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How To Create Customer Loyalty Rewards Programs To Drive Lifetime Customer Value

customer loyalty reward programs

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customer loyalty reward programsAs an entrepreneur, growing and stabilizing the traffic to products and services may take quite a bit of experimentation.  You may choose the wrong niche and position yourself in a place where you’re not received well, you could overspend on unnecessary things (like perfectionism), or you could struggle with personal mindset issues.  There are quite a few challenges that could hinder you in this phase of business growth, but leveraging satisfied customers could be one way to get thru.


About Customer Loyalty Reward Programs


Customer loyalty reward programs can help to solve problems every business has to solve: customer acquisition and customer retention. Of all things to be said about your business, hearing excited customers is probably the most relevant to build your reputation in a positive way.


Most potential customers feel they’re taking a risk by becoming a patron of any company, so they need facts to diminish the weight of the risk.  When they hear a person whose problems have been solved by your product or service, it builds their confidence that maybe you can solve problems for them also.


Satisfied customers (especially those who are very pleased with your work) are the best people to refer others because:


  • They can explain what to expect
  • They know advantages and disadvantages of your product or service in comparison to other choices
  • They are likely to know people with similar expectations as they have


As a result, with referrals, you are more likely to acquire customers with realistic expectations that you understand how to serve–that’s what makes satisfied customers the best advocates.


Acquired Customers are Keepers

In addition to bringing the best referrals, people who have already been patrons of your business are the cheapest to keep.  There’s no further customer acquisition costs required to keep a customer, you simply have to deliver your product and service, therefore, if you already have “acquired” their attention once, it would be easier to do this again rather than building trust with someone else.  Therefore, you don’t have to worry about this…


customer loyalty reward programs

and, instead, you can worry about this…


customer loyalty reward programs


Serve Customers Well


Since satisfied customers are the best advocates, one formula for customer retention is to serve your customers well.  Good customer service may sound like common sense, but statistics say $41 billion dollars has been lost by US companies due to poor customer service. (Source: NewVoiceMedia)


In order to really have customer loyalty or create customers who want to advocate for you, you have to serve them well by:


  • Clearly explaining your product or service–not inflating it
  • Pricing fairly
  • and, over-delivering on the expectation

When you’ve created advocates by overdelivering, you’ll get feedback from customers like:


  • I’m so glad I do business with them
  • They always surprise me
  • I would definitely tell others about them

You want to hear positive feedback or you may need to re-evaluate your customer fulfillment system, and create a customer journey map to make some tweaks.


3 Ways to Reward Customers for Longevity and Referrals


Once you’ve created raving customers, then if you add rewards, it’s like the icing on the cake.  Rewards programs can range from points systems to affiliate programs, and even to multi-tiered rewards programs where people are rewarded for telling others about your product or service transcending multiple levels of referrers.


1. Point System Rewards or Cashback Rewards


Plant Therapy is an essential oil company who offers lots of rewards in exchange for product purchases.  Take a look at their website:


customer loyalty reward programs


They offer so many different types of rewards for various customer actions!


  • Mystery gifts with purchases over $35, 15-25% off sets
  • Give $10 and get $10
  • Earn points when you write a review
  • Earn points when you connect on social media
  •  and, Oils of the week

Programs like what’s offered at Plant Therapy really excite customers, they get people to spend more and return more, they increase loyalty, and they increase customer lifetime value!  If you haven’t thought about how to add a customer rewards program to your business, you should consider.


Point system rewards can be:


App-based – With an app based system, customers would join by downloading your app.  Then, when they fulfill certain actions, you’d award them with points. Service providers who offer software for app-based loyalty programs are Shoutem or CandyBar.


Card-based – With a card-based program, you’d create something like a credit card that customers would swipe or input a code during their purchase.  The card would track the frequency of their transactions, and the tracking would enable you to reward them when they’ve achieved a milestone.  Some service providers who offer this service are Belly or Spot On.


Email-based – An email-based loyalty program is completely hands-free.  If you already have the email addresses of your customers, you could keep track of their rewards via email.  I’ve seen an email-based rewards program only a limited number of times, but I have seen them used well.


For example, Dave Ramsey hosted a contest via email where he sent out actions like “like me on Facebook”, “Share with your friends”, and other prompts in exchange for an entry into the contest he had.  The emails seemed to get alot of engagement and created more excitement about his brand.


Website-based – By adding a plugin like a Woocommerce extension to your website, your loyalty program can run on your website seemingly on autopilot.  A customer would checkout, and points would be added to their rewards account.  Then, once they’ve achieved a milestone, you get a notification.


or Punch cards – Punch cards are definitely the most old-fashioned of all the choices, but they’re still an option.  You could create a card design and have it printed by Vistaprint similar to how you’d have any other business card printed.  Once, they have a certain number of initials or punch holes, then they’d get their reward.


2. Affiliate Program Rewards


Another alternative to points or cashback rewards are affiliate programs.  More and more people are learning how to use affiliate marketing, therefore, offering an affiliate program could be very exciting for your customers.


If you make the affiliate program promising enough, customers who truly advocate for your product or service may take lots of initiative to help you promote.  One example of a very promising affiliate program is with Wealthy Affiliate, the home of affiliate marketing training.  Their affiliate program provides insights to affiliates so they know:


  • How many referrers they’ve had
  • How many free members signed up based on their referral
  • How many paid members signed up based on their referral
  • They get 40% recurring commission
  • and, they have an 8 month average retention rate, so affiliates can expect to build a consistent income and recieve sizable commissions over time


Similarly, you can offer affiliates an opportunity that’s mutually beneficial: they can get paid for investing time and money to promote your business, and you can get more quality customers!  A promising affiliate program leaves room for:


  • Advertising
  • Profit
  • and other promotion methods


If you’re saving money on customer acquisition costs and translating that to affiliates, you can give them:


  • Pay for a lead
  • or, pay for a sale (usually a percentage)


When a good affiliate program is put in place, some affiliates will:


  • Pay to advertise your product or service
  • Pass out flyers
  • or, make promoting your business their full-time work!


You could have a full-time sales force simply by adding a good affiliate program!


3. Network Multi-Level Marketing Rewards


Similar to an affiliate program, you could allow the rewards to pass more than one level.  For example, if customer A refers customer B to your product or service, you’d give X%.  If referrer B refers customer C, an affiliate program would likely only pay referrer B, but a multi-level marketing rewards program would pay referrer B and referrer A.


Old companies used the multi-level approach to drive massive customer loyalty and revenues.  Very well-known companies like Avon, Tupperware, Pampered Chef, Mary Kay, or The Watson Co. grew multi-million dollar companies without using traditional marketing or advertising because they leveraged the customers.


The Watkins Co. Example


customer loyalty reward programs


The Watkins Co. was founded in 1868.  They offer natural body care, home cleaners, spices, herbs, and health products.  They’re products are competitively priced with Amazon and Walmart, and their competitive advantage is their commitment to natural ingredients with no additives.


They’re a direct sales company who offers the multi-level marketing rewards program to customers dependant.  Rewards increase as personal and downline sales increase.


Thru their rewards programs, customers can earn by:


  • Buying Watkins products at a 35% wholesale discount and selling them at retail price
  • Refer other wholesale customers (Watkins sellers) and earn 5-10% on their sales volume
  • or, by ordering products for personal use and earning rewards

Watkins is one example of a reputable company who offers a great reward program that’s created a lasting company and lots of long term happy customers.


Pyramid Schemes


Multi-level marketing has become synonymous to pyramid schemes for some people, but they’re two different things.  A pyramid scheme is when scammers create products and services that don’t deliver to expectations or are not worth the value they’re sold for, and used this business model to recruit people looking for an opportunity to make more money.


In contrast, multi-level marketing rewards programs that are attached to products and services with great products and services, competitive pricing, and great competitive advantages can drive long term business and referrals.  Despite the pollution of this model by pyramid schemes, it can still be used by reputable companies to encourage loyalty and referrals without high customer acquisition costs.


Facts About Multi-Level Marketing


In fact, 20 million people are involved in the direct sales industry for various reasons including…


  • They can buy product and services they love at a discounted price
  • Acquiring rewards and sharing the products and services can serve as a supplemental income
  • Making a direct sales income can add flexibility for families or people who want more time independence
  • and, other reasons.

Despite the mixed opinions about using a multi-level marketing approach to reward customers, it can still be a viable option, and it can grow lots of loyalty and growth for a company with quality products and services.


Final Words on How to Create Customer Loyalty Reward Programs


The goal of this article was to show how to create customer loyalty reward programs that drive sales and lifetime customer value. There’s lots of options for how you can reward your customers for referrals and loyalty, and if you don’t have anything established already, you should definitely consider.


If you have questions or concerns about this, don’t hesitate to leave them in the comments section.  I’d love to help you out!


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Now, it’s Your Turn…


Have you seen customer loyalty rewards programs that create lots of engagement?  Which ones?  What do you think makes them stick out?  Have you created a customer loyalty rewards program in your business?  Why or why not?  Leave your comments below.

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