Establishing a good loyalty program can be difficult. Practice shows that many programs are shut down after just one year of operation because they do not meet the expectations of the marketing department or the bosses in the company. It is likely that effective planning would have anticipated some of the barriers and failures that contributed to its closure. A professional loyalty program should be targeted to the needs of the participants based on recent trends in culture or the Internet, and run with an expert IT tool. A well-implemented and well-run program carries many benefits that, over time, allow you to grow your business, build greater brand recognition and increase sales.

Wanting to help entrepreneurs and marketing departments, I have prepared a list of 5 mistakes that should be avoided when creating an effective loyalty program.

1. I don’t know what I want

The main problem in creating a program is the lack of awareness of what a loyalty program is supposed to be. Many bear the slogan of promotion and quick results, but this is not the way to go. An effective loyalty program should be stretched over time and have clearly defined program objectives consistent with the company’s strategy. In the industry, a distinction is made:

• Operational objectives e.g. Achieving a certain level of participation in the program
• Qualitative goals e.g. Create a customer database or establish new channels of communication with customers
• Marketing objectives e.g. Increase in brand recognition rate

2. I don’t do industry analysis

A thing that is effective with your competitors does not mean that it will also be effective with you. Each industry has its own peculiarities, which are worth considering when analyzing the market. If your closest competitors already have several programs with similar themes and operating processes, then coming out with another similar one may result in oversaturation and lack of interest in the program among customers. In addition, it is worthwhile to determine what the success factors may be in a given industry and what possible threats and barriers await the program. 

3. I don’t have a pre-set budget

The lack of a predetermined budget can cause the entire program to be ditched while it is still being prepared. The budget should take into account all the activities that will be carried out through the campaign. Every additional idea must be verified against the budget so that expanding the program does not compromise its quality. It should be oriented that the program will only be profitable in the long run.

The budget should most often include:

• Salaries of those developing and running the program
• Market research
• IT infrastructure
• Employee training
• Program promotions
• Rewards and their storage and distribution

4. I don’t plan a target group

Effective communication is the cornerstone of any loyalty program. However, to whom we direct our messages will depend on a well-executed analysis of the target audience. Under this point, we can present our program to a wide or narrow audience. A broad group will allow us to reach new users or retain existing ones. A narrow one, on the other hand, will be easier to target and build the message.

5. I am not creating a full program concept

The concept of the program is like the skeleton of the roof in our house. Without a proper structure, the whole thing will fall apart. Therefore, it is worth considering some key factors that will make our program a stable structure, and these include:

• Mechanism of the program (e.g., the customer will collect stamps or points or maybe something else)
• Form of reward (e.g., prize money, in-kind or other)
• Effective communication channels (e.g. Facebook, YouTube, flyers)
• Consistent graphic design 
• Technologies used (e.g., app, landing page)
• Accounting and legal form, i.e. how we will account for it

You already know what mistakes to beware of and how to turn them into successes. The next step is to look at why our well-planned program failed again, that is, we will write about successful implementation. If you want to know more about this topic, including others, additionally subscribe to our newsletter, where we cover this and many other topics.