Starting a Loyalty Program? Simplicity is Key at Launch!

Editor’s Note: This post was originally published October 11, 2017 and was updated for accuracy and comprehensiveness on September 28, 2018.

Here at Smile.io we have seen tens of thousands of loyalty programs. We’ve also gotten to see these many of them grow from launch to thriving brand communities. Through our experience, its the uncomplicated programs have much more success at launch compared to those that try to do too much, too fast. This might seem odd considering all the functionality that is available when building out your loyalty program, but we recommend starting simple.

Here’s why.

Complexity creates confusion

When you first start your loyalty program the whole process is new to your brand community. It’s important to not overwhelm them right off the bat, and all the great ideas you have will be too much for your customers to process all at once.

From our experience, you are better off starting a rewards program that is simple. You can add additional functionality over time as your community grow accustomed to the program. There are a couple key ways to get your loyalty program off the ground quickly that are still very effective.

Simple earning rules

This is one of the most effective ways to encourage loyalty and is also the easiest to set up. All you need to do is set the amount of points you want to reward for every dollar spent, and let your customers start earning. We recommend starting with 1% back on purchases, and making points equal to 1 cent each. We’ve found this to be an effective place to start.

The simplest way to set this up is to award 100 points for each dollar spent. Setting the point value of purchases this way makes it easy for your program members to understand what their purchases are worth from an earning perspective, and sets you up to make easily understood spending rules as well.

Simple spending rules

Once you have set the amount of points you will be rewarding, you need to also set how points will be redeemed. Start your program by allowing a set number of points be used to get one dollar off. This will let your customers know exactly how much their points are worth as they earn them.

Customers also like when there is a simple conversion between points and dollars off, such as 1000 points = $1 off. That there is a clear connection between how much they earn, and what they can spend those points on. Simplicity is key, and your your earning and spending rules should be no different.

A simple program lets you launch quickly

A simple program allows you to launch now, rather than weeks or months down the road. As we like to say “A simple loyalty program is always better than no loyalty program”. Every moment spent in development has an opportunity cost, so you miss out on time that your customers could be becoming engaged members of your community. Every day that passes without implementing is costing you potential revenue.

Instead of spending weeks perfecting your collection of earning rules, or crafting a long list of rewards for each VIP tier, starting with just few simple rules will get your program live faster, so you can start building a community sooner rather than later.

Starting simple provides great marketing potential

This staged launch process also provides a great way to market your loyalty program. Every time you introduce new features to your program, you can market them to your customers and encourage engagement. Say you launched with a simple earning and spending rule, and now you are ready to add VIP tiers to your program. You can email your community and let them know about the new program, and what benefits they get with each tier.

When launching, instead of marketing it as a new loyalty program, the simplest way to communicate it to your customer base is to frame it as the official launch of your brand community.

A loyalty program is about you, but a brand community is about your awesome customers.

This shift in mindset will help you craft email, social media, and other marketing communications that emphasize the value that the program brings to your clients, and not just how it will help your business grow.

Simple launches allow for customer feedback

If you launch with a basic program you can get your customers to help you decide where to improve. It should come as no surprise that the best ecommerce loyalty programs are the ones that are driven by customer data and insight.

By launching a simple program it is easy to interpret the data and results you are seeing. The program is being driven by the few rules you have set to start. You can use the information you gather from the early stage results to determine what is effective and what is not.

You may have to adjust how many points to award or what a point is worth. These fundamental learnings can get lost in a program that has tons of features and rules. It is important to have a firm grasp of your programs fundamentals before proceeding with all the features available. I know we sound like a broken record, but, when starting a loyalty program, keeping it simple is key.

It is also important to involve your customers in the evolution of your program. Before introducing the next feature, ask your customers what they thought of the last feature. Did they use it? Was it easy to use? Did they know it existed? This will ensure that the features you are adding in the future will not only used by your customers, but actually provides them value.

Building your program so that your community members want to use all of your features will keep them engaged with your brand, and ultimate help the community keep growing.

When starting a loyalty program you need to keep it simple

We have launched thousands of loyalty programs, and the successful ones use a basic program to start. A simple program at launch gets you started right away, gives you powerful remarketing potential, and allows you to involve your customer in the program’s direction.

A basic program launch allows you to avoid overwhelming customers, while at the same time gathering valuable insight on where to improve the program in the future.
- Mike Rossi, CEO, Smile.io