Business Operations

How to Create an Effective Customer Rewards Program

There are so many benefits to businesses and retailers creating a customers rewards program. The idea of these programs really started taking hold in the 1980s, particularly as airlines wanted to give their frequent fliers special rewards that would incentivize them for their loyalty.

Since that time, customer loyalty programs have grown, and they’re used by a wide variety of businesses.

For example, smaller businesses like Country Wine and Spirits, a California alcohol retailer ranging up to extremely large corporations like American Express all embrace the ideas of these programs.

So how can you take advantage of customer rewards programs that boost loyalty and customer retention?

Is It Right For You?

While customer rewards programs can work extremely well across many industries and businesses of all sizes, that doesn’t mean they work for every single business. You’ll need first to determine whether a rewards program is right for you.

You’ll initially need at least a little bit of customer loyalty and information to glean some key insights about your customer’s habits, and if your business doesn’t deal with customers very frequently by nature, a rewards program may not be ideal.

What Are You going to Offer?

There needs to be a good balance with your program between true value and of course your own bottom line. You don’t necessarily want to limit your program to only offering repeat customers’ special discounts because these don’t tend to resonate with customers.

Earned bonuses and prizes tend to work better in most cases.

Keep It Simple

When you’re first implementing a new customer loyalty or rewards program, try to keep it simple. You don’t want it to be so complex or have so many levels that your customers don’t even get what you’re offering.

Eventually as participation in the program grows you might be able to make it a little more detailed, but particularly when you’re just starting out, simple is better.

When you’re setting up the rules for earning, make sure it’s easy to understand and keep spending or redemption rules similarly straightforward.


You want your rewards program to be designed with your brand and company philosophy front and center. A good example of a company that does this well is TOMS. This shoe company has become known for its mission of donating a pair of shoes to people in underdeveloped countries for each pair of shoes sold.

As part of their loyalty program, there are more donations made to charities of the customer’s choice, along with other options such as early access to new products and discounts.

Integrate Digital Components

As a final note, make sure you have plenty of digital components that are part of your rewards program. If you’re already using a mobile payment platform, it’s easy to incorporate rewards options into this.

A good rule of thumb is to have both off and online options that will appeal to all of your customers, of course, unless it doesn’t make sense for your particular business to offer one or the other.