Customer Loyalty Programs In Retail – A customer loyalty program or rewards program is a strategy to retain customers and encourage them to continue purchasing from your brand instead of your competitors. Read examples of the best loyalty programs.
Sometimes you need to give your customers a reason to keep buying from you. To build customer loyalty, companies offer special discounts to repeat customers. This strategy is called a loyalty program.
Customer Loyalty Programs In Retail
If you implement a good loyalty program in your contact center, your customers will be more willing to buy from you. There are different types of customer loyalty programs that can increase customer engagement. Which you choose will depend on your mission, product, and incentive program goals.
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A customer loyalty program or rewards program is a customer retention strategy that encourages customers to continue buying from your brand instead of your competitors.
Like personal relationships, customer relationships succeed when both parties feel they have something to gain from the relationship. Loyalty rewards like discounts or giveaways prove that customers are getting something in return when they purchase your products. Here are eight benefits of a customer loyalty program:
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Most loyalty programs have common goals: customer retention, customer lifetime value, and customer appreciation. However, each type of loyalty program works differently. For example, a rewards points program allows customers to exchange points for discounts or gifts, while a subscription program allows customers to earn rewards when they order.
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Points programs are one of the most common forms of customer loyalty programs. It works because points are easy to collect and redeem. Customers can redeem their points for future purchases, discounts or gifts. Customers can track their loyalty program using a loyalty card, online account, or mobile app. Many brands use a point system to help consumers easily recognize them. They understand how to utilize it and it is a lasting experience. For example, Marriott has a popular customer loyalty program called Marriott Bonvoy Benefits. Travelers can redeem their points for free hotel stays, dining, and other experiences. You can also earn points for car rentals and flights, share them with friends and family, and enjoy free Wi-Fi and special rates. Personalization has played a key role in driving brand loyalty for Marriott. The benefit of using a points-based system to reward customers is that Marriott can analyze customer behavior and use that customer data to provide a better experience for each guest. As companies learn more about their customers’ preferences, they can offer personalized incentives.
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The tiered program begins with a points program that allows customers to earn rewards with each purchase. Leveling programs are like video games. After completing a level of spending, users can unlock new levels with access to greater benefits and bonuses.
A tiered program can fit into your brand’s marketing strategy. You can have “diamond level” clients to create exclusive elements. Customers at this level have access to special pricing on the most expensive products and services. This encourages lower-tier customers to strive to reach the next level of spending. The more exclusive the rewards, the more attractive they will be to customers. Popular footwear retailer DSW has announced its VIP customer loyalty program for Canadian customers in 2019. Tiers are built around customer behavior and include incentives like free shipping and extra points for donating unwanted shoes.
The benefit of adding a tiered rewards customer loyalty program to your points program is that it provides a structure your customers can rely on for months or years. It gives them something to aspire to.
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Not all bonus programs focus on tiers and discount codes. If your company has a strong social mission, you could try a customer loyalty program.
Aligning with a mission or cause creates customer engagement and repeat purchases through shared values. These programs are most effective when partnered with non-profit organizations that are closely aligned with the company’s mission. Ben & Jerry’s creates ice cream flavors with social justice themes and donates sales to charities that support animals, the environment, social programs and other causes.
A mission-driven customer loyalty program allows your customers to feel like they are helping improve the lives of others, in a big or small way. Before starting this type of program, make sure it aligns with your company’s values and mission. Next, find an organization or cause that resonates with your customers.
Why Loyalty Programs Work
We’ve already talked about loyalty campaigns that offer customers points for every purchase they make. But how can we incentivize consumers to spend more in the short term? How can you encourage these customers to continue spending money with you instead of going somewhere else? Cost-based customer incentive programs help businesses identify high-spending customers. Airlines in particular are transitioning from points programs to spending-based systems. This allows us to connect more deeply with frequent flyers who pay more for fewer flights. Azerbaijan Airlines rewards frequent flyers with travel points based on the base price of each ticket.
Travelers who achieve elite status early receive benefits such as complimentary lounge access, early boarding, and extra checked baggage allowance.
This type of program is great for business travelers who want to pay more for last-minute flights for their next meeting or planned event. Recognize both how often your customers shop and how much they spend.
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Game programs introduce an element of fun into the simple task of shopping. Let’s look at Starbucks, a great example of a gamification-based customer loyalty program.
In 2016, Starbucks shifted from a simple points program to a gamified approach. In addition to these changes, Starbucks recently announced a new feature to encourage occasional customers to become repeat customers.
Before this change, all shoppers received one point per purchase, regardless of how much they spent. The problem was that a customer who purchased a large iced vanilla latte and a slice of pumpkin bread received the same reward as a customer who only ordered a tall cappuccino. The gamification system allows customers to earn two “stars” for every dollar spent, rewarding those who spend more in less time. But it doesn’t end with the stars. The newly introduced tier component expands the points program, allowing customers to redeem points for more than one cup of coffee, including a cup of espresso or select merchandise.
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Customers play games through the mobile app, and Starbucks also informs customers of opportunities to earn additional points. Gaming loyalty programs encourage future purchases by making the point-earning process more fun and engaging with customers.
Who doesn’t love gifts? Free rebate programs provide free products and services to loyal customers. Grubhub’s loyalty program allows customers to redeem ongoing offers that can earn them over $400 worth of free food at any time. Through this, the program helps restaurant partners promote their restaurants on the app by introducing customers to new places.
Amazon Prime is the holy grail of subscription-based customer loyalty programs. But you don’t have to be a big tech company to implement this kind of incentive model. Dirty Lemon, an e-commerce startup specializing in lemonade, is offering discounts to its subscribers. Everyone else has to pay full price for carbonated lemonade.
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Sephora’s Beauty Insider program allows customers to select gifts based on a points system. But it also offers a unique feature: an online community. The Beauty Insider Community is an online community where beauty enthusiasts and beauty newbies alike can ask questions, share looks, and exchange tips. Experiential rewards, like Sephora’s online community, add an emotional element and strengthen the customer-brand relationship.
A referral program is a type of customer incentive that rewards customers who refer friends or family. It helps you convert loyal customers into brand advocates. Freshly’s referral program gives existing customers $40 off each time they refer a new customer, and their friend also gets $40 off.
Paid loyalty programs require customers to pay loyalty rewards. DoorDash customers can become DashPass members for a small monthly fee. In return, customers who use the app often save money on their orders, as it offers free delivery to a variety of restaurants. Takeout? Paid customer loyalty programs only work if the value exceeds the cost.
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The most successful loyalty programs make customers feel like they are getting something in return. Cash incentives give customers cash or money to spend on your business. These types of loyalty programs are popular with financial companies. However, Gap offers consumers Gap Cash, which can be used in stores or online. Bank of America’s Preferred Rewards gives customers cash back when they spend.
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