marketing-strategies | 7 mins read

5 Customer Loyalty Program Ideas That Will Have the Crowds Coming Back

6 customer loyalty program ideas that will keep customers coming back 1643808072 3185
Archita Wagle

By Archita Wagle

What is a Customer Loyalty Program?

Customers generally buy food, goods, or services from a favoured brand, shop or restaurant for the quality or price-point of a product. But there's another reason they could be drawn backfor rewards. It's a proven fact that rewards (manifest as deals and discounts) is one of the best ways to earn customer loyalty.

A customer loyalty program is a structured 'gifting' plan that brands adopt to reward customers who engage with them repeatedly. It's a long-term marketing strategy that has a company offering loyal customers points, rewards, coupons or early access to new products to keep them coming back. A loyalty program also provides crucial data on customers' spending habits and choices.

Why Does a Customer Loyalty Program Matter?

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Customer loyalty programs are a great way for a company to keep their existing customers and entice new customers into the fold. Data generated from customer loyalty programs also offer a company insights into the popularity of its products and services, pointing out ones that are a natural draw through its rewards programs. Companies build customer loyalty through a set of unique experiences and opportunities.

According to a study by Rare Consulting, a consumer research group, 83% of customers said they keep coming back to a brand because of its loyalty program. Additionally, statistics have shown there is a 67% increase in customer spend when they are loyalty program members.

Benefits of adopting a customer loyalty program-
1. Better customer retention and engagement
A customer loyalty program will make sure that a customer keep coming back. According to studies, 84% customers will stay loyal to a brand if it offers a loyalty program. 66% will alter how they spend money in order to gain loyalty points. A loyalty program also facilitates email marketing, opening up for the company a direct channel of communication with a customer.

2. Brand loyalty and referral
Perks like Personalized Customer rewards programs, gifts, and incentives like free shipping, satisfy customers. If a customer enjoys the benefits of a loyalty program, they're likely to refer it to others. Repeat customers should be offered a chance to maximize their gains and earn pointsin addition to what they've accumulatedthrough referral programs.

3. Cost efficient
A customer loyalty program is a cost-effective way to keep customers happy and have them coming back. It costs a company more to draw in new customers than it does to engage repeat customers. A loyalty program promises to increase customer lifetime value (net profit earned through a customer).

4. Promotion of a brand or company
Loyalty programs keep customers happy. This in turn will encourage them to post good reviews of the brand or company on social media, making them authentic brand advocates. A long term association with loyalty program customers gives brands a competitive edge.

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6 Points to Consider Before You Set up a Loyalty Program

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While customer loyalty program sounds like an ideal long term solution for customer retention every company must consider how implementing a loyalty program will help their business. Here are 6 points to consider before crafting a customer loyalty program-
1. Know your customers
Keep track of how much customers spend on average. Check how often customer keep coming in to purchase products. Check if they come back for repeat purchases or to buy new products. Track profits notched by repeat customer sales. Collect customer feedback.

2. Get your customer loyalty program ready
Find out how satisfied customers are. Analyse sales data and find out how you can persuade them to buy more. Assign employees who are good at dealing with customers to help execute your loyalty program.

3. What are your goals?
Establish your goals at the outset. Set a target purchase goals. For instance, if a customer comes back every 15 days for a repeat purchase, can you encourage them to buy every 10 days? Or even inspire existing customers to buy new products.

4. Decide on a budget
Find out the average industry spend on customer loyalty programs. Budget accordingly for your own rewards program. Set aside separate budgets to manage repeat customers and gain new customers.

5. Decide on your customer base
Decide on the kinds of customers you want to include in your loyalty program. Here are factors to consider- frequency of purchase, purchase volume, ability to purchase more, how quickly the customer pays and customer loyalty.

6. Ways to boost customer loyalty
Decide on how you are going to increase customer loyalty. Will you set up a points system to encourage customers to earn rewards? Or hand out punch cards?

5 Top Draw Customer Loyalty Program Ideas

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Here are five loyalty program ideas that can help a company frame the best loyalty program for their brand-

1. Point based loyalty
This is the most common type of rewards program. Customers earn or accumulate points they can redeem later. DSW or Designer Shoe Warehouse has a loyalty program that rewards customers with points for each purchase.

2. Tiered loyalty
Tiered loyalty programs offer customers perks depending on their spending levels. With Sephora's Beauty Insider rewards program, customers get a chance to earn different rewards based on the tiers they occupy.

3. Paid loyalty
Fee-based loyalty programs like Amazon Prime offer customers ongoing benefits. Data shows that customers are 62% more likely to spend money after opting for a paid loyalty program.

4. Value loyalty programs
These loyalty programs want to connect with customers at a deeper level. For instance, REI Co-op offers loyal customers steep discounts on garage sales and adventure sessions.

5. No loyalty programs
Sometimes a company can earn loyal customers by simply offering unique products. A company like Apple has no rewards program, but it offers customers a unique product, thus creating an amazing customer experience.

Is Your Rewards Program Working?

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A loyalty program is geared towards enhancing customer experience and increasing sale.

This is how you can tell if your customer loyalty program is working or not-

1. Value
Check the average lifetime value of your loyalty program members, compared to regular customers. If the value is higher, the loyalty program is working. The higher the lifetime value, the more you should invest in the loyalty program.

2. Percentage of sales
Calculate sales made to loyalty program members as a percentage of total sales. Higher the percentage of sales notched by loyalty program members, better the loyalty program is working. This also translates into deeper customer insights.

3. Sales above the normal forecast
Loyalty programs should be able to generate incremental sales (sales during a tracked period, over and above the normal sales forecast). Loyalty programs should be able to facilitate transactions that would not have ordinarily taken place.

4. Frequency & Spend
A loyalty program should be able to encourage members to buy more often and spend more than they normally would.

5. Discounts
If a loyalty program relies on discounts to draw in members, care should be taken that it also generates incremental sales to offset the cost of discounts.

6. Return on investment
A loyalty program should ensure a positive return on investment, large enough to benefit shareholders. Only then can it be justified.

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A Great Rewards Program Needs Great Software

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Once you have decided you want to run a loyalty program, the next step is to find the right software to manage it. Software like Zip Loyalty can handle every aspect of a loyalty program, while also calculating the costs and benefits of such a program to a business.

Here are the benefits of using customer loyalty program software like Zip Loyalty-
Digital options- A customer's loyalty program details are stored on their phone, allowing them to keep tabs on benefits they earn in real time.

Flexibility and automation- A loyalty program can have multiple tiers to meet the specific needs of a business. Each tier can be easily managed with the click of a button. The software will automatically assign reward points once they are earned.

Tracking- Loyalty programs can obtain details on purchase history and the product Types Customers opt for. The program can also track data to provide actionable insights for future rewards programs.

Loyalty Program FAQs

1. What does a loyalty program do?
A loyalty program encourages existing customers to make repeat purchases instead of going to competitors. Reward programs ensure customer retention.

2. Which are the best loyalty programs?
The best loyalty programs in the market are DSW, Sephora Beauty Insider, Starbucks Rewards, Amazon Prime, The North Face and REI Co-op.

3. Who owns a loyalty program?
A loyalty program is the combined responsibility of several arms of a business, including marketing, customer service, stock control and dispatch, operations and the board.

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