How to Build a Loyalty Program (Lessons from QSR’s and Frequent Flier Programs)

A solid business case for the development of a customer loyalty program.

The most common (and easiest) way to launch a loyalty program is to use a simple points system.

A customer can earn a specific number of points for every dollar spent at your establishment or online store. Then, accumulated points earned can yield a specific reward – the simpler the better.

Why is keeping it simple so important? Think of some rewards programs you’ve come across – they’re not rewarding at all – they’re bothersome and hard to understand. This is where Menchies’ mySmileage loyalty program trumps the competition – it’s remarkably simple. To ensure your loyalty program is viable (and simple), here are a few things to consider:


  • Is the reward motivating enough to drive loyalty?
  • How long does the customer have to redeem their reward?
  • What is your anticipated redemption rate — how many customers do you expect will redeem their rewards?
  • What is the estimated revenue gained from incremental purchases in comparison to the cost of the reward?
  • Are there limits to the rewards customers can earn?


The best way to ensure the long-term success of your loyalty program is to answer the tough questions early and mitigate risk. Most importantly, your company’s loyalty program should be financially feasible and easily scaled to serve 1 or 100,000 customers.

Start small by beta testing your rewards program with a few customers. Take those learnings and expand incrementally.


The Hidden Value of Loyalty Programs

Not only can your small business enjoy the aforementioned benefits from instituting a loyalty program, it can also reap the rewards of big data. Successful loyalty programs collect valuable customer data: demographics, location, products purchased, frequency of purchase, transaction values and more.

This data can be used to improve marketing and sales efforts exponentially, if used correctly.

As a small business owner, you are empowered. You can now map a customers demographics to their purchases and you can estimate which customers are more likely to respond to a certain promotion. This is merely the beginning. And the upside is this: your marketing dollars can work smarter and harder.


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