There are many ways for a business to retain its customers and raise sales. Among the most effective is to launch a well-thought-out loyalty program. Such an initiative motivates customers to continue doing business with a brand besides a product’s or service’s unique features.
Just how effective are these programs? A recent study shows that 70% of buyers believe loyalty programs are major factors in enhancing brand loyalty. After all, these programs add value to a brand’s products and make them even more appealing. Additionally, they feel seen and appreciated by the brand, as they receive rewards for continued patronage.
So, how does a brand craft a winning loyalty program? This blog post explores a program’s types, elements, and benefits. It also offers pointers on how to create an effective loyalty program.
What is a loyalty program?
A loyalty program is a marketing scheme that dangles incentives to customers so that they would return and continue buying products or services. For this to work, it should offer rewards that are attainable and congruent with the interests of a brand’s target market Popular examples of these programs include free items, free or discounted transportation fees, and cashbacks.
The aim of loyalty programs is to boost customer retention and engagement, which raises the value of buyers and reduces churn. Why so? Shoppers have added reasons to buy a brand’s products. After all, only a few can resist the allure of discounts or free goods.
As such, loyalty programs are widely used among brands across industries. Research shows that a US consumer, on average, is a member of 17.9 loyalty programs and actively participates in at least half of them.
Types of loyalty programs
Loyalty programs can be used by nearly any kind of business and can be adjusted to cater to the interests of different types of audiences. This means that brands with multiple product lines can create comprehensive loyalty campaigns that make all their items more saleable. You can opt to apply a program type that would most likely appeal to your captive audience.
- Tiered Loyalty Programs: You offer various rewards, structured into tiers, based on how much a customer spends or the level of engagement they bring to your products. Members of tiered loyalty programs can unlock a set of rewards as they enter a new tier. Ideally, the rewards progressively increase as a buyer goes through each tier. This is ideal for retail companies.
- Points-Based Loyalty Programs: Your customers earn corresponding points for each item purchased, with the items of higher value yielding more points. When shoppers have accumulated enough points, they can redeem free complementary items, discounts, or special experiences. This is ideal for airline and credit card companies.
- Paid Membership Programs: Your customers can become program members for a fee, and in return, they receive exclusive benefits like early access to new releases, personalized goods, or free or discounted deliveries. This is ideal for food delivery apps.
- Value-Based Loyalty Programs: These programs can improve your brand’s image by offering a portion of the profits from the promo to special causes like charities, nonprofits, and environmental organizations. Any business can implement this program type.
- Gamified Loyalty Programs: You can boost the engagement of your customers by turning parts of the buying process into a game. The game-like elements you can incorporate include points, badges, and challenges. Besides increasing engagement, this type of program can lead your customers to associate your brand with fun experiences. This is ideal for brands with younger audiences.
- Hybrid Loyalty Programs: You can combine elements from different types of loyalty programs to maximize engagement and customer retention, following your target market’s interests. For instance, brands sometimes combine the elements of tiered and points-based programs so that customers would know what to aspire for in continuing to buy products or services.
Why create loyalty programs?
Loyalty programs, in general, have etched a history of marketing success, and their presence impacts a consumer’s willingness to purchase. A recent report found that 79% of consumers prefer to continue patronizing a brand with an established loyalty program. This applies to both free and paid programs.
So, how exactly can you benefit from these programs?
The foremost advantage is that your brand will retain more customers. With enough promotions, your loyalty program will generate interest among your customer base since they will receive more for what they normally pay for. Just make sure that the rewards and incentives go hand-in-hand with their interests.
Another advantage is the ability to acquire more customers. If your program offers unique or high-value rewards, you can convert members of your target into buyers. What’s more, your existing customers who are satisfied with the program will likely spread it to friends and family and post about the rewards they received on social media.
Of course, with more returning customers and an influx of new buyers come higher sales. You might also notice an uptick in the average order per customer, especially if your rewards are particularly appealing.
If your program generates a buzz and a relatable narrative, it can turn regular customers into loyal followers. It will be trendy to obtain rewards, and trendy things magnetize more buyers and repeat customers.
Furthermore, you can deem your program as a seasonal affair. In doing so, your customers and target market will anticipate what your brand will offer even before you launch the program each year in the long run. Think your brand’s version of the Black Friday weekend, but probably longer.
The Creation Process
When creating a loyalty program, you should get to know your customers, the things they like, the trends they follow, and how their preferences match your brand’s image. Being a graduate of the cheapest ABA master’s programs online or any related degree helps, but regardless, you can gather information through internet research, surveys, or any means of gathering data.
Your mission is to create a program with rewards that will pique the interest of not just your existing customers but also the target markets of your product lines. Moreover, you should weave a narrative surrounding the program your customers can relate to so that they will feel seen and appreciated, enticing them to participate as members or repeat buyers.
You can take a hint from coffee shops and their programs. Some brands use stamp cards. One stamp represents one purchased drink. If you complete a card, you can obtain a prize, which can come in the form of a drink, tumbler, planner, or other cool prizes. Getting any is a good deal. A tumbler means you can bring your drink anywhere, while a planner lets you enjoy the amenities of coffee shops.
With that in mind, you can create an appealing program with a fairly simple process.
- Have a catchy name: Your program should be attention-grabbing. It should evoke at least a bit of emotion. You should give it a name that is easy to recall and interesting to share.
- Tie it to your brand’s values: Your program has to connect with your customers. What you can do is create a narrative that incorporates your brand’s core values. In doing so, your customers will have an affinity for your program. You can also use part of the proceeds to perform charitable acts like planting trees or helping needy communities if you want to enhance your brand’s image.
- Incentivize engagement. This is optional but you can devote a simple reward or incentive to people who would share media related to your program. This will bring more eyes to your initiative.
- Offer relevant rewards: Ask yourself: “What rewards will my customers be interested in?” The rewards don’t need to exclusively be top dollar but it should also not be an item that your customers can easily purchase unless you’re willing to offer free products. Going back to the coffee shop example, planners and tumblers are valuable enough to be viewed as premium items even though they are far from the priciest items you would find in a shopping center. You can also customize goods to add value.
- Simple mechanics and redemption: Many customers loathe unnecessary complexity. Make the mechanics clear and simple then post them on all platforms to eliminate any complexity.
- Don’t skimp on promotions. Promote your loyalty program on all possible platforms, from your store to your website and social media accounts. Keep your customers and target audiences informed to drum up excitement.
- Gamify the experience: This step is optional. If you have the bandwidth to create fun and engaging experiences for your program’s participants, then you can take the gamification route. Add game-like elements to the buying process. Your customers can associate the fun experience with your brand, which you can use for future marketing schemes.
Tips for Making Successful Loyalty Programs
A loyalty program does not guarantee success, especially if it prioritizes customer acquisition more than retention. According to a recent report, 77% of purely transactional programs fail within two years. Moreover, 73% of those who abandon loyalty programs do so due to the lack of personalization depth,
Ideally, a loyalty program should be easy to participate in, account for the actual interests of a brand’s customers, and allow users to painlessly monitor their points or progress in reward journeys.
Building an omnichannel loyal customer base hinges on delivering exceptional experiences across every touchpoint. A robust e-commerce platform may help meet customer needs consistently, fostering satisfaction and building trust. It also helps foster omnichannel customer retention.
The key to developing customer loyalty extends beyond rewards. It is about actively listening to customer feedback, providing practical solutions, and demonstrating genuine care. By placing the customer at the core of your strategy and leveraging data-driven insights, you can create tailored experiences that drive long-term engagement.
Consistency is paramount. Delivering consistent service and product quality across all channels, including social media and relevant websites, reinforces brand reliability and encourages customer loyalty. An integrated e-commerce solution can streamline operations, improve customer communication, and optimize rewards management.
To strengthen customer bonds, recognize and reward loyal customers, and share their positive experiences. This creates a cycle of appreciation, trust, and advocacy.
Building Trust and Value
A well-designed loyalty program can transform customers into long-term supporters. By offering rewards that resonate and providing exceptional experiences, businesses can build lasting relationships that lead to better sales and customer retention. The success of your program is hinged on personalization and considerable knowledge of your customers’ interests.
By following the strategies in this guide, your customers will feel good purchasing your products and claiming rewards. They will view your offerings as prized commodities and your brand as a home that values their presence and support.
