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Loyalty Programs 101: Creating Value for Customers

We all know the importance of customer loyalty (In case you don’t -- studies show that it costs 6 to 7 times more to acquire a new customer than to keep an old one). And, today, customers have seemingly endless options for buying sandwiches, shoes, and tires and even where to stay on a vacation and how to get there. One way companies can cut through their customers’ clutter and create better experiences is having a loyalty program. 

Loyalty programs are a valuable tool in a marketer’s toolkit, and when executed well, not only keep customers happy, but drive sustainable customer growth. They generally fall into these three categories with the most successful loyalty programs following a hybrid model: 

Points: Creating your own currency can allow for flexibility in the types of behavior change you can drive. 

Discounts: Building a permanent discount or rebate into the program as an incentive to bea  member

Soft Benefits: Focusing on the customer experience, using the program to deliver a more personal level of service based on customer value. 

Measuring Success in a Loyalty Program

Loyalty programs drive value in a number of ways, and it’s key to determine what success means and to measure it. Success can be measured differently over time -- as a loyalty program matures, KPIs shift to more impactful metrics. 

For example, at launch, the KPIs measured could be enrollment rate or survey responses. As the loyalty program matures, transaction frequency, rewards redemption, and referrals are measures of success. A long-term loyalty program KPI would be measuring the customer lifetime value. 

Loyalty Program Email Best Practices 

Now more than ever, email plays a huge role in loyalty program engagement. Below are five loyalty program email best practices: 

  • Send a welcome email. Always engage right after a member has signed up, with an initial welcome email and a reward that will engage them in program operations.
  • Show them the value. Provide an overview of the value proposition and tell them their benefits. 
  • Celebrate their benefits. Celebrate and highlight the member’s benefits with an email that provides actions for them to take next. 
  • Drive reward redemption. Give members ideas on how to redeem their rewards with options. Tell them exactly what rewards they currently have, and also show them what they can get on the next level up. 
  • Roll out the red carpet for members. Offer special events like “Early Access for Members,” and promote it to members and non-members with a link so they can get in on the VIP action. 

At Lev, we're loyalty experts from both a strategy and execution perspective. Help us, help you drive increased revenue and customer satisfaction with your new or existing loyalty program.



Susan Prater, Associate Principal, Strategic Consulting

Brianne Mullally, Content Marketing Manager

Matt Tate, Strategic Account Executive