back so think about whether you can sustain it for a long period of time.
  • You can create different tiers of rewards and provide better freebies in exchange for more purchases. This ensures that you will profit in the long-run. You can also keep your program interesting by exploring partnerships and rewarding customer behavior.

How do you get started? Candybar is a no-brainer solution because you only need to create an account to start your own loyalty program. You can sign-up for a free trial here.

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