Design a Loyalty Program

Loyalty programs let you target customers and provide incentives to increase business.

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 they use the member portal rather than a call center, or other behavior.

For example, if an airline finds that half its revenues come from 10 percent of its customers, then it would design the program to appeal to these frequent flyers.

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.

To design a loyalty program:

1. Research and analyze your customer base to determine who your best customers are.

2. Determine how you want to affect their behavior.