Customer Loyalty Plan – How to build one using the 3i Technique

How to build a customer loyalty plan

Customer Loyalty Plan – How to build one using the 3i Technique

Investing in a customer loyalty plan is only natural for any business today. While acquiring a new customer costs 5 to 25 times more than to retain an existing one, an existing customer spends 67% more than a new customer. As a result, today almost every business is engaging its resources in customer loyalty plans. Right from the e-commerce giants to the local grocery store.

Customer Loyalty Plans are essentially rewards (or some incentive) offered to the customers for staying loyal to your business. Though loyalty programs are relatively inexpensive to implement, its successful execution can dramatically increase customer lifetime value (LTV). And also create a pool of brand advocates!

To know more about creating brand advocacy through customers – click here.

How to set up a Customer Loyalty Plan?

A customer loyalty plan can be set up in 3 steps as mentioned below. At JacobsonsDirect, we call them the 3i’s to build an effective customer loyalty plan – Introspect, Identify and Implement


Introspect - Why did the customer choose you?

Introspect – Why did the customer choose you?

Take time to understand why is it that customers have chosen you. What is the value you can create and how you could become even more relevant to them? A good way to go about it is by creating buyer personas and customer journey mapping. In fact, customer journey mapping will help you identify obstacles which affect customer loyalty. Conducting surveys and customer interviews is another way to go about it. In essence, identify something that will create an additional value for your customers simultaneously pushing up your sales.


identify - the budget and framework

Identify – the budget and framework

Try to identify the budget and framework to realise the loyalty plan. You can start off by looking at your current average sale per customer per segment and customer LTV to understand the impact you plan to achieve at the top and bottom lines. Calculate how increasing average sales per order in selected segments impacts the business and then go on to lay the measures to achieve your targets.


Implement - Keep it simple

Implement – Keep it simple

It is this phase which determines the success of a loyalty plan. Hence, it is best to keep a loyalty plan as simple as possible. Easy conversions, easy redemptions, omnichannel use, are just some of the ways to keep it effective and engaging.

Also, it is advisable to run a few soft launches of the loyalty plans and invest time in A/B testing to identify any shortcomings or technicalities before rolling out a full-scale program. The true test for the success of any loyalty plan is if it increases average sales and customer lifetime value.

Even after implementing the loyalty program, keep monitoring the data and feedback – there’s always a scope for improvement. We hope this helps you chalk an outline of your loyalty plan.

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