Loyalty programs are custom marketing programs that reward customers for their participation. Most of us have joined one.

Examples include at your grocery store, where you swipe a branded card or enter your phone number to receive discounts, and a frozen yogurt store, which provides a punch card to earn a free frozen treat after a set number of purchases.

Do these loyalty programs work? What is the value of developing a loyalty program for your customers?

Loyalty programs work incredibly well when done right, with response rates as high as 80 percent on offers extended to loyalty club members in business sectors such as retail and hospitality. Even a 30 percent response rate is significant, given that a respectable response rate for an average prospect campaign offer is 0.05 to 1 percent.

Providing your customers with a loyalty program adds incredible value to your business. It can increase customer retention, add to the amount customers spend, drive volumes higher during off peak times and decrease marketing expenses.

Are you sold on the idea of rolling out a loyalty program for your business? It’s time to place your company in a position of power. Here are three tips that will help you roll out a quality loyalty program for your customers:

• Outsource technology — Avoid the temptation to use an old-school, paper-based punch card system or to develop an in-house loyalty system.

One major benefit of creating a loyalty program is that it allows you to gather data you can leverage to increase your revenue. This means you need to track all customer information electronically in order to take full advantage of the information collected.

Also, if you’re thinking of developing all this by yourself, don’t. It will take much longer than you anticipate, and your staff, customers and bottom line will pay the price.

Solid, inexpensive loyalty systems are available for use that can be outsourced quickly. These systems aren’t just for big corporations, either. Synergy One is one such system. Numerous others are available for a monthly fee. If you use a company for gift-card services, check with it, as it may have a system available for you to use.

• Make it easy — The loyalty program should be easy and convenient for customers. That means easy to sign up for, check reward balances and redeem rewards.

When creating the sign-up process, make sure that your staff — not the customer — does most of the work. Also ensure that it takes place onsite. It should include an instant reward to encourage participation and require minimal information from customers.

Members of your loyalty club should be able to check their reward balances easily online and onsite. The redemption process should be simple and easy to understand. Don’t make your customers jump through hoops to participate.

• Reward your customers — Create rewards for club members. Customers love tangible rewards that they can touch and feel, such as a free gift.

Rewards also should be measurable so that you can calculate the cost and the return on investment of your loyalty program. You can choose to reward your customers in a variety of ways, including points, discounts and free products.

Customers shouldn’t need a secret decoder ring to figure out the program benefits. Make the rewards simple and easy to understand.

The best rewards programs accomplish this by giving free products for a certain number of purchases. Customers understand “free.” Point systems can be too complex for customers to understand easily. Discount systems, too, generally don’t have as high of a perceived value as free giveaways.

• Market your program — Customers should be exposed to your loyalty program in every transaction they make with your company. This means collateral that outlines its benefits should be available at the point of sale, along with forms to sign up. Information about the loyalty program should be included in all advertising material as well as any online marketing endeavors, including on your website, and on social media outlets such as Facebook and Twitter.

Sarah Procopio, President of Thrive Marketing Science, a business intelligence and driven marketing firm. Sarah specializes in loyalty program development and turning around flailing companies and marketing programs quickly. She can be reached at sprocopio@thrivemarketingscience.com or 949.230.7873. This article was original published in the Denver Business Journal and can be found at https://www.bizjournals.com/denver/print-edition/2011/07/29/a-good-loyalty-program-can-increase.html