Five Tips for a Strong Rewards Program

Small-business owner handing card to woman customer

Customer loyalty: It’s the engine that drives repeat business and the power behind growing your customer base. The holiday season is the best time to create loyal customers out of seasonal shoppers.

But in a world where consumers have so many choices, what can you do to encourage loyalty toward your company? Offer an effective rewards program. It works — and now’s the time to establish one that’s right for your customers and your business.


Do rewards programs work?


In a 2016 Bond Brand Loyalty survey of more than 19,000 consumers, 81 percent of respondents said that rewards programs make them “more likely to continue doing business with brands.”*

Mike Schween, director of Digital Marketing at FedEx, knows all about building a successful loyalty program. He managed the highly successful My FedEx Rewards program, which has been in place for about nine years. “It’s important to understand that, at their core, all loyalty programs are customer-engagement engines,” he explains.

Review these five tips from Schween on how to build a successful loyalty program.

1. Know your customers

Understand your audience and its buying patterns. “Use customer data to create highly relevant communications and offers,” Schween says. “One-size-fits-all models are not going to be as engaging or effective.”

Your goal is to build a habit, and catering to your customers is how you’ll make that happen. For instance, if your company relies on small-value sales, a program that rewards customers frequently will entice them to return more often so they can cash in their points and earn more.

On the other hand, if most of your business comes from high-value individual purchases, your customers may get more excited about larger rewards that take longer to redeem.

2. Offer variety

For a loyalty program to draw interest across the customer spectrum, it’s key to provide multiple rewards options, Schween says. Different groups come with their own expectations about what types of rewards they want to earn and how they’ll use them.

Whether you build your program around big-ticket items or smaller perks, keep in mind that some customers prefer to redeem their points regularly, while others would rather save up for something special. Ideally, you should find a way to keep both camps interested in your offerings.

3. Make it easy

The real secret to retaining customers is to make your rewards program convenient and easy to use, Schween says. “If it’s difficult to earn or redeem your loyalty currency, your customers will not be engaged,” he says. “Customer convenience is a critical ingredient.”

4. Think long term

An extensive marketing budget isn’t always feasible for small businesses. If you’ve been tempted to avoid or cancel a loyalty program in times of economic pressure, Schween cautions against it. This isn’t just a marketing expense, he says, it’s an investment in your future business.

Looking at the big picture, the costs of maintaining a loyalty program can pay off in a big way over time: Offering special incentives and discounts can help firm up your base of repeat customers.

5. Measure your results

Of course, it’s crucial to know that your loyalty program is, in fact, paying off over time. Data is a central part of this strategy. “Look at both revenue performance and customer behavior to ensure it’s providing the return you anticipate,” Schween says.

Are rewards customers spending more with you than similar customers who are not enrolled in the program? Likewise, you’ll want to measure how often customers earn and redeem points, and the frequency in which customers peruse your catalog of rewards items.

If your loyalty program can get your customers excited, become a part of their routine and stay relevant, you’ve got yourself a winner.

Buzz for your brand

For more useful tips on getting the word out about your business, check out the Get Noticed page on the FedEx® Small Business Center. And find out how the My FedEx Rewards loyalty program can help you grow your business.


*Bond Brand Loyalty, “The 2016 Bond Loyalty Report.”

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