Guide to Launching a Loyalty Program

Identify your best customers

Before launching a rewards program for loyal customers, you should collect information — via a database that tracks visits and spending — to help you assess who those customers are. Analyze customer data to find out who your most profitable shoppers are, and market your program especially to them.

I recommend: Use Microsoft Outlook 2003 with Business Contact Manager Update to manage customers' information, track their purchases and forecast sales opportunities among them. For a more sophisticated approach, point-of-sale systems capture extensive buyer data as your employees ring the cash register.

Choose a rewards system

Popular rewards programs include frequent buyer clubs and loyalty cards that reward advance purchases, repeat visits or expensive buys with discounts, cash back, store credit, gifts and prizes, free merchandise or special upgrades.

I recommend: Order custom loyalty cards for your customers — and comprehensive loyalty programs to match — from Arthur Blank & Company or Duracard or purchase lower-cost punch cards from Business Card Source or Grip Marketing.

Market your program

Invite your best customers to join your loyalty program via direct mail, such as a postcard, or online, via e-mail. Mention it in your regular advertisements and PR efforts, as well.

I recommend: Notify customers who enroll in your loyalty program of special offers and discounts available to them via email; use an e-mail marketing service, such as that from Constant Contact or EmailLabs, to send emails that are both attractive and effective.

Measure results

Set goals for your loyalty program and monitor progress regularly to determine how it is impacting sales. Measure increases in revenue and track the number of sales made to registered customers.

I recommend: Learn to build your own loyalty profit-and-loss statement by reading "Constructing a Loyalty Program P&L" from the American Marketing Association, or take advantage of a fully-integrated loyalty platform, such as that offered by Parago, which includes ongoing loyalty analytics and monthly program management.

Revisit and revise

Monitor enrollment in your program over time and take regular surveys of your customers to find out what is driving their purchases. As customers evolve, your program should, too.

I recommend: Sample customer satisfaction surveys from Polaris Marketing Research and QuestionPro will help you develop your own questionnaire with which to evaluate the continued success of your loyalty program.