Creating Discount Programs or Loyalty Programs to Encourage Repeat Business and Recurring Revenue

Introducing discount programs or loyalty programs can be an effective strategy for businesses to encourage customer retention and recurring revenue. The goal is to provide incentives for customers to make repeat purchases and continue using your products or services on an ongoing basis. Here are some tips for creating and managing successful discount and loyalty programs:

Define Your Goals

Before launching any kind of discount or loyalty initiative, clearly define what you want to achieve. Typical goals include:

  • Increase repeat purchases from existing customers
  • Reward loyal customers and improve retention rates
  • Generate word-of-mouth referrals and new customer acquisition
  • Create predictable recurring revenue streams
  • Gather customer data and insights

Whatever your specific goals are, outline them from the start so you can design and evaluate the program accordingly.

Choose the Right Program Structure

There are different frameworks you can use for your discounts or loyalty rewards:

  • Loyalty tiers – Offer escalating rewards based on how much/often customers spend. For example, a basic tier for all customers, then silver, gold and platinum tiers with increasing benefits.
  • Points-based – Customers earn points for purchases that can be redeemed for discounts or rewards. Popular for flexibility.
  • Paid loyalty subscriptions – Offer exclusive perks, discounts and offers for a monthly or annual membership fee. Can create a predictable income stream.
  • Referral programs – Encourage sharing and word-of-mouth with incentives for referring friends. Helps attract new customers.

Consider your customers, business model and goals to choose the right structure for maximum impact.

Offer Valuable Benefits

The discounts or rewards you offer should be compelling enough to change customer behavior. Potential benefits to include:

  • Percentage discounts or dollar amount off for repeat purchases
  • Free gifts, bonus products or upgrades after a certain number of purchases
  • Exclusive access to sales, special offers and new products
  • Priority customer service for program members
  • Free shipping or expedited delivery
  • Convenient benefits like members-only lines or parking

The more value you can provide, the more effective the program will be.

Promote Across Multiple Channels

Don’t just add a loyalty program and expect customers to discover it. Actively promote it across your website, email marketing, social media, in-store displays and any other channels you use to engage customers.

Make it easy for people to sign up, understand the benefits and start enjoying the rewards.  For example, some casinos offer $200 no deposit bonus to their first pay. Provide reminders and progress updates to keep them engaged long-term.

Leverage Data and Analytics

The customer data captured from loyalty and discount programs provides valuable insights you can use to improve operations and marketing. Review metrics like:

  • Enrollment rates
  • Active user rates
  • Repeat purchase rates
  • Average order value from members vs. non-members
  • Products/offers that are most popular or drive repeats
  • Customer segments that are most engaged

Refine the program based on data to maximize ROI. Customers will also appreciate personalized communications and offers based on their behavior.

Recognize Your Best Customers

The most loyal, high-value customers deserve to feel special. Find additional ways to recognize top tier program members through perks like:

  • Special badges, titles or designations
  • Exclusive events and experiences
  • First access to new products/services
  • Birthday/anniversary rewards
  • Personalized customer service

Make your VIP members feel valued, and they will often respond with higher lifetime loyalty.

Watch for Abuse or Exploitation

To sustain any rewards program, you need to ensure customers are using it legitimately and not exploiting loopholes. Monitor for:

  • Manufactured spending only to earn rewards
  • Duplicate accounts
  • Reselling benefits/rewards
  • Returns/refund abuse

You may need to implement policies – like requiring a minimum spend to earn rewards – to keep programs profitable.

Review and Refresh Frequently

Customer preferences, economic conditions and your own business needs will evolve. Set reminders to periodically review your loyalty and discount programs to assess what is working well and what needs adjustment. Survey customers for feedback as well.

Small tweaks can go a long way – like adding new reward options or changing point values. But you may need a major revamp after the first year or two. Don’t let programs grow stale.

Succeeding with discounts and loyalty programs takes creativity, continuous optimization and conveying real value to customers. Done right, these initiatives can lead to measurably higher customer retention, repeat sales and lifelong brand advocates. Just be sure to clearly define goals, promote aggressively, leverage data and provide a stellar customer experience.

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