setting up customer rewards program

Ultimate guide to setting up a customer rewards program for retailers

Loyalty rewards programs are more prominent and popular than ever. More than 90% of companies have some sort of loyalty rewards program in place, and more than half of Americans join reward programs to achieve better levels of personalization, gain unique “VIP” perks, score loyalty points, and enjoy a feel-good “thank you” for their everyday purchases. 

Retailers who excel in setting up customer rewards programs successfully grow 2.5x faster than their competitors. Shoppers feel an emotional connection to brands they’re loyal to and are willing to spend more money, more frequently with brands they love—and refer friends and family, too! 

Maybe you’re the new retailer on the block just getting started or perhaps you already have a customer rewards program that isn’t performing as well as you’d hoped it would. Either way, this guide will highlight best practices in rolling out an effective customer reward program (or optimizing your current one!). 

Step 1: Develop the Goals You Want to Achieve With a Customer Rewards Program. 

Defining objectives is part of creating any successful campaign or program. Understanding the motives behind why you’re taking a new direction will enable you to set up metrics that determine how well you’re progressing. Customer rewards programs can be used to: 

  • Provide greater value to consumers who choose your retail brand.
  • Increase brand awareness and store foot traffic among new audiences.
  • Keep your brand top-of-mind among existing audiences.
  • Boost immediate sales, conversions, and revenue.
  • Acquire market share, stealing traffic from competitors.
  • Encourage existing shoppers to spend more money, more often.
  • Decrease the cost-per-acquisition and increase the number of repeat customers.
  • Win back customers who have abandoned shopping carts or who rarely buy from you.
  • Increase website traffic, SEO ranking, credibility, online authority, and brand affinity.
  • Create brand advocates who passionately love your brand and refer friends and family.
  • Gain consumer insights and data to better personalize and improve your brand experience.
  • Attract media attention as a brand that understands and cares about their customers.

More than one goal may apply to your situation—perhaps you even wish to accomplish them all. But when structuring your program, it’s best to focus on three core objectives within your strategy, just so your team doesn’t spread itself too thin when it comes to achieving those goals. 

Step 2: Decide Which Type of Rewards Program Is Right for You.

There are many different ways to structure a rewards program, but first and foremost, you want a system that is easy to use and understand. You want shoppers to recognize the value of your program, whether it’s their first purchase or their 200th. The perks you provide should be relevant to your core audience and automated in their redemption, and your marketing should support your loyalty program to ensure its regular use. Lastly, you’ll want procedures in place to collect data and ensure your rewards program is furthering your aforementioned business goals.

Customer reward systems to consider include: 

  • Points-based systems, to solicit new customers who make frequent purchases.
  • Tiered loyalty programs, if you want existing customers to shop and spend more.
  • Premium fee-based programs, to increase value, market share, and revenue.
  • Cashback reward programs, if you want to drive incremental upsell purchases.
  • Coalition loyalty programs, to expand to new audiences and provide value.

Step 3: Add Trending Features That Customers Want to Your Retail Loyalty Program.

If you want your retail loyalty program to stand out from the crowd, you’ll have to implement cutting-edge practices, while also tailoring your offerings to your target audience’s particular needs. 

setting up customer rewards programExamples of best-in-class features include:

  • An omnichannel experience: Adding a mobile app boosts program engagement by 75%.
  • Transactional incentives: Make buying easier with free shipping, buy online pickup in-store (BOPIS), or mobile payment options.
  • Cutting-edge technology: Use beacons and push notifications to enhance shopping experiences.
  • Rewards: Reward hobbies and interests, and provide content that speaks to these values.
  • Tiers: Give customers a “next-level” tier to pine and strive for, offering enticing benefits.
  • Gamification features: Challenges, badges, and rewarding games increase loyalty status and engagement.
  • In-store engagement: Scannable barcodes and receipts can be rewarded with added info or points.
  • Instant gratification: Along with points, offer gifts and “surprises” along the path to purchase. 

Looking at loyalty program examples and unique differentiators other leading retailers have employed can help you gain insights and ideas for your own program, but ultimately, you’ll need to ask the following questions: What do my shoppers want? How can I make it easier for them to achieve it? How can I provide greater value?

Step 4: Choose a Partner to Amplify Your Rewards Program Results. 

A common pitfall is that retailers assume that setting up a customer rewards program is solely their responsibility. You can approach this task in that way and sometimes a great in-house rewards program does achieve successful results, like Macy’s, Sephora, or Nike. However,  there are many more cost-effective ways to implement a rewards program and expand your reach even further. 

Retailers can partner with an established third-party customer loyalty program which not only allows them to begin engaging customers right away, but also gives them instant access to the third-party’s existing customer base.

These audiences may be completely foreign to a retailer’s brand, so the partnership offers an affordable way to scale up to new shoppers quickly and easily.

Shopkick is a leading mobile rewards shopping app used by millions of shoppers already. They log into the rewards platform to find retailers and brands offering “kicks” (reward points) for a number of engagement-related activities. Just entering a retail location with a mobile phone in hand can earn shoppers kicks. Other kick-earning activities include scanning select items’ barcodes, watching branded videos, browsing curated lookbooks, and making online or offline purchases. Once enough kicks are accumulated, they can be redeemed for gift cards of the shopper’s choosing. The end results are greater conversions, a higher return on investment (ROI), and long-lasting brand affinity.  

A Shopkick partnership can be a great way to amplify or establish your customer rewards program. Read our success stories or contact Shopkick to learn how easy setting up a customer rewards program can be for our retail and brand partners.

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Image courtesy of William Perugini



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Dima Volovik

EVP of Product and Engineering

Dima Volovik is the EVP of Product and Engineering at Trax Retail — Shopkick.

Dima Volovik is the accomplished product and engineering leader who led teams to deliver innovative and commercially successful e-commerce products, marketplaces, and enterprise solutions for Amazon, Comcast, Fandango, and Universal Music. Before joining Trax, Dima was the Director at Amazon, where he led product development and Engineering for Amazon Appstore and Amazon Prime Video, CTO at Fandango, and Paciolan, head of technology at Golf Channel/Golf Now, and Global VP of Direct to Consumer Technology at Universal Music Group. Dima’s expertise includes developing consumer products, marketplaces, and enterprise solutions.

Dima grew up in Baku, Azerbaijan, where he received his MS in Electrical Engineering from Azerbaijan Oil Academy, and he currently resides in Los Angeles, California, with his family.