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Loyalty program: A definitive guide for beginners

This article is about two aspects of promoting the store’s Loyalty Program to customers. The first is about identifying customers who are not yet members of the company’s loyalty program, explaining to them how the scheme works and how they would benefit from being members of the scheme.

Secondly, the article is about recognizing when customers are interested in joining the loyalty program and helping them fill in the membership application. For the purposes of this unit, a loyalty program means a scheme offered by a retailer to its customers, subject to terms and conditions under which eligible transactions are recorded as accumulated points. These points can be exchanged by the customer in the future for rewards such as vouchers, discounts, or air miles. The article is not about promoting or helping the customers to apply for any kind of payment card.

Learning Outcome

  • Know how to explain to customers the features and benefits of the loyalty program
  • Know how to gain customer commitment to the loyalty program
  • Explain features and benefits of the loyalty program to customers.


Loyalty programs are a way for the retailer to encourage the continued patronage of customers. They allow retailers to gather data on customer behavior in order to decipher trends, appropriately reward loyalty, and influence shopping behavior. Loyalty program take many forms; some of the most common include rewards cards, such as CVS’s Extra Care, and pay-for-membership cards for stores including Costco

Retail outlets come up with Loyalty programs for customers on a regular basis. This is to attract customers and to retain them. This scheme can be given to them either in the shop premises, or over phone telephonically. In either case the Trainee associate, need to know the complete features of this scheme and try to sell it to customers.

Why Loyalty Programs

According to a research conducted by Jupiter Research, approximately 75% of families have at least one loyalty card in developed countries; the rate is increasing three-folded in BRICS nation. When implemented well, these programs can potentially benefit both customers and businesses alike.

Shows customers they are valued

When someone feels valued, one is automatically wired to like the person valuing them, and this psychology works in case of businesses too. It is one thing for a store to say “thank you” at the bottom of every invoice (nobody reads it) and it goes to a entirely new level when the feeling is communicated by giving a customer special offers and perks. “Make people feel special and they’ll be your fan”

Encourages Return Business

The main notion behind the return business is to influence your customer. When people have lot of options to choose from (which certainly there is), sometimes even the knowledge of earning a reward from a particular retailer is enough to influence their choice and make them run to come at your stores; and if you are able to influence your customer, the mission is accomplished. If you place particular limits on your program – such as an expiration date, you may also be able to encourage people to shop sooner rather than procrastinating and this in turn will increase your sales multiple times ( a strategy commonly used throughout the world)

Helps You Gather Information

You can collect information from the members of your loyalty program to learn more about your customer base. Learning more about demographics, customer sex ratio, age group, traffic sources are of tremendous help for a retail store to market their products specifically, which is more efficient. For example, some programs offer you the opportunity to track customer spending habits (like cookies do online) with your CMS (customer management software) and gather data on demographics. Members of your loyalty program may also be more likely to return a customer survey and provide useful feedback.

Low-cost advertising

If customers see your membership card whenever they open their wallet or on an email when they check their inbox, you are taking good advantage of low-cost advertising. It is something of a constant reminder to your customer about your presence and your company name gets settled in their permanent memory.

Also read : A Comprehensive Guide On Visual Merchandising for Beginners.

How to Set Up a Loyalty Program

Setting up a loyalty program is a crucial task for a good business. Loyalty programs help business grow rapidly and keep their customers loyal. Following things should be kept in mind while setting up a loyalty program:

Let people opt in

If you want high participation in your program, let people opt in. On your website or at your cash register, give customers the option of filling out a form to join your loyalty program, with the promise of receiving regular or occasional special offers form your business. Keep track of these email addresses with your customer management software.

Keep it elite

If you want to limit participation to those customers who spend the most, you could consider offering invitations to a select few and ask them to join the program.

Issue membership cards or numbers

Create a real or virtual membership card that customers can use to track their purchases and work their way up to a discount. Membership cards can be a major influence on customers’ behaviour. After all, if they know it will take just three more purchases at your business to earn their reward, why would they go anywhere else?

Send regular emails or text messages

Set up an email newsletter to communicate with loyalty program members so they feel like they’re part of an elite group. These emails can be filled with useful content, descriptions of new products and special offers.

For example, if you sell body care products, your email newsletter might contain tips on how to deal with dry winter skin, an explanation of the ingredients in your newest body wash and a coupon for 5 percent off of the customer’s next order.

You can also set up text message service which keeps them up to date about the ongoing program at your store and about various programs launched by the store. Care should be taken that you do not bombard them with text messages, you will create a negative impression of your store and sooner or later you would be in their reject list.

How to structure rewards?

Every shop has its loyal customers and you always want your customers to keep coming back to you and do not go to your competitor. But making your customer stick to you is not as easy as it sounds, you need to woo them every time they come. This could be achieved to greater extent by giving them great offers which they cannot dare to refuse. Some of the great offers are listed below:

B1G1 (Buy one, get one free)

This is a cool trick used by a number of retail stores, which give visitors their 2nd soap free on purchase of 1st soap. This generally works as you can contact some wholesaler or company for marketing a certain product of theirs by putting it into a “Buy One Get One free” you can use this as a model and tailor the specifics to your business.

Discounts and waivers

Particularly if you run a service-based business, it makes sense to offer a discount on future orders to customers who spend above a certain amount. For example, award a 10 percent-off coupon for every Rs. 1000, customers spend in a single order. Also publicizing about your amazing discount offers ca give a boost to your sales which were stagnant for quite a while.

Many retailers offer good discounts on certain days of a week, like future group in India offers great discounts on Wednesdays, reason being Wednesday is the day of the week when least number of people are shopping, so offering discounts in this days help the store to boost their sales during the off-days.


Most supermarkets offer a club-style rewards program, which tracks their purchases and permits certain advertised deals only to those who are a member. This method may work well for businesses that are keen on targeted advertising.

Rewards for paying upfront

Small business owners can offer their regular customers an incentive to pay ahead. This can also help with cash flow management. This is another great tool used by companies to generate cash before actually selling the product or service. This is very well applied by and OLA Cabs. Both of them ask you to keep some money in advance in your e-wallets and they offer you quick service or priority above other customers.


You can hold regular contests to write reviews for products, come up with ideas for the regular email newsletter – or simply hold a raffle for all customers who spend more than a set amount in a given month. Various other contests can be conducted to keep people engaged with your brand, the main motive behind all this promotional activities and advertisement is to fix your brand’s name into your customer’s head. Whenever they think of buying a certain item (available in your store) they should at-once remember your brand’s name.


Many retail food chains in Asia ask you to take surveys online about their services and your experience with them. They offer discounts on such surveys and the percentage of discount usually varies from 10% to 40% depending upon companies policies. You can also frame such surveys and get necessary feedback; it is a wonderful scheme to get the real feedback about your service and customer experience.

How to Train Your Employes for Loyalty Programs

Training your executives for loyalty programs is an important ingredient of a company’s success. It becomes obligatory for the executives to understand the features and benefits of the company’s loyalty program as this is going to benefit both the consumers and companies and not to mention the perks executives get.

  • They should know all the sources of information about the loyalty program they will use or tell the customer while explaining the scheme.
  • They should know why loyalty programs are important in achieving the company’s commercial aims.
  • They should know the specific offers which is currently available to scheme members and should be able to communicate it well to the customers.
  • They should know how to gain the customer’s attention and interest and make them feel wanted and needed for the growth of the company.
  • They should know how to raise suitable questions to gain information about the customer and the customer’s interest in joining the loyalty program.
  • They should be well versed in communication skills and should have the ability of a good salesman to sell the service/ product.
  • They should know how to portray the features and benefits of the scheme to the customer which keeps them glued to you and hence the company.
  • They should know how to deal with frequently asked questions and objections in relation to the loyalty program and should be well prepared to face any argument considering their post and the responsibility which comes with the designation.
  • They should be at par in explaining the features and benefits of the loyalty program to the Customers.
  • They should know how to read the body language of a customer and able to judge customer’s true interest.
  • They should be well versed in the art of convincing and should know how to convince customers to sign up for the loyalty program in a way that encourages customers to co-operate willingly.
  • They should know the layout of the membership application form, the questions it asks, and how to fill the form accurately (its better if the form has been filled by them multiple times so that he is quick while helping customer to fill the form).
  • They should be able to provide the proof of membership that company provides, and should know how to prepare this proof.
  • It is expected from an executive that he knows how to correct or replace incorrect proof of membership.

The most important component by far is customer engagement. “Retailers should ask themselves, ‘how do I create a partnership with the consumer?’ instead of pulling one over on them,” says Alvarez.

Many customers see loyalty programs as a way of being ambushed by the retailer. Successful retailers connect with customers via loyalty programs at three levels. The first is an introduction of sorts: the customer receives a generic reward for enrolling in the program.

At the second level, the retailer contacts the customer directly, often via e-mail, to offer a reward more tailored to the customer’s wants and needs. Two-way communication occurs at the third level with customer- or retailer-initiated feedback loops.

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Loyalty program: A definitive guide for beginners


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