Brands are at all times fighting for customer loyalty in highly competitive markets. Some seven out of 10 US consumers consider loyalty programs a number one consider sticking with a brand.
Most loyalty programs fall into certainly one of 4 categories: points, tiers, paid and value-based.
Learn the way loyalty programs work and the way they might help your online business, plus discover examples to encourage your personal loyalty strategy.
What’s a loyalty program?
Loyalty programs reward an organization’s repeat customers with discounts, free offers, and other incentives to encourage customers to make repeat purchases.
How do customer loyalty programs work?
With a loyalty program, firms can offer points or advantages to customers. In return, customers redeem points for discounts, free products, rewards, or insider perks. The goal is motivating repeat purchases and constructing trust between customer and business.
People will go the gap for brands they love, but they need perks in return. Some 60% of US shoppers wanted discounts for joining a loyalty program. The identical poll found that respondents expect to earn points and rewards, and about 33% want exclusive or early access to products.
Running a customer loyalty program means giving something, be it discounts, sales, or early access. The payoff could be huge. Advantages can include:
- More customer referrals. People tell their family and friends about great programs. More referrals equals more loyal customers.
- Higher customer retention. If people find value in your customer loyalty program, they’ll likely stick around longer.
- More sales. Want a better average order value? A 2022 survey found that 79% of US consumers said loyalty programs impacted their likelihood of maintaining business with a brand. One other poll found that 80% claim to buy more regularly from a brand after joining its loyalty program.
- Brand advocacy. A successful loyalty program can turn regular customers into brand advocates who evangelize your brand through word of mouth, a low-cost marketing strategy compared with paid ads.
Varieties of loyalty programs
Not every loyalty program is identical. There are several types of rewards programs you should utilize to construct customer loyalty and earn repeat business. Listed here are a few of the hottest:
1. Points-based loyalty programs
Points programs are probably the most common sort of rewards programs. They let customers accumulate reward points they’ll redeem for freebies, cashback, perks, etc. Rewards customers don’t just earn points from purchases. They may earn loyalty points by sharing on social media, leaving reviews, having a birthday, or through gamification.
2. Tiered loyalty programs
Tiered customer loyalty programs are memberships where customers get different advantages depending on their rank. Businesses often rank membership into groups depending on metrics like sales or engagement.
These customer rewards programs give customers a goal. The upper their tier, the more exclusive the rewards.
3. Paid loyalty programs
Paid loyalty, or fee-based loyalty programs, give customers immediate and ongoing advantages for a participation fee. These fees could be recurring or one-time.
Paid programs may require proof of value to get signups, but they’ll gain higher customer value from members. Probably the most common example of a paid loyalty program is Amazon Prime. While it looks as if a tough model to mimic, paid loyalty can suit many alternative business models.
4. Value-based loyalty programs
The thought behind a value-based loyalty program is to attach with customers on a deeper level. It involves donating a percentage of purchases to charity or welfare programs. You may allow customers to select from different charities or have just one which aligns with their values.
This program doesn’t actually reward customers, nevertheless it holds a special place for them, because the rewards profit society.
Unsure where to start out? Ask customers what they need from a rewards program. You may easily run a survey or poll together with your customer base to search out out. Then create a rewards program accordingly.
Successful customer loyalty program examples
Blume
Bodycare retailer Blume uses a points system called Blume Bucks in its loyalty program, dubbed Blumetopia.
It’s pretty straightforward: Customers can earn Blume Bucks by following the brand on Instagram, placing an order, or telling friends about Blume. They’ll redeem their Blume Bucks for merch, free products, and other gifts.
LIVELY
LIVELY is clothes and accessories brand with a tiered rewards program. Customers are robotically enrolled in this system once they join for a LIVELY account. They earn points through activities comparable to following the brand on TikTok (10 points) or purchasing an item in-store (30 points).
Loyalty members can apply points to purchases. For instance, 100 points equals $10. They may redeem them for products like totes, socks, and clips. LIVELY’s rewards program has different tiers based on annual spend:
- Insider: $1–$124
- Inner circle: $125–$324
- VIP: $325+
The more spent, the higher the perks. As an example, VIP members get free expedited shipping, upgrade offer discounts, and a customer care text service.
Mirenesse
Mirenesse is Australia’s leading sustainable and cruelty-free cosmetics brand. Its loyalty program, Love Rewards, includes two tiers: Gold and Onyx.
The Gold tier earns two points for each $1 spent. It includes advantages like free shipping on all orders, double points for activities, a 200-point joining bonus, and conversion of 100 points right into a $5 store credit. The Gold tier costs $18 monthly but includes additional perks like access to secret sales and the prospect to be a tester for brand spanking new products.
The Onyx tier is free. Members earn one point for each $1 spent. It offers a 100-point joining bonus, and members get a birthday surprise.
100% Pure
100% Pure is a well-liked skincare and sweetness brand with a tiered reward system. Customers earn points by engaging on social media channels and writing reviews, redeemable for products on their site.
This system has three tiers based on spend per calendar 12 months:
- Enthusiast: $0
- Activist: $250
- Revolutionist: $750
Advantages include early access to latest products, free shipping, redeemable vouchers, and birthday gifts. Loyal customers earn points for actions like signing up for an account (50 points), writing a review (10 points), and interesting with the brand on Facebook and Instagram (20 points each).
Anyone can join the Purist Perk program and redeem points for discount code vouchers. Customers earn 15% off for 200 points on the Enthusiast level, and $20 off for 200 points on the Activist level. Discounts could be used during checkout and can’t be combined with other offers.
Tips on how to add a loyalty program for your online business
Every business is competing for customer trust. Among the best ways to construct this trust is by showing gratitude and providing unique experiences. Fairly than spending your time finding latest customers, you possibly can start a loyalty program to grow the connection together with your existing base.
If you’ve a Shopify store, making a loyalty program online is straightforward. Download an app like Smile or Yotpo from the Shopify App Store and begin today.
For instance, with an app like Smile, you possibly can create rewards points and referral programs that engage customers in your store. It helps you with every little thing from program design to establishing a thumb-stopping widget in your website to capture visitors’ attention and encourage them to enroll.
Customers can even have a rewards portal on their phones to administer their accounts, earn rewards, and redeem points.
Do things otherwise together with your loyalty program
During the last decade, customer loyalty programs and rewards programs have proven an efficient technique to improve customer retention rates, boost customer lifetime value, provide good customer support, and encourage brand loyalty.
A very progressive approach to customer loyalty programs can create huge value for retailers.
Illustration by Rachel Tunstall
Loyalty rewards programs FAQ
What do loyalty programs mean?
A loyalty reward program rewards repeat shoppers with advantages and promotions. Each purchase earns some type of reward. Reward programs are great for customer retention and loyalty because they encourage future purchases.
What are the different sorts of loyalty programs?
Loyalty programs could also be referral- or purchase-based, or each. Programs could also be points-based, tiered, paid or value-based. You may run your loyalty program online or with a tangible item, like a punch card.
What’s the purpose of a loyalty program?
The aim of a loyalty program is to motivate customers to proceed buying from your online business over competitors.
