If you’ve been thinking of adding a loyalty program to your business, stop thinking and start acting.
They help retain customers, get you more revenue and you dole out benefits only when you get referrals. What’s not to like about them?
Loyalty programs aren’t a new invention. They have been around for years and there are only a few types of them. As such you can’t reinvent the wheel with these programs. To stand out, you can employ a novel idea in the way you deliver or add to the ease with which someone can accrue points.
I would like to talk about different types of loyalty programs and share examples you can learn from.
Why Should You Have A Loyalty Program?
More than 84% consumers are ready to stick with a brand that offers a loyalty program. It’s easy and cheap to sell to customers who are already buying from you. On the flipside, acquiring a new customer is difficult and expensive.
Other than the reasons mentioned above, a loyalty program also gives you some protection against a rainy day.
Google updates have been killing site after site after site. It doesn’t matter how many links the site has or how authoritative it is.
They flip a switch and traffic tanks.
That means people who find your business from search engines may not be able to do that anymore one day. With loyal customers sticking close to you(thanks to a loyalty program) you have a great alternative to tide past the challenges running an online business accosts you with.
Different Types of Loyalty Programs You Can Use
- Create a points system — It should be simple enough for people to understand. Allow customers to earn points they can convert to rewards and exchange for gifts or as cash.
- Offer tiered rewards: A tired loyalty program works like this. A customer makes an initial purchase and gets an incentive. As the value of purchases increase the customer moves up the loyalty ladder. Airlines, hotels and insurance companies tend to use this program.
- Charge an upfront fee: A one time fee or a recurring annual fee to enjoy a host of benefits later on can be a lucrative incentive. Amazon does it with Prime.
When Starbucks first introduced My Starbucks Rewards through its app, it was the first time anybody was experimenting a loyalty program on an app.
Punch cards were in vogue back then. With the app there was no sign in needed nor a punch card to carry.
To earn points all anyone had to do was make a purchase and pay through the app.
This way Starbucks created a system that became gold standard later on. They also found a way to get customer data and preferences to sell even more to them.
With Starbucks Rewards, a customer can collect rewards with the following options:
- Purchases at an outlet that build up points towards free drinks and food
- Rewards on customer’s birthday
- Prepay options
- The loyalty points build toward the coveted Gold status.
The app was a master stroke for two reasons.
One— people were already using smartphones a lot. The average Gen Xer spends 9 hours a week on his phone. Millennials even more so.
And two—it removed the clunkiness associated with punch cards.
Customization based on customer preferences is a great idea to win customers and get them to come back again.
With the app, loyal customers get Starbucks stars as credits. Hit 125 stars and they can choose a reward from the list.
Thanks to the wealth of data gleaned on the back of past purchases the reward of choice is often something customers are bound to like.
The takeaway? Observe overarching trends and customize your marketing accordingly. If your loyalty program hasn’t got an app get one. As of now, brands are adding a loyalty component to chatbots. It makes sense since conversational marketing is the future and messaging apps have overtaken social media apps.
Tarte, a cosmetics retailer incentivizes customers for activities like posting a selfie with Tarte products. The program shows you that a brand can choose to reward almost any activity from a customer and gives a wide berth of ideas to choose from for the customer.
By incentivizing things like taking pictures, Tarte makes it easy for customers to accrue points. This is a great sell.
This has the additional advantage of getting Tarte user generated content like social videos and pictures that it can repurpose for its social media pages and attract more traffic and build more trust. Video posts on Facebook on average generate 135% higher reach.
With the help of retargeting ads you can successfully convert some of the people who saw the videos to members of your loyalty program.
The North Face
A points system is designed to reward customers based on how much they spend.The brand North Faces uses a points system to reward customers with its VIPeak rewards program.
With the points system, it’s easy for customers to understand the program.
Customers earn 10 points for every $1 they spend online and in retail stores, and five points for every $1 they spend in their outlets. Customers can put these points towards future purchases.
North Face successfully tied its loyalty program to its app. The app gives users a platform to manage their accounts, buy products and check the number of points they have.
Customers can redeem their points against future purchases. This way, you create a need among customers to stay with your brand. The message you’re sending is loud and clear—Buy from us, accrue all those points and you can exchange them for tangible things you like.
There are multiple tools available that can help you readily set up such a system.
A tiered loyalty program is based on levels a consumer can aspire to reach based on how much he spends with the brand.
It’s a great way to engage customers since it offers a certain level of gamification by turning the aspect of purchase into play.
Let’s take a look at Elf’s loyalty program, the Beauty Squad loyalty club which has three levels:
The level a person is in depends on the loyalty points he or she has. Each level gives a certain amount of exclusivity and the desire to reach higher levels eggs customers to keep spending.
The program also indicates how many members are actually part of which level.
This drives members at the lower echelons to try and reach a higher level to gain the same social status that members who belong to that tier enjoy.
The ride-sharing market thrives on steep discounts. New entrants make it a lose-lose game by offering even more discounts. Even for established players like Uber a loyalty program is sometimes the only way to keep their customers.
Uber Rewards is a platform for loyal customers to earn points based on how often they ride with Uber.
The points can be redeemed against hotel deals, meals or miles. The flexibility and control in the program makes it a favorite among customers who love to share rides.
Virgin Atlantic has a tiered loyalty program as is the norm for airlines.
There are three levels dubbed Club Red, Club Silver and Club Gold with incremental benefits as customers journey up each level.
On the membership page, there’s a low down on the benefits associated with each tier. In addition, there’s an easy to understand tiers comparison table.
This helps prospective customers put the benefits in perspective as well as fuel their aspiration to reach the highest levels.
What do you think of the different loyalty programs shared above?
With loyalty programs, you allow your brand to be in a position that reels customers back in for yet another purchase. A loyalty program should be easy to understand and offer great rewards that customers like, for it to work.
Loyalty programs provide an incentive for your customers to share your brand with their friends on social media.
Brands like Sephora generate 95% of the revenue through their loyalty program. That goes on to highlight how important these programs can be for a business.
George Mathew is a freelance writer who’s worked with brands like CrazyEgg and scores of SaaS startups. If you want great content, you can check his work on his blog.