More than 90% of companies have some sort of loyalty program for customers.
How Customer Loyalty Programs Work
A customer loyalty program rewards customers who interact repeatedly with the brand. It is a strategy for retaining customers and encouraging them to continue purchasing from your brand instead of competitors. The more a customer buys or engages with the brand, the greater the rewards they receive.
With a loyalty program, companies can offer points or benefits to customers. In return, they redeem points for discounts, free products, rewards, or exclusive perks. The goal is to incentivize repeat purchases and build trust between the customer and the business.
95% of customers say that trust in a company increases their loyalty. Customer Trust Trends Report, Salesforce Research
A recent survey by Yotpo revealed that people will go out of their way for brands they love. Nearly 68% of participants said they would join a customer loyalty program for brands they love, while 56% of those are willing to spend more with the brand even if there are cheaper options.
The study also revealed that people want more free shipping and discounts. They also want early access to offers and new products.
Running a customer loyalty program means you’ll need to offer something. Whether it’s discounts, sales, or early access, etc. But the return on investment for having rewards programs is enormous:
- More customer referrals. If you have a great loyalty rewards program, people may tell their friends and family about it. More referrals mean more customers.
- A higher customer retention rate. If people find value in your customer loyalty program, they are more likely to stick around longer.
- More sales. Want to increase the average order value? According to the latest research on loyalty, 49% of consumers agree that they may have spent more after joining a loyalty program.
- Brand promotion. A successful loyalty program can turn casual customers into brand advocates. This helps the company reach new customers through word of mouth, a low-cost marketing strategy compared to paid advertising.
Types of Customer Loyalty Programs
Not all loyalty programs are the same. There are different types of reward programs you can use to build customer loyalty and achieve repeat purchases.
1. Points Programs
Points programs are the most common type of rewards program. They allow customers to accumulate reward points that they can redeem for free products, cash back, or other perks. Customers earn points not just for purchases but also by engaging on social media, leaving reviews, celebrating birthdays, or through games.
The body care seller Blume uses a point system called Blume Bucks in its loyalty program, named Blumetopia. Customers can earn Blume Bucks by following the brand on Instagram, placing an order, or telling friends about Blume.
Customers can redeem their points for free products and other cool gifts from Blume.
2. Tiered Membership Programs
Tiered customer loyalty programs are a type of membership where customers receive different benefits based on their rank. Membership is often categorized into tiers based on specific metrics such as sales or engagement.
These customer rewards programs provide a goal for customers. The higher their rank, the more exclusive and valuable rewards they will receive.
The lingerie and loungewear brand ThirdLove uses a tiered system for its program, Hooked Rewards. Customers can simply sign up for the program and start earning rewards immediately. The more a customer spends with ThirdLove, the greater the benefits they will receive.
Once
for their next purchase
This personalization helped reinvigorate interest in the loyalty program and increased sales.
2. Starbucks
Starbucks offers a popular loyalty program where customers earn stars for every purchase, which can be redeemed for free drinks and food items. The more you spend, the more stars you earn, which encourages additional spending.
Additionally, Starbucks frequently introduces limited-time offers and customized rewards to keep customers engaged. Their mobile app also plays a significant role in enhancing the customer experience by allowing for convenient payments and tracking of rewards.
3. Sephora
Sephora’s Beauty Insider program is another excellent example of a successful loyalty program. Customers earn points for each purchase, and these points can be redeemed for various rewards, including exclusive products and experiences.
Furthermore, Sephora segments its loyalty program into three tiers, encouraging customers to spend more to unlock higher levels of rewards, including special birthday gifts and access to exclusive events.
4. Nike
Nike’s loyalty program focuses on building a community of brand advocates. Members receive customized product recommendations, early access to new releases, and invitations to exclusive events.
The program also encourages social interaction by allowing members to share their achievements and participate in challenges, significantly enhancing customer engagement and brand loyalty.
5. Kohl’s
Kohl’s Rewards program allows customers to earn points for purchases, which can be redeemed for discounts on future purchases. Additionally, the company frequently provides bonus points promotions, incentivizing customers to shop more often.
Kohl’s also integrates its loyalty program with its credit card offerings, further encouraging spending and enhancing customer loyalty.
6. Ulta Beauty
Ulta Beauty’s Ultamate Rewards program offers customers points for every dollar spent, which can be redeemed for discounts on beauty products. The program includes various tiers, providing increasing benefits for higher-spending customers.
Ulta frequently sends members personalized offers and exclusive sales, encouraging repeat purchases and keeping customers engaged with the brand.
7. Target
Target’s loyalty program, Target Circle, allows members to earn 1% on purchases to redeem at a later time, as well as access exclusive deals and discounts. Members also have the opportunity to support their local communities by voting on various donations made by Target.
Target Circle combines saving and community support, fostering customer loyalty and encouraging shoppers to return regularly.
What made the campaign very successful is the level of personalization. Loyalty programs like DSW give the brand access to a wealth of customer data. DSW used that to its advantage (along with some reliable email automation) to build highly unique and relevant emails – far from the generic marketing messages that sit in customers’ inboxes.
2. Sephora Beauty Insider
The Sephora Beauty Insider rewards program is very popular. It has over 25 million loyal members, and members account for up to 80% of Sephora’s annual sales. Customers earn rewards for every purchase based on a traditional points system. The innovative part is that members can choose how to use their reward points.
One of the biggest barriers for a large number of Sephora customers is the price – Sephora products are not cheap. Loyalty program members can redeem their reward points for things like gift cards and discounts, helping to offset the purchase prices without diminishing the value of the products. Loyalty members can also redeem points for more exclusive items, such as limited-edition products or in-store beauty classes.
By empowering loyalty members to choose the deals they want, Sephora can offer customers the deals and products they truly desire without distorting the value of its products.
3. Starbucks Rewards
It’s now common for retailers to create mobile apps to manage loyalty programs, but when Starbucks launched the Starbucks Rewards program through the Starbucks app, it was a new idea. Running the program through the app makes it easy for customers – no punch card to forget or lose, no login required.
To earn loyalty points (or stars, in Starbucks’ case), customers must order or pay using the Starbucks app. Compiling customer transactions in this way provides a goldmine of data about customer preferences and behavior.
Favorite drink orders, customer lifetime value, frequently visited locations, seasonal favorites – by directing customers toward its app, Starbucks can gather information on all these habits and more, allowing the brand to provide more relevant benefits and communications to its customers.
If an app is feasible for your online store, it can be a great way to gather and centralize customer data. Otherwise, a point-of-sale system capable of doing so can help you collect most of the same information.
4. Amazon Prime
Amazon’s flagship membership program is well-known as a paid loyalty program. For a fixed annual fee, Prime members get unlimited access to free two-day shipping on millions of products, plus other benefits like Amazon’s streaming service and Prime Day sales.
Amazon faces intense competition from other retailers like Walmart. Most products found on Amazon are also available elsewhere. Prime is about how to differentiate itself and persuade customers to purchase products exclusively through Amazon. And it works: Prime members spend an average of four times more than other customers on Amazon.
For sellers in similar industries where products and price points are very similar among competitors, your loyalty program can become a distinguishing factor and a competitive advantage.
Think
In beautiful clubs like Costco, provide customers with a reason to shop exclusively with you by offering value in addition to your products and services. By charging a membership fee, you can grant yourself some flexibility to offer truly valuable benefits. Encourage customers to validate their purchase by spending more with you.
5. The North Face
Outdoor clothing and gear company The North Face incentivizes loyalty members to earn more and more rewards by providing flexibility in how to redeem them – with options that fit their customers’ lifestyles.
Customers earn points with the XPLR Pass program in the traditional way with every purchase, and sometimes in unique ways, such as attending exclusive The North Face events, signing up at specific locations, and downloading The North Face app. When it’s time to redeem rewards, customers can use their points for unique travel experiences, such as a mountain climbing adventure in Nepal.
The “XPLR Pass offers many great benefits to its members, such as early access to limited edition collections and collaborations, the chance to test products before they’re available to the public, and testing products in the field,” explains Andrea Bosoni, founder of Zero To Marketing.
More than just encouraging customers to spend more, The North Face rewards speak directly to the targeted consumers. They aren’t general discounts on products – they are personalized experiences that help build a stronger emotional bond between the consumer and the brand.
While sponsoring a climbing trip in Alaska may be out of reach for you as a small retailer, you can still create a rewards and loyalty program tailored to your customers that helps strengthen your bond.
6. REI Co-op
Consumers can be somewhat cynical about brands and marketing initiatives. They know that the ultimate goal is always to convince them to buy more products and spend more money. For this reason, the most innovative loyalty programs focus away from convincing customers to spend more and redirect their focus on creating value for them.
REI’s program takes customers back to the brand’s humble beginnings as a cooperative – a company owned by its customers. Customers can become lifetime members of REI Co-op for $20. Once they join, customers receive serious value, such as 10% back on all purchases, steep discounts on “garage sales,” and discounts on experiences like adventure classes.
Ultimately, the best loyalty programs keep their eyes on the customer – providing real value that truly speaks to the power of loyal customers and their impact on business. Big discounts may not be realistic for small retailers, but by learning from many of the examples above, you can find a financially viable way to be truly generous to loyal customers.
7. Apple
This one is a bit different, but there are few brands that have a more rabid and loyal customer base than Apple.
Sometimes, the most innovative loyalty program is to not have a loyalty program at all. Not every seller can build a committed and loyal customer base – like Apple has done – without offering rewards and incentives. But sellers who truly sell unique products can do so.
By attracting new customers through your product itself, creating an amazing customer experience, and providing those benefits with every purchase, you can eliminate the need for a traditional loyalty program altogether.
When to Add a Loyalty Program to Your Business
Every
1: اختر نوع برنامج الولاء الخاص بك
هناك العديد من الأنواع المختلفة من برامج الولاء، لذا ستحتاج إلى اختيار النوع الذي يناسب عملك بشكل أفضل. هل سيكون برنامج نقاط، أو برنامج يعتمد على المستوى، أو برنامج إحالة؟
الخطوة 3: تصميم برنامج الولاء الخاص بك
قم بإنشاء هيكل واضح لكيفية عمل البرنامج. حدد كيفية كسب العملاء للنقاط أو المكافآت، وما هي المكافآت التي ستقدمها وكيف سيتم استبدالها.
الخطوة 4: إنشاء رؤية للعلامة التجارية
اجعل برنامج الولاء جزءًا من الهوية العامة لعلامتك التجارية. تأكد من أن جميع عناصر البرنامج تتماشى مع رؤية العلامة التجارية الخاصة بك.
الخطوة 5: تعزيز برنامج الولاء الخاص بك
استخدم التسويق عبر البريد الإلكتروني ووسائل التواصل الاجتماعي والإعلانات لجذب انتباه العملاء إلى برنامج الولاء الخاص بك. يجب أن يكون العملاء على دراية بمزايا البرنامج.
الخطوة 6: قياس الأداء
تتبع نجاح برنامج الولاء الخاص بك من خلال قياس مؤشرات الأداء الرئيسية مثل معدل الاحتفاظ بالعملاء ونسبة الاشتراك في البرنامج. استخدم هذه البيانات لإجراء التعديلات اللازمة لتحسين البرنامج.
الخاتمة
إن تنفيذ برنامج ولاء فعال سيساهم في بناء علاقات قوية مع العملاء وزيادة ولائهم لنشاطك التجاري. مع التخطيط الدقيق والترويج المناسب، يمكنك أن ترى تأثيراً ملحوظاً في نجاح مشروعك على المدى الطويل.
Step 2: Understand Your Customers
Analyze customer behavior, preferences, and needs. This will help you design a program that targets them.
Step 3: Choose the Type of Program
Decide on the type of program that will achieve your goals and target your customers. It could be a points system, a tiered system, or a paid program, etc.
Step 4: Define the Rules
Clearly define how customers can earn and redeem rewards. Ensure that the rules are simple and easy to understand.
Step 5: Implement the Program
This includes the technical setup (such as creating a mobile app or integrating with your website), training staff, and launching the program to your customers.
Step 6: Promote the Program
Use various marketing channels to make your customers aware of the program and its benefits.
Step 7: Measure and Adjust
Regularly review the program’s performance against your goals. Adjust the program as needed based on customer feedback and data.
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