Peer to Peer: What should I know before introducing a loyalty program that rewards customers at my business?

Loyalty program should reward both customers and business 

From left, David Strebinger, Nancy Harris, Fiona Lake Waslander 

NANCY HARRIS | Senior vice-president, Sage North America

As companies like Canadian Tire have proven, loyalty programs can provide powerful incentives for customers. Here are a few simple steps that can help ensure that your loyalty program is one that is a win-win for both you and your customers:

Think long term

Don’t jump into starting a loyalty program without first thinking it through and anticipating how it may affect your business in the long run. Once you establish a loyalty program, you will open your business to backlash if you change it or – even worse – eliminate the program.

Choose a type of loyalty program

Popular options include “Buy nine and get the 10th free,” offering discounts on future purchases over a certain dollar amount, club memberships that offer special discounts to members only and contests. Identify a type that brings you the best return, but offers something that your customers will see as valuable.

Get something in return

In addition to gaining repeat business, loyalty programs are an excellent way for small businesses to collect customer contact information that can be used for future marketing campaigns. Collect emails and use a simple customer relationship management application to market to your most loyal customers by sending them thank-you notes or alerting them to upcoming sales.

Make it easy for your customer

If you want your customers to participate in your loyalty program, you need to make it easy for them to join and to earn and use their rewards. Keep the sign-up process short and sweet and provide an option to sign up by computer or phone. With privacy a top concern for many consumers these days, it’s important that you don’t ask for too much personal information.


Customer loyalty is something all brands crave yet few enjoy. Research shows 95% of consumers happily switch from one brand to another.

Given an abundance of choice, the lack of strong brand preference or loyalty is largely because consumers are underwhelmed by the performance of the products or services they purchase.

Most brands don’t deliver the product benefits promised in their advertising and promotion, and fewer than 5% of all brands meet or exceed consumer expectations.

Here are my golden rules to consider prior to launching a consumer loyalty program:

1. Running a loyalty program is what you should do once you are doing most everything else right. Well-executed loyalty programs can enhance your best customers’ experiences with the brand. But loyalty programs won’t work if the delivery of the consumer experience is poor.

2. Select a method of tracking your customers to get basic metrics that measures their visit frequency and spend.

3. The participation mechanics of a loyalty program must be painless for the consumer and the rewards need to be as instant as possible and have a high perceived value.

4. You don’t need all your customers to be on the program or rewarded at the same level. On average, 15-20% of a brand’s customer base can drive up to 50% of sales. But you must have a loyal base to start from.

5. Do not abuse your customers by pushing irrelevant information and deals their way.

6. Execution, execution, execution – enough said.

7. Provide unexpected moments of delight within your rewards structure.

8. Go mobile – a loyalty program via mobile is more likely to deliver relevancy if the platform can recognize time, place and customer consumption patterns.


FIONA LAKE WASLANDER | General manager, Vicinity

Smart business owners are starting to realize that loyalty programs are their most valuable marketing tool. Rather than utilizing one-to-many type of marketing (i.e. discounts posted on social media), which is expensive and ineffective because you end up discounting for bargain hunters, loyalty programs allow small businesses to implement a one-to-one marketing model based on customer activity (i.e. reward your highest spenders). This way, instead of devoting marketing dollars to new customer acquisition, businesses are generating much more value by focusing on their existing customers and getting them to return more, spend more and bring their friends.

However, before introducing a loyalty program, business owners need to spend time planning. Dedicate time to figuring out what your goals are—do you want patrons to visit more often, to come in during different days or hours, to buy more high-margin products, to introduce patrons to new complementary products, etc.—and decide what the best structure for your program is.

Once you have an end-goal in mind, the most important thing is to choose a loyalty program with high adoption. Staff will need to be trained, and must always encourage customers to sign up. After all, having a loyalty program that no one joins is useless. The program should also be flexible, customizable and work within the flow of your business– for example, a bubble tea shop needs a loyalty program where it’s lightning fast to sign up customers and allocate points, and easy for cashiers to use.

In essence, a good and efficient loyalty program must do three things:

1. Collect information seamlessly and effectively without interfering with business practices or causing delays;

2. Manage and segment customer data and trends such as purchasing behaviour, time of visit and type of redemption;

3. Market your business by allowing you to send targeted information to customers. 

Next week’s question: Face-to-face meetings are getting more impractical at my company but are technology-driven solutions really going to make meetings run smoother?