How To Build A Customer Loyalty Strategy

Step 1: Get Prepared

To define your customer loyalty strategy you can either build your own whiteboard template for example on Miro and use Google Sheets to calculate your loyalty model economics or you can use our ready-to-use templates along with this guide.

Customer Loyalty Strategy Templates

Included Templates:

• ✅ Customer Loyalty Strategy Miro Board
• ✅ Loyalty Model Economics Spreadsheet Template

Get TemplateLearn More

Step 2: Competitor Benchmark and Best Practices

Start again by researching best practices not only from your competitors but from businesses in other industries.

• Who offers some kind of loyalty model?
• How do these loyalty models work?
• How are customers incentivized and rewarded?
• How do they communicate the loyalty model?
• …

✅ Use the first area of your Customer Loyalty Strategy 📒Template to note your findings. Identify noteworthy elements or even trends and add any examples or evidence in the form of images, screenshots, links etc.

Step 3: Loyalty Model Selection

Next we will delve into the different types of models and evaluate which model is the most suitable for your business.

During your best practice research you probably identified different types of loyalty model, however, here is a overview of common types:

Points-based loyalty programs

A Points-based loyalty program is a type of loyalty program where customers earn points based on their purchase behavior or specific actions, such as writing reviews or referring friends. These points can then be redeemed for rewards, such as discounts, free products, or exclusive experiences. In such a program, customers are typically able to track their points and rewards through an online or mobile platform, which offers a personalized and engaging user experience. Key elements of a Points-based loyalty program include a clear point-earning structure, an easy-to-use tracking system, and a variety of reward options to motivate and retain customers. Benefits of such a program to customers include the ability to earn tangible rewards for their loyalty, a sense of accomplishment and progress as they accumulate points, and the opportunity to access exclusive rewards that are not available to non-members.

Examples:

• American Express Membership Rewards: cardholders earn points on purchases that can be redeemed for things like travel, merchandise, and gift cards.
• Sephora Beauty Insider: customers earn points for purchases, which can be redeemed for beauty products and experiences.
• British Airways Executive Club: a loyalty program for British Airways that allows members to earn and redeem Avios (points) for flights, upgrades, and other rewards. Members can also earn Avios through purchases made with British Airways’ partner brands, such as hotels and car rental companies.

➕ Advantages:

• Encourages repeat purchases to earn more points
• Provides a tangible reward that customers can track and work towards
• Can be personalized to the customer’s preferences
• Provides a way to gather customer data and insights

➖ Disadvantages

• Customers may become disengaged if they do not see the value in the points system
• Redemption options may be limited or unappealing to customers
• Can be costly for the company to manage and fulfill reward

⚙️ Implementation Difficulty: 🔴 High

💵 Cost Level: 🟡 Medium

💡 Explanation: Requires tracking and management of points, redemption options, and associated costs

Tiered loyalty programs

A tiered loyalty program typically has different levels of membership that customers can achieve based on their engagement and loyalty to the brand. As customers move up to higher tiers, they receive more benefits and perks, such as exclusive discounts, free products, or access to special events. The user experience may involve a personalized dashboard that tracks the customer’s progress and shows the rewards they can unlock as they move up the tiers. Key elements of this model include clearly defined tiers, rewards that are desirable and meaningful to customers, and a system for tracking and rewarding loyalty. Benefits to the customer include a sense of achievement and recognition for their loyalty, as well as access to exclusive rewards and experiences.

Examples:

• Hilton Honors: customers can earn higher status levels (such as Silver, Gold, or Diamond) based on the number of stays they book with Hilton hotels. Each level offers different benefits, such as room upgrades and free breakfast.
• Delta SkyMiles: frequent flyers can earn higher status levels (such as Silver, Gold, or Platinum) based on the number of miles they travel with Delta. Each level offers perks such as priority boarding and lounge access.
• Sephora Beauty Insider: in addition to points-based rewards, Sephora also offers a tiered program where customers can earn higher status levels based on their spending.

➕ Advantages

• Provides a sense of exclusivity and status to customers
• Encourages customers to reach higher tiers by making more purchases
• Allows for targeted rewards and promotions based on a customer’s tier
• Provides customer data and insights that can be used to optimize rewards and promotions

➖ Disadvantages

• Can be complex to manage and understand for customers
• May be difficult to achieve higher tiers, leading to customer frustration
• Customers may not see the value in reaching higher tiers

⚙️ Implementation Difficulty: 🔴 High

💵 Cost Level: 🔴 High

💡 Explanation: Involves more complex program design and management, and may require significant investment in rewards

Subscription-based loyalty programs

A subscription-based loyalty program typically offers benefits to members who sign up for a recurring monthly or annual fee. An example would be, Amazon Prime which offers free two-day shipping, access to streaming video and music, early access to certain deals, and more. Members sign up and pay for the program, which provides them with ongoing perks and benefits. The user experience typically involves logging into a dedicated member portal or app to access the benefits and keep track of usage. Key elements of this model include the recurring fee, access to exclusive perks and benefits, and ongoing engagement with the program. Benefits for customers include cost savings on shipping, access to exclusive content, and other value-added perks.

Examples:

• Amazon Prime: members pay an annual fee to access free shipping, streaming video and music, and other perks.
• Walmart+: a subscription program that offers free delivery on eligible items, discounts on fuel purchases, and access to exclusive deals and discounts at Walmart stores and online.
• Best Buy Total Tech Support: a subscription program that offers members 24/7 tech support, free shipping on all purchases, and exclusive discounts on select products.

➕ Advantages

• Provides a recurring revenue stream for the company
• Encourages customer loyalty through exclusive benefits and perks
• Allows for targeted promotions and rewards based on subscription level
• Provides customer data and insights that can be used to optimize rewards and promotions

➖ Disadvantages

• May not be appealing to customers who do not want to commit to a recurring fee
• May be difficult to manage and fulfill subscription benefits

⚙️ Implementation Difficulty: 🟡 Medium

💵 Cost Level: 🔴 High

💡 Explanation: Requires development and management of a subscription service, and potentially ongoing premium benefits

Gamification-based loyalty programs

A gamification-based loyalty program is designed to engage customers by incorporating game mechanics and elements into the loyalty experience. It works by rewarding customers for completing certain actions or challenges, such as making a purchase, referring a friend, or completing a quiz. The user experience can involve interactive challenges, personalized progress tracking, and visual displays of achievements and rewards. Key elements of this model include point systems, badges, leaderboards, and personalized challenges. Gamification can offer benefits such as increased engagement, motivation, and loyalty among customers who enjoy the sense of accomplishment and competition associated with gaming.

Examples:

• NikePlus: members can earn badges and achievements for completing workouts and challenges.
• Duolingo: language learners can earn rewards for completing lessons and practicing regularly.
• My Starbucks Rewards: customers can play games and puzzles in the Starbucks app to earn bonus stars and other rewards.

➕ Advantages

• Provides a fun and engaging experience for customers
• Encourages repeat purchases through game mechanics
• Allows for targeted rewards and promotions based on customer behavior
• Provides customer data and insights that can be used to optimize rewards and promotions

➖ Disadvantages

• May not be appealing to all customers
• Can be costly and complex to develop and manage
• May not provide tangible rewards that customers value

⚙️ Implementation Difficulty: 🟡 Medium

💵 Cost Level: 🟡 Medium

💡 Explanation: Requires development of a gamified experience and associated rewards, but may not require significant cost.

Discount-based loyalty programs

A discount-based loyalty program typically offers customers discounts on purchases as a reward for their loyalty. A good example would be Ikea Family, which offers members discounts on select products, free coffee or tea at the store’s restaurant, and other perks. Customers can sign up for the program online or in-store and receive a physical or digital card to use at checkout.

The program’s key elements include discounts, exclusive offers, and special promotions. Customers can also receive personalized recommendations based on their purchase history, and they may be able to earn additional rewards by referring friends to the program. This type of loyalty program can offer benefits to customers by providing cost savings on their purchases, as well as exclusive access to discounts and promotions that are not available to non-members.´

Examples:

• IKEA Family: members receive discounts on products, free coffee or tea, and other benefits.
• Ulta Beauty Ultamate Rewards: members receive discounts and other benefits based on their spending.
• CVS ExtraCare: members receive discounts and other benefits, and can earn “ExtraBucks” to use on future purchases.

➕ Advantages

• Provides immediate value to customers through discounted products or services
• Encourages repeat purchases to continue receiving discounts
• Allows for targeted promotions based on customer behavior
• Can be cost-effective for the company to manage and fulfill

➖ Disadvantages

• May not be sustainable for the company if discounts are too high
• Customers may only be loyal for the discounts, not the brand itself
• Can be difficult to manage and track discounts for different customers

⚙️ Implementation Difficulty: 🟢 Low

💵 Cost Level: 🟢 Low

💡 Explanation: Simply involves offering direct discounts or special prices to loyalty program members

Branded community

Building and engaging a community of customers or users around a brand, product, or service. The community can be centered around a particular topic or interest related to the brand, such as health and fitness for a supplement company. Key elements of such a program can include exclusive content, special events, and access to experts or ambassadors associated with the brand. Customers can participate in the community by sharing their own experiences and engaging with others, earning rewards or recognition for their contributions. This can create a sense of belonging and community among customers, leading to increased loyalty and brand advocacy.

Examples:

• Harley Owners Group: Harley-Davidson owners can join a community of like-minded enthusiasts and participate in events and activities.
• Sephora Beauty Insider Community: customers can connect with each other and Sephora employees to discuss beauty tips, product reviews, and more.
• Lululemon Sweat Collective: fitness instructors and trainers can join a community that offers discounts and other benefit

➕ Advantages

• Provides a sense of belonging and community to customers
• Allows for customer feedback and engagement
• Encourages advocacy and positive word of mouth
• Provides customer data and insights that can be used to optimize rewards and promotions

➖ Disadvantages

• May require significant resources to develop and manage
• May only appeal to a niche audience
• Negative feedback can be amplified in a community setting

⚙️ Implementation Difficulty: 🔴High

💵 Cost Level: 🟡 Medium

💡 Explanation: Requires development and management of an online community, and ongoing engagement with members

Cashback

A cashback program is a type of loyalty program that offers customers a percentage of their purchases back in the form of cash or store credit. This typically involves signing up for the program and linking a payment method to track purchases. Key elements of this model include clear communication of the cashback percentage and redemption process, as well as tracking and reporting tools for both customers and the company. Benefits to customers include the ability to earn money back on purchases they would make anyway, which can be used towards future purchases or other expenses.

Examples:

• Payback: a loyalty program in Germany that allows customers to earn points for purchases made with various partner brands, including grocery stores, gas stations, and online retailers.
• Nectar: a loyalty program in the UK that partners with a variety of retailers, including grocery stores, gas stations, and online retailers. Members can earn points for purchases made with partner brands and redeem them for rewards such as discounts and vouchers.
• Rakuten (formerly Ebates): a cashback program that partners with thousands of online retailers to offer cashback on purchases made through their site or app.
• Dosh: a cashback app that automatically detects and rewards customers for purchases made with participating retailers.

➕ Advantages

• Provides immediate value to customers through cash rewards
• Encourages repeat purchases to continue earning cash back
• Can be cost-effective for the company to manage and fulfill

➖ Disadvantages

• Customers may only be loyal for the cash rewards, not the brand itself
• Can be difficult to manage and track cash back for different customers

⚙️  Implementation Difficulty: 🟢Low

💵 Cost Level:  🟢Low

💡 Explanation: Simply involves offering cashback rewards to loyalty program members

“Punch Card” program

A Punch Card program typically works by providing customers with a physical or digital card that is punched or stamped each time they make a purchase. After a certain number of punches, the customer becomes eligible for a reward, such as a free product or discount. The user experience would involve the customer keeping track of their punches and working towards achieving the reward. Key elements of this model include the punch/stamp mechanism, clear reward structure, and a tracking system to ensure accurate counting of punches. This model can offer benefits to customers by providing incentives to make repeat purchases, while also creating a sense of excitement and achievement as they work towards earning a reward.

Examples:

• Booking.com Genius: customers who book a certain number of stays with Booking.com can become “Genius” members and receive discounts and other benefits.
• Smoothie King: customers can earn a free smoothie after purchasing a certain number of smoothies using the chain’s mobile app.
• Yogurtland: customers can earn a free cup of yogurt after purchasing a certain number of cups using the chain’s loyalty card.

➕ Advantages

• Easy to implement and track customer behavior
• Encourages repeat visits or purchases
• Cost-effective

➖ Disadvantages

• Limited customer engagement beyond the transactional
• May not provide enough value to incentivize loyalty in highly competitive markets
• Limited opportunities for personalization or customization

⚙️ Implementation Difficulty: 🟢Low

💵 Cost Level:  🟢Low

💡 Explanation: Simply involves tracking and rewarding repeat purchases through a physical or digital punch card system

Member get Member programs

A Member get Member program is a type of referral program where existing customers are incentivized to invite their friends and family to become customers. Typically, the existing customer and the new customer both receive a reward, such as a discount or free product. The user experience involves the existing customer sharing a referral link or code with their friends and family, who then use it to sign up and make a purchase. Key elements of this model include clear communication of the rewards and requirements, easy sharing and tracking of referral links/codes, and timely delivery of rewards. This model can offer benefits to both the existing customer and the new customer, as well as the company through increased customer acquisition and retention.

Examples:

• Dropbox: customers can earn additional storage space by referring others to sign up for Dropbox.
• Tesla: customers can earn referral bonuses (such as free Supercharging or cash credits) by referring others to purchase a Tesla vehicle.
• Airbnb: customers can earn travel credit by referring friends to sign up and book a stay with Airbnb.

➕ Advantages

• Can result in exponential growth of customer base
• Creates a sense of community and belonging
• Cost-effective compared to traditional advertising

➖ Disadvantages

• May not be effective in highly competitive markets
• Can be difficult to track and manage referrals
• May not provide enough value to incentivize loyalty on its own

⚙️ Implementation Difficulty: 🟢Low

💵 Cost Level:  🟢Low

💡 Explanation: Simply involves offering rewards or incentives for existing members to refer new customers to the program

CSR- based programs

A CSR-based loyalty program involves companies donating a portion of each purchase to a charitable cause, which can be chosen by the customer or predetermined by the company. Through this the customers feel like they are making a positive impact with their purchase, and potentially feeling more loyal to the company as a result. Key elements of this model would include clear communication about the charitable cause and the percentage of the purchase that will be donated, as well as transparency about the impact of the donations.

This type of program can offer benefits to both the customer and the charitable cause, as well as potentially enhancing the reputation and brand image of the company.

Examples:

• TOMS: for every pair of shoes purchased, TOMS donates a pair of shoes to a child in need.
• Warby Parker: for every pair of eyeglasses purchased, Warby Parker donates a pair to someone in need.
• Coca-Cola (RED): a portion of sales from Coca-Cola products with a (RED) label are donated to the fight against HIV/AIDS in Africa.

➕ Advantages

• Aligns with customers’ values and promotes goodwill
• Can differentiate the brand in a crowded market
• Encourages customers to feel good about their purchases

➖ Disadvantages

• Can be difficult to measure the impact and ROI
• May not resonate with all customers or demographics
• Can be seen as insincere if not authentic to the brand’s values

⚙️ Implementation Difficulty: 🟡Medium

💵 Cost Level:  🟡Medium

💡 Explanation: Requires identification of a suitable CSR cause, and the associated costs and management of donations

Web3 loyalty programs 

A Web3-based loyalty program using tokens or NFTs could involve creating a decentralized loyalty platform using blockchain technology. Customers could earn tokens or NFTs for their purchases or other brand interactions, which could be stored in a digital wallet. These tokens or NFTs could then be redeemed for various rewards such as exclusive products or experiences, discounts, or even voting rights on future product releases. The key element of this model would be the use of blockchain technology to create a secure and transparent loyalty program, allowing customers to have greater control over their rewards and potentially even trade or sell them with other customers. This model can offer benefits to customers such as increased trust and transparency, unique and valuable rewards, and the potential for increased engagement with the brand.

Examples:

• Yves Saint Laurent Beaute Blocks: customers who purchase YSL Beauty products can earn and trade NFTs (non-fungible tokens) that offer exclusive access to events and products.
• Nike: Nike launched a web3 loyalty program called Nike CryptoKicks, which allows customers to buy limited edition sneakers as non-fungible tokens (NFTs) on the Ethereum blockchain. Customers can use their NFTs to access exclusive experiences, such as virtual meet-and-greets with athletes, and they can also trade their NFTs with other collectors.
• Prada: Prada launched a web3 loyalty program called Prada Dialogue, which allows customers to participate in virtual events, access exclusive content, and earn rewards for engaging with the brand. The program uses blockchain technology to ensure transparency and security for customers.

➕ Advantages

• Provides unique benefits such as ownership of digital assets and decentralized rewards systems
• Can be highly engaging for tech-savvy customers
• Can provide a competitive advantage for early adopters

➖ Disadvantages

• Can be difficult to understand and adopt for non-tech-savvy customers
• Can be subject to volatility and regulatory uncertainty in the crypto market
• Requires significant technical expertise and resources to implement and maintain

⚙️ Implementation Difficulty: 🔴High

💵 Cost Level: 🔴High

💡 Explanation: Requires development and management of a blockchain-based loyalty program, and associated token economics

Those are the most common types of loyalty models. You can also combine several approaches, take for example Sephora the brand mixes a points based model direct discount and a tiered model. Another possibility is to simply partner within an existing program and sign your business up in an existing cashback program or a complementary brand’s loyalty program.

✅ Go to the second area of your Customer Loyalty Strategy 📒Template, collect ideas on how a loyalty model could look like for your business.

1. List the loyalty models and their variations that you consider suitable for your business.
2. Describe shortly how the approach would look like for your business. What would you offer to your customers?
3. Take note of how each approach fits your business strategy. Think of your business model, target customers and business objectives.
4. Describe at a very high level what would be necessary for you to implement each model.

Now use the matrix and place the selected loyalty models according to their strategic fit with your business and their estimated implementation effort and cost. This shall help you to visualize which is the most ideal loyalty model(s) for your business at this stage. The higher the strategic fit and the lower the implementation effort and cost the better. Finally choose one or several models that you will implement, mark them with the ⭐ icon.

Step 4: Define the Loyalty Model Components

Once you have selected your loyalty model(s), you need to go one level deeper and define the different components of your loyalty model.

Go to the third area of your Customer Loyalty Strategy 📒Template and work through each component step by step.

✅ Reward System: Describe your rewards system. Explain the loyalty model(s) you chose, its key elements and the rewards or benefits it will be offering your customers

✅ Reward Structure & Mechanism: Explain how your reward model works. What conditions need to be fulfilled for your customers to benefit from the rewards. We’ve prepared a template for each type of loyalty model, so pick the template for the loyalty model(s) you selected and start defining your mechanism.

• Points-based loyalty program: define how customers can earn reward points and how many they will earn (e.g. for every 1$ spent customer earns 1 point). On the other hand define for what they can redeem those point and how many points they need to redeem (e.g. to redeem a 5$ discount voucher they need 100 Points) ➡️ Use the Loyalty Model Economics 📒Template to calculate the exact value, access it here and go to the first 🗃️ Poins Model Tab. you will find a detailed explanation here.
• Tiered loyalty programs: define your loyalty tiers (e.g. basic, silver, gold), define what conditions need to be fulfilled for a customer to reach each tier (e.g. basic = entry level starting from 1$ spend, silver minimum spend of 500$ in 12 months, gold = minimum spend of 1000$ in 12 months) and define the rewards and benefits that come with each tier (e.g. basic = 5% discount, silver = 10% discount and 3 free trial products/year, gold = 20% discount and 5 free trial products/year) ➡️ Use the Loyalty Model Economics 📒Template to calculate the exact value, access it here and go to the second 🗃️ Tiered Model Tab to introduce the tiers, the required spend as well as the benefits and their corresponding value to find the best relation between provided rewards and needed spend per tier.
• Gamification based loyalty programs: define your gamification based reward model. What types of tasks, goals or milestones can your customer complete in order to earn rewards? (e.g. leave at least  3 product reviews to earn a reward) and what reward will they get in return (e.g. a 10% discount voucher)
• Discount based loyalty programs: define the conditions your customer need to fulfill to qualify for receiving discounts (e.g. create a profile and sign-up for the newsletter) and define the type of discount they can receive (e.g. member only discounts on selected products + always 10% on a selected “favorite” product that can be changes every 6 months)
• Branded Community: define the condition to participate in your brand community (e.g. create a profile, complete the on-boarding process and contribute at least once a months), and the benefits that come with forming part of your community (e.g. member only online events, gated content, special discounts, early access to new products etc.)
• Cashback Program: This one is pretty straight forward. Define the value a customer needs to spend and the value he will get back (e.g. for every 1$ spent the customer gets back 5% → 0.05$). You could further differentiate the minimum spend and cashback rewards (e.g. minimum spend of 1$ = 0,05$ cashback, minimum spend of 50$ = 0,1$ cashback) ➡️ Use the Loyalty Model Economics 📒Template and go to the third  🗃️ Cashback Tab to understand the cost of your cashback model.
• Punch Card Model: This model is pretty simple as well. Define the requirements to earn a reward (e.g. 10 purchases) and the reward the customer gets after completing these requirements (e.g. a free product). You can advance this model a little by introducing a staggered system (e.g. 10 purchases = 10% discount, 20 purchases = free basic product,  30 purchases = free premium product etc.)
• Member get Member Program: Define the referral requirements that need to be fulfilled to earn a reward (e.g. refer a friend to place an order of min. 100$) and specify the reward earned (both the existing and the new customer get a 10% discount on their next order. You can again differentiate the rewards for example by referral value (e.g. if the new customer spends a min. of 100$ both get a 10% discount, if the new customer spends a min. of 200$ both get a 20% discount, etc.)
• CSR Based Program: Define the conditions that need to be completed to “earn” a social reward. (e.g. purchase a specific product) and specify the social reward (e.g. 5% of revenue are donated to a ONG of the customer choice)
• Web 3 based Program: Define the conditions that need to be completed to earn a reward. (e.g. make a purchase of min. 50$) and specify the web3 reward (e.g. earn an NFT that comes with access to exclusive content)

✅ Customer Journey: Next, draw your loyalty model’s customer journey, reflecting the steps the customer goes through when using your loyalty model. This could include, for example:

• Sign-up
• Earn reward
• Redeem reward
• Upgrade tier
• Downgrade tier
• Use benefits
• Complete challenges/milestones/tasks, etc.

Then define the 1-on-1 communications the customer will receive at the different steps (e.g., the customer signs up for the program → receives a welcome email).

✅ Loyalty Platform: Next we will take a look into your technical platform requirements meaning what type of user interface and backend processes do you require to make this loyalty model run. Your platform could be a website, a mobile app or some kind of software. So, look at each of the steps/outcomes that you defined and note down the technical requirements and abilities needed in the front end as well as in the back end to enable each step (e.g. sign up: in the front end – sign-up form with specific fields and in the backend – data base and a automated process that assigns the new customer the right tier.)

✅ Branding: And finally your loyalty program will need a name. So in the last step we will work on your brand name.

1. First list important umbrella terms define your loyalty program and business. Keep in mind your value proposition, the benefits you offer, note your terms down in the keyword cloud.
2. Then think about keywords related to the different umbrella terms individually and note them down.
3. Use the red voting dots (this of course works best if you are working on this task with the whole team) to mark the favored key words and select those that you want to focus on.
4. Then with those keywords in mind generating various brand name ideas. There are different types of brand name that you can use:
   • Descriptive names: brand names that describe the product or service they represent (e.g. Burger King).
   • Evocative names: brand names that evoke a certain feeling or emotion in the consumer (e.g. Dove).
   • Invented names: brand names that are completely made up and have no meaning in and of themselves (e.g. Kodak).
   • Wordplay names: brand names that use puns or wordplay to make the name more memorable (e.g. Ben & Jerry’s).
   • Acronyms: brand names that are made up of the initials of a longer name (e.g. IBM).
   • Founder names: brand names that use the name of the founder or a person associated with the company (e.g. Disney).
   • Location-based names: brand names that use a location or region in the name (e.g. California Pizza Kitchen).
   • Hybrid names: brand names that combine two words or concepts to create a new name (e.g. Microsoft).
5. Then look at all the brand name ideas and use again the red dots to mark the favored ideas and select the final brand name.

Step 5: Metrics and Objectives

As for any other growth initiative, you also want to track your loyalty model performance to understand what is working well and what not.

Therefore, you want to define the performance metrics and objectives for your loyalty model.

✅To do so, go to the fourth area of your Customer Loyalty Strategy 📒Template, and start by defining which type of metrics you use to track your loyalty performance. These metrics you choose should help you to understand various aspects of your loyalty model. Loyalty model metrics could include for example:

• Number of members: the total number customers who have signed up for your loyalty program
• Enrollment rate: the percentage of customers who have signed up for your loyalty program
• Points Earned: Number of points earned in case of a point-based loyalty model
• Redemption rate: the percentage of points redeemed or rewards and benefits that have been used by your customers.
• Average order value (AOV):  the average value of an order from a customer enrolled in your loyalty program compared to a non-enrolled customer
• Purchase Frequency: the average order frequency from a customer enrolled in your loyalty program compared to a non-enrolled customer
• Repeat purchase rate:  the percentage of customers who have made multiple purchases after enrolling in your loyalty program
• Customer retention rate: the percentage of customers who remain active in your loyalty program over a period of time
• Net promoter score (NPS): a measure of customer satisfaction and loyalty to your brand
• Lifetime value (LTV):  the estimated total value of a loyalty customer’s purchases over their lifetime with your brand compared to a non-enrolled customer
• Cost per acquisition (CPA): the cost of acquiring a new loyalty program member
• Churn rate:  the percentage of customers who have dropped out of your loyalty program
• Return on Investment (ROI): the estimated increase in customer value vs the loyalty program cost spend per customer
• Engagement rate:  the level of participation and interaction of your customers in your loyalty program. (e.g. log-ins, participation in gamification challenges etc.)
• Open rate: The percentage of loyalty program emails that were opened by recipients.
• Click-through rate (CTR): The percentage of recipients of loyalty emails who clicked on a link within the email.
• Conversion rate: The percentage of recipients of loyalty emails who completed a desired action, such as making a purchase, after clicking on a link within the email.

✅ Next, set the target figures your want for reach for each of your metrics in a given time frame. We propose to set quarterly targets. You can however adapt the timeframe as needed. So use the post-its next to each metric in your Customer Loyalty Strategy 📒Template to define the your targets.

Step 6: Loyalty Model Implementation Plan

Finally, you will need to implement your loyalty model, of course. No worries, we won’t implement it in one day. That would be impossible. But we will work on your implementation plan today so that you have a clear roadmap on how to turn your loyalty model vision into reality.

Managing loyalty operations (like tracking customer activity, assigning points and rewards, providing redemption options, managing tiers, etc.) and implementing a system to support these operations can be a challenging task. Therefore, a number of plug-and-play loyalty solutions exist.

You can find a selection on this 📋List:

✅ To define your plane, go to the fifth area of your Customer Loyalty Strategy 📒Template, here you will find a so called KANBAN board.

A Kanban board is a visual project management tool that you can use to plan and track the tasks for your projects. The board consists of four columns, each representing a stage of the workflow, such as, “The Backlog”, “To Dos,” “In Progress,” and “Done.” Each task or work item is represented by a sticky note or card that moves through the columns as it progresses. This allows you to quickly see the status of your tasks, identify bottlenecks and prioritize urgent tasks.

• Workstreams: Start by defining the different work streams, those would be groups of tasks that belong together, for example technical set up, marketing, customer experience etc.
• Tasks: Then detail the individual tasks under each workstream in the “Backlog” e.g. design wireframe, create frontend, set-up earning logic in the back-end etc. Assign each task to a team member and set a due date.
• Track progress: Once you start with the implementation you can then use this KANBAN board to track your progress. Move the tasks you plan to work on next to To Do’s, then once you are working on them move them to “In Progress” and when they are finished move them to “Done”.
• Highlight: You can furthermore use the icons in the library to highlight urgent tasks, indicate if a task is blocked or if an issue needs to be resolved.

Take your time today to plan and assign the detailed tasks. You might want to consider the following workstreams:

• IT Development: Choose or build the appropriate technology platform and tools to support the program. This may include a website or mobile app in the front end, a customer database or CRM, or a loyalty program management software.
• Customer Experience: Develop a user-friendly interface for the loyalty program, both online and in-store. Consider the customer journey, touchpoints, and user experience design.
• Marketing & Communication: Create and execute a marketing plan that effectively communicates the benefits of the loyalty program to customers. Develop the one on one communications for your loyalty members (e.g. Emails).
• Rewards: Design and develop your own rewards or negotiate with partners to offer third party rewards.
• Operations: Develop operational processes to manage the loyalty program, including customer service, fraud prevention, and data analysis.
• Legal: Develop terms and conditions for the loyalty program that outline the rules and guidelines for participation.
• Strategy and Analytics: Just as you did for your relationship model you also want to establish metrics to measure the success of the loyalty program.