Designing a Loyalty Program

To design a loyalty program, you must do the research and analysis to determine who your best customers are and how you want to affect their behavior.

Depending on your business model, you might want to increase the frequency of a customer's interactions, the total dollars spent for each transaction, how often members use the Member portal rather than phoning the call center, or other behavior.

For example, a major airline might find that 10 percent of its customer base generates more than half its total revenue. When the airline recognizes that frequent flyers are the major source of revenue, it can design a loyalty program to appeal to frequent flyers, which would increase the frequency of their transactions.

Oracle Business Intelligence can help you analyze your customer base. A smaller research effort might just select the target customers, design the program, hold focus groups to get feedback, and then roll out the program. A more advanced effort can include simulations of customer segments, reward thresholds, and financial analysis to maximize the program’s impact on customer behavior across the customer base.