How to create a customer loyalty programme

To create a customer loyalty programme, you need to decide on a simple, valuable reward you can offer customers for their repeat business. The easiest and most popular way to start is with a physical stamp card – for example, "buy nine books, get £5 off the tenth" – as it's cheap to produce and easy for customers to understand, instantly encouraging them to come back.

Why reward loyalty?

It's often said that it costs five times more to attract a new customer than to keep an existing one. A loyalty scheme is a powerful tool for retention. It makes customers feel valued, gives them a reason to choose you over a competitor, and can even increase how much they spend each time they visit. Think of it as a structured way of saying "thank you" for their business, turning casual shoppers into a community of regulars.

Choosing the right type of programme

Loyalty schemes come in all shapes and sizes. While you can develop complex digital systems, it's best to start with something manageable. Here are a few popular models:

• Stamp Cards: The classic. Customers get a stamp for each purchase, and a full card earns them a reward. It’s visual, satisfying, and perfect for businesses with frequent purchases like coffee shops, bakeries, or bookshops.
• Points-Based Systems: Customers earn points for every pound they spend, which can be redeemed for discounts or free items later. This is more flexible but often requires a digital system, like an app or email-based account, to track the points.
• Tiered Programmes: Customers "level up" to higher tiers with better rewards the more they spend. This works well for creating long-term loyalty but is more complex to manage and better suited to established businesses.

For a new business, the stamp card is almost always the best place to start. It requires minimal investment and is incredibly straightforward for both you and your customers.

How to set up your first loyalty scheme

1. Define the Reward: Decide on a reward that is genuinely appealing to your customers but sustainable for your business. A free product or a significant discount (e.g., 20% off) works well. Calculate the cost to ensure it doesn't eat too much into your profit margin. For a "buy 9, get 1 free" deal, you're effectively offering a 10% discount to your most loyal customers.
2. Set the Rules: Make the path to the reward clear and achievable. If it takes 50 purchases to get a freebie, most people won't bother. Keep the number of steps reasonable to maintain motivation. For example, you might set a minimum spend of £5 to earn a stamp.
3. Create Your Materials: Design a simple, branded stamp card. You can use online design tools to create one and get a small batch printed professionally for a low cost. Don't forget to buy a self-inking stamp – maybe with your logo on it!
4. Train Your Team and Promote It: Make sure you and any staff are ready to offer the card to every customer. Explain it clearly and enthusiastically. Put up a small sign by the till so people know it's available and mention it on your social media channels.

Best practices for success

• Keep it Simple: The easier the programme is to understand, the more likely people are to use it.
• Make it Feel Generous: The reward should feel like a genuine treat, not something insignificant.
• Consider a Head Start: Some businesses give customers the first stamp for free. This small gesture can make the reward feel much more achievable from the outset.

Remember, if your loyalty scheme involves collecting any personal information from customers, such as an email address for a digital programme, you will need to comply with data protection regulations.