Whether you’re considering putting your retention knowledge into practice or are simply curious about the 'bigger side' of customer rewards, here are five things to consider when launching a large scale rewards program.

For decades, acquisition marketing has been the name of the game. Businesses of all sizes were constantly battling to be the loudest in a sea of similar marketing campaigns, each trying to woo new customers to their business instead of their competition.

In the past number of years, however, more merchants are becoming aware of the profitability of repeat customers. As a result, retention marketing has quickly become the new approach for marketing a new business, but this re-education isn’t only for people new to the ecommerce and retail worlds. Larger, established brands are also reassessing their marketing strategies to see how retention marketing fits in - especially when it comes to rewards programs.

With more and more big brands like Sephora, Nike, and Samsung refining their loyalty offerings, it’s natural to wonder how these large scale rewards programs get off the ground. With more customers and a long-standing customer experience already in place, the considerations are understandably different than for a business that’s just getting started.

So whether you’re considering putting your retention knowledge into practice or are simply curious about the 'bigger side' of customer rewards, here are five things to consider when launching a large scale rewards program.

1. Determine a Program Goal

Like anything else in your marketing strategy, you should never start a rewards program simply to have one. In order for it to be truly successful, you need to address a specific goal that you would like your program to help achieve.

Typically, a large scale rewards program’s goal is based on increasing one of the following three retention metrics:

Repeat Customer Rate

Repeat Customer Rate

Your store’s repeat customer rate measures what percentage of shoppers return to your store to make a second purchase. Increasing your repeat purchase rate ultimately means that your churn rate is decreasing, keeping your store’s profitability high. After all, repeat customers account for only 8% of your customer base but more than 40% of your annual revenue! With that much profitability at stake, this is a highly significant metric to keep an eye on.

Customer Lifetime Value

It stands to reason that customers who shop with your store more than once are going to be more profitable for your store. Setting a goal to increase your average customer lifetime value will put a greater focus on your store’s best customers, and what your rewards program can do to improve their experience with your brand.

Referral Rate

When customers like your store, they’re likely to tell their friends about it. This word-of-mouth marketing is extremely beneficial for your store because it mobilizes your loyal customers as an external acquisition marketing team. Since customers trust each other more than they trust brands, improving your referral rate will leverage your rewards program as both a retention and acquisition tool.

These are only three examples of the goals you can set for your rewards program. Whether you choose to combine them or think of something entirely different, the goal you choose will become the root of your program’s long-term success.

2. Outline the Program Rollout

Once you’ve determined the goals of your program, you need to conceptualize how it will begin to take shape. At this stage, it’s important to remember that starting a rewards program is a process - it doesn’t happen all at once!

With this in mind, it’s good practice to plan a soft launch for your rewards program. This gives you the chance to release your rewards program to a select group of customers before anyone else. The benefits of a soft launch is that it gives you time to fine tune the mechanics and structure of your program before releasing it to the general public.

Secondly, consider what it will take to launch your program to your entire customer base. As a new pillar of your brand and customer experience, you want to ensure that you’ve allowed yourself enough time to hone and establish your program before formally releasing it.

Finally, it’s extremely important to consider and plan for each of your marketing campaigns. Social media, special events, and on-site visibility are only three of the highly impactful ways that you can market your program at every stage of your program’s rollout. Knowing what you plan to do and how you’re going to do it will give you the confidence you need to carry out an impactful marketing strategy that gets customers excited and keeps your program’s progress on track.

3. Schedule Program Engagement Tests

Engagement Tests

Too often merchants forget that a rewards program is not a set it and forget it tool. In order to achieve your program’s goals, you need to make sure that it’s performing well. Retention metrics like repeat purchase rate, redemption rate, and customer churn rate are only three leading indicators that will help you gage the health of your program.

If you find that these metrics are rather low, it could mean that your customers aren’t actively engaging with your program on a regular basis. A great way to encourage program adoption is with a series of targeted rewards campaigns designed to increase interest and drive engagement. This could be a bonus of double points campaign, introducing new exclusive rewards your customers can’t get anywhere else, or making certain rewards only available for a limited time or a limited quantity. Each of these tests can be executed through a combination of email, social, and on-site marketing to make sure your customers are informed and encouraged to participate.

Of course these are only three suggestions - once again, the sky’s the limit! No matter what you choose to do, you’ll want to run these test campaigns fairly regularly. By doing so, you’re able to keep your finger on the pulse and keep a better idea of what’s going well and what needs improvement.

4. Outline a Course for Expansion

As I already mentioned, a rewards program isn’t stagnant. As more customers engage and your brand continues to experience success, your program will grow and change to adapt. With that in mind, a key part of a large scale launch is considering how you’re going to continue to make your program bigger and better.

This can take a number of forms, either large scale or small scale. From a small scale perspective, expansion could be as simple as embedding it in other areas of your site. By placing it in your checkout process, on product pages, or on your homepage, you make it more accessible to customers.

Additionally, you could explore ways to incorporate your rewards program into your brand’s packaging and branding. This could involve including a small card with each order inviting them to join, or including your rewards program in more outward-facing marketing campaigns.

If you’re considering a larger scale expansion, I’d highly recommend planning to move your rewards program from online to in-store. As a large, established brand, your customers want to be able to interact with every component of your customer experience no matter where they encounter you. Making your rewards program accessible to every single customer, no matter their preference, works to further increase your program’s accessibility, making it easier for customers to engage and continue fueling the metrics your program wishes to improve.

5. Secure Organization Buy-In

Last but not least, you can’t launch a large scale rewards program without the support of other members of your team. In order to get them on your side, you need to educate them on the benefits of a retention and rewards marketing strategy.

This is the perfect time to put your retention marketing knowledge to the test! Explain how it positively impacts your entire customer experience, outlining how it improves and adds value to every stage of the customer journey.

You’ll also need to build a business case for your brand’s rewards program. Ultimately your team is going to want to know if starting a rewards program is worth it, so be prepared to discuss your program’s return on investment. There’s even a whole slew of resources available to help you back this up! By understanding the costs and gains of your rewards program, you’re better prepared to convince others of the benefits of retention marketing.

Lastly, you will need to coordinate who will be involved at each stage of the launch, rollout, and iteration of your rewards program. Come up with a proposed schedule and distribution of responsibility, leaving no stone unturned. The more you know about your program, the greater your success at pitching it to others.

Getting a Large Scale Rewards Program Off the Ground

Hopefully these five considerations have given you a better idea of what it takes to start a large scale rewards program. From determining a goal to getting the rest of your organization on board, each of these steps will bring you one step closer to more engaged customers who have the power to make your store more profitable.

While starting a new loyalty program may be a lot of work, it also has the potential to be a supremely profitable one for your brand. So get excited and, most importantly, get going!

Author Bio:

- Kirsten Burkard is a Rewards Marketing Specialist and lead editor of the blog. She’s passionate about excellent customer service, art and design, bows, and anything Disney.
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