Table of Contents Hide
- What is Customer Loyalty?
- What Is a Loyalty Rewards Program Why Is It Important?
- What are the Best Reward Loyalty Program Ideas?
- 7 Ideas for Customer Loyalty Programs
- Loyalty Programs FAQs
- What are examples of loyalty programs?
- What are the four main types of loyalty programs?
Do you want to launch a loyalty program? The best loyalty programs reward your customers for sticking with your business, but which rewards and benefits would work best for your brand’s loyalty program? We’re here to help with our list of iconic and innovative loyalty program ideas, complete with real-world examples.
What is Customer Loyalty?
Customer loyalty assesses the likelihood that a customer will do business with your brand again. This is heavily influenced by customer satisfaction, customer experience, and the customer’s perceived value for money from the services or goods offered by your company.
So, this appears to be a simple enough task. So, how do you capitalize on your customers’ positive experiences to foster brand loyalty? By rewarding them through a well-thought-out loyalty rewards program.
What Is a Loyalty Rewards Program Why Is It Important?
Loyalty programs reward your customers for simply being your customers. So, the idea is to encourage future purchases by rewarding each purchase with a point system or a gift card redeemable in your store. With these incentives, they are enticed to return to your store and make another purchase.
This improves not only customer retention but also sales, as customers are more likely to spend more in order to receive greater rewards. The greater the benefit to your customers, the greater the benefit to your business:
It’s a win-win situation for both you and your clients. So, are Loyalty Programs Successful at Increasing Sales?
Yes, indeed! Loyalty services will help you boost revenue and profits.
Consider the following three facts on how loyalty bonus systems boost sales:
- After getting an incentive, 75% of customers say they are more likely to make additional purchases from a company.
- Customer loyalty services will improve customer satisfaction by 5%, which will increase profits by 25 to 95% for some companies.
- An eCommerce company could theoretically increase its average order quantity by 319 percent simply by providing a customer loyalty program to its customers.
One of the most common concerns that business owners have about loyalty schemes is that they will cost them more than they will receive.
While a loyalty rewards program will incur some initial costs, it will eventually boost revenue and profits. Furthermore, there are ways to choose low-cost loyalty program ideas and set up the loyalty program’s processes to ensure a net positive return on investment (ROI).
What are the Best Reward Loyalty Program Ideas?
There are several choices available, including a discount, a promotional deal, or a one-of-a-kind incentive. Also, this is highly dependent on the company’s structure, as each brand is unique. You’ll want to give your customers more of what they like about your business.
A local coffee shop, for example, can sell a drink upgrade or a branded travel mug. After the tenth massage, a massage spa can add an additional 30 minutes.
You want to choose a loyalty reward program bonus that both strengthens your brand and delights your customers.
7 Ideas for Customer Loyalty Programs
Whatever the circumstances of your company, a customer loyalty rewards program work better when one of the 7 tried and tested loyalty rewards techniques are used.
#1. The Points System
The idea behind a loyalty point program is simple: the more your current customers spend, the more points they can get. These points can then be exchanged for prizes such as discounts or gifts on future purchases.
Customers can also collect points to be redeemed for larger rewards. This will encourage your customers to make more purchases in a row to receive the fancier incentive. This means they’ll visit your store more often.
By providing redeemable loyalty points to your customers, you encourage them to continue doing business with your brand in the future. And, as a result, they are less likely to turn to a rival.
So, brands that use the loyalty Point Program include:
- Beauty Pass from Sephora
- Starbucks Reward Program
- Costa Coffee Club is a coffee shop in Costa Rica.
#2. The VIP Program / The Paid Program
The paid customer loyalty program entails allowing your consumers to pay a one-time subscription fee to join your brand’s VIP program, where they can access exclusive rewards or benefits.
This loyalty approach works well when pitched to current or repeat customers. This is since potential consumers are less likely to enter your program if they have not yet tried your goods or services.
By providing extra incentives, such as significant discounts or exclusive access to a new product, the customers would be able to continue shopping with you while still paying for their membership.
Brands that have used the Paid Program include:
- Amazon Prime is a subscription service provided by Amazon.
- Membership in the REI Co-Op
- Orchids Made Easy
#3. The Charity Loyalty Program
By donating the benefits and incentives of your loyalty program to your favorite cause, you will integrate your brand’s mission and values into your marketing campaign. Though this does not directly benefit your clients, it does help to strengthen your partnership with them by engaging with charitable organizations in which they believe.
Customers are more likely to be loyal to you if you can find values that you both hold.
According to studies, 50 percent of global customers are “belief-driven” shoppers, with 57 percent saying they will purchase or boycott goods based on a company’s social or political positions.
This form of loyalty rewards program provides a powerful opportunity to engage with your customer base on a deeper level, thus increasing their interest in your brand.
The following are some examples of brands that have used the Charity Program:
- Scribe Media
- The Body Shop’s Love Your Body Club
#4. The Tier System
The tiered loyalty incentive program focuses on different levels of brand loyalty. In other words, the more your customers buy from you, the higher the tier they step up to and the greater the incentives they will get in return.
Tiered services also provide points, in which consumers must collect a certain amount of points in order to advance to a higher tier. Airline frequent flyer miles and hotel stay services are two popular examples.
A tiered scheme, in a sense, transforms shopping into a game, where the more they spend, the higher the thresholds they can achieve and the better the rewards are likely to be. It’s not about a nice way to thank the clients. In reality, game theory assists brands in tapping into the brain’s rewards hub, making shopping for your brand an addictive experience.
The Tier Program has been used by the following brands:
- Carnival Vacations
- SpikePoints in Spikeball
- Loyalty Program for SweetLegs
#5. The Affiliate Program
A partner loyalty program, also known as a coalition program, is exactly what it sounds like: you collaborate with another retailer to provide an exclusive customer discount or promotional deal to each of your customer bases.
Rather than investing new funds in ads and marketing to a new audience, many companies opt to collaborate with other brands in the industry. Other brands in your niche will have a similar consumer audience to you, so collaborating with them will open you to a potential customer base that you haven’t yet hit.
It is up to you if you do this by brand alliances, influencer marketing, or an affiliate program. In any case, the aim is to provide benefits to potential customers who are outside of your control.
Your company not only gains more affordable access to potential clients, but it also encourages your customers to offer benefits for other products in which they have not yet engaged, making it an equally valuable experience for them as well.
The following are some examples of brands that have benefited from the Partner Program:
- Air New Zealand Airpoints
- Plenti Points by American Express
- Nectar Partner Program
#6. The Community Service Program
The community loyalty program ideas encourage consumer loyalty by providing member-only benefits and access to a like-minded group of people.
Members of these group loyalty programs will engage with one another, see input from other members, and gain access to unique events and deals.
Don’t underestimate the power of your customers’ fandom; they can generate powerful marketing content such as unboxing videos or affiliate links that help build your brand through word-of-mouth.
Some brands that have used the Community Loyalty Program include:
- Hotel Pink by Frank Body
- LUSH (Lush Cosmetics)
- Tarte Cosmetics is an American cosmetics company.
#7. The Subscription Service
Subscription loyalty programs are similar to VIP or paid loyalty programs in that members join by paying a recurring fee, but instead of access/rewards, customers receive products.
Loyalty members receive products on a regular and ongoing basis in exchange for a monthly fee. These goods are typically selected by the brand, are exclusive to the subscription, and are less expensive and more convenient than buying individual items.
A subscription loyalty program makes shopping for your brand enjoyable, easy, and automatic.
Some brands that use the Subscription Program include:
- The Mojo Box
- Amazon Prime
The Best Loyalty Reward Programs
So, what does a successful customer loyalty program look like?
Let’s take a look at these different ideas of loyalty incentive programs.
#1. Sephora (Tier / Points Program)
Beauty Pass (or Beauty Insider in North America) is Sephora’s famous customer rewards program. The service currently has over 17 million loyalty members, accounting for a whopping 80% of Sephora’s annual revenue.
Customers who use Sephora’s Beauty Pass receive incentives for each purchase they make using a simple points system. Sephora’s reward members will then choose how to invest their won points.
It is entirely up to them if they spend them on gift cards, coupons, or more exclusive items such as limited edition cosmetics or in-store beauty tutorials. Sephora also gives Beauty Pass members early access to their seasonal sales, making them feel like VIPs.
Giving their loyalty members the option to select makes Sephora’s customer reward program very appealing to both returning and prospective customers.
#2. REI(Paid Program)
REI’s Co-op customer loyalty program encourages consumers to see the brand as a consumer enterprise, one that gives back to its loyal customers. It is a core conviction that underpins REI’s brand values.
Co-op members can purchase a lifetime membership for $20. A small price to pay when co-op participants are compensated with access to massively discounted products. They have a 10% discount on the total purchase amount and member-only exclusive deals.
The initiative has been so effective that it has grown to become the largest consumer cooperative organization in the United States.
#3. Charity Program
Not all loyalty schemes are entirely dependent on member discounts. The Body Shop exemplifies this well.
Its customer rewards program is structured around common ideals that it shares with its clients, in addition to rewarding loyal members with VIP benefits. Hence, they allow their members to donate earned rewards to Born Free USA, an animal welfare organization.
This form of customer rewards program fosters a stronger bond with members, resulting in brand loyalty and improved customer relations.
#4. Hotel Hyatt (Tier Program)
Hyatt’s loyalty rewards program uses a five-tiered point structure to reward loyalty members with member-only benefits.
These benefits include invitations to members-only deals and discounts on hotel stays at participating properties. Members will also gain more points by using hotel facilities such as eating in their restaurant, visiting the spa, or participating in a gym class.
The more their consumers appreciate the benefits of becoming a member, the more likely they are to return to enjoy those benefits again and again.
And the higher they climb in the tier program, the higher they climb in the tier program, creating a never-ending cycle of customer retention and satisfaction.
#5. eBay and Nectar (Partner Program)
With over 19 million customers participating in the loyalty rewards program, the UK-based business Nectar is a shining example of collaboration rewards programs done correctly.
The alliance program between Nectar and eBay, for example, is one of today’s most active collaborations. Users can sign up for Nectar and receive discounts when they shop on eBay, which they can then add to their purchases.
Customers receive one reward point for every £1 spent on eBay. Afterward, they can spend it on over 50 million eBay products.
In addition, Nectar has collaborations with 16 other firms. As a result, any Nectar points won can be redeemed at any of Nectar’s collaboration partners. The ability to redeem points from a variety of companies makes Nectar’s customer rewards program very appealing to its loyalty members.
#6. Amazon Prime (Subscription Program)
Amazon’s Prime membership service is one of the most well-known subscription-based customer loyalty services available.
Prime members will get unlimited free delivery on millions of items for a monthly charge. Members may also gain access to a variety of other benefits, such as Prime’s media streaming services.
Customers are willing to pay a one-time fee to gain access to exclusive deals they believe are worthwhile. Customers are also encouraged to justify the recurrent cost by purchasing more with Amazon or your brand as a result of this upfront investment.
Now that you’ve seen these famous and creative loyalty program rewards, it’s time to choose the ones that will fit better for your business. Check out our other posts for more information on how to launch a customer loyalty program and how to improve customer loyalty
Loyalty Programs FAQs
What are examples of loyalty programs?
Best customer loyalty program examples
- Sephora Beauty Insider.
- Starbucks Rewards.
- Amazon Prime.
- The North Face.
- REI Co-op.
What are the four main types of loyalty programs?
While the types of rewards can vary depending on customer preferences, the types of loyalty programs themselves tend to fall within four main categories: Rebate/cashback, discounts, frequency punch card, and points. As with loyalty programs in general, each type of program has its pros and cons.