A
Loyalty program is a type of marketing strategy which is designed by businesses
to enhance and encourage customers to continue their purchases from them by
offering some incentives and rewards on each and every purchase they have done.
The aim goal is to make strong customer loyalty, increase repeat sales, and
make a strong relationship between the user and the business.
Loyalty
programs can be used by any industry depending upon how they use it. Here are
breakdown of how the loyalty program works and its key components that you
should know about:-
1. Working on Loyalty Programs
Customers
can earn rewards and points or incentives every time they make a purchase or
perform certain types of actions like referring the link to a friend, writing
renews, signing up, or purchasing products or services. For example, a customer
can earn 1 point for every spent of 50 Local currency.
Once
the customer has enough amount of points numbers, they can redeem their points
for rewards like free products, discounts, special offers, cashback, etc. Like
10-20 points might be equal to a free product or cashback etc.
Some
loyalty programs have different types of membership levels. They provide their
loyal customers with a type of membership like bronze, silver, and gold.
customers unlock higher tiers as they spend more, gaining access to more
valuable exclusive offers, rewards, or some kind of more benefits.
2. Types Of Loyalty Programs
Here
are some types of loyalty programs that you should know about:-
-
Point-Based Loyalty Program:- This type of loyalty program is helpful for
customers to earn points for each purchase, which can be redeemed for free
products, access, or discounts later.
-
Cashback Programs:- Customers receive a percentage of their total purchase as
cashback which they can use for their upcoming or future purchases. We can
understand this with a very simple example "Get 5% cashback on every
order."
-
Tiered Programs:- Customers earn more perks as they move up the loyalty ladder
by spending more. Customers who have earned loyalty points many times will get
extra benefits for their continuous loyalty. There could be a membership as per
their loyalty towards the company.
- Punch
Card System: This type of loyalty program is generally used by small
businesses. This program rewards customers after a certain number of orders or
purchases. You can also see this type of loyalty program in your local small
markets, shops, restaurants, etc.
- Paid
Memberships or Subscription Programs- This type of loyalty program is very
famous among users. Customers pay a fee to join a type of loyalty program and
receive some kind of benefits like free shipping, exclusive deals, and
discounts extra. Amazon Prime is a very good example of this type of loyalty
program.
3. Benefits of Loyalty Programs For Businesses
There
are a very good number of benefits to a loyalty program. It does not only
increase repeat purchases but even helps to improve your business quality,
business branding, etc. A few benefits are given below:-
-
Increase customer Retention: Loyalty programs generally encourage customers to
keep coming back because they want to earn more points or redeem their rewards
which is a very good thing.
-
Higher Average Order Value: Customers may spend more per order to earn more
points which leads to increased sales for every business.
-
Branding: A loyalty program is a very great marketing strategy and also helps
to increase brand advocacy. Happy and loyal customers are more likely to refer
friends and promote the brand on social media. This helps to get new customers
and positive word-of-mouth marketing which is very important these days in a
competitive market.
-
Batter Customer Insights: Loyalty programs help any business to track its
customer behavior, spending patterns, preferences, etc. This can be used to
create personalized marketing campaigns which is very important these days.
4. Some examples of Great Loyalty Programs
There
are many types of loyalty programs run by different types of businesses few of
them are Starbucks Rewards which is one of the most successful loyalty
programs. They offer customers stars for every purchase which can be redeemed
for free food and drinks. Also, Sephora beauty insider has been running it's
loyalty program for years and has had a very successful journey throughout the
year. This tiered program has levels like insider, VIB, and Rouge that can help
users get samples, discounts, exclusive events access, and exclusive benefits.
Another
very famous loyalty program is run by Amazon Prime, Customers can pay an annual
fee to become a Prime member of Amazon, gaining access to free shipping, prime
videos, exclusive deals, and many more benefits. Apart from the point-based
loyalty system, it is a type of loyalty program that is designed to keep the
user within the ecosystem of Amazon. This is another very successful example of
a Loyalty Program
Loyalty
program is not bound for B2C, even it is famous for B2b As well, there are so
many types of examples across the globe that you can find.
5. Steps To Create a Loyalty Program
If you
want to invest in the Loyalty program, then it is the best time to do that. You
can earn the maximum possible things. Set clear goals like deciding what you
want to achieve in terms of a loyalty program. Whether it is increasing sales,
higher retention of customers, or increasing your brand advocacy.
Choosing
the right type of loyalty program is very important. A point-based system,
tiered membership, or a cashback loyalty program, you need to choose the right
one for your business which is more suitable depending on your business.
Offering
valuable rewards is always the best option for you. You need to understand the
marketing trends and user intent. Include discounts, freebies, experiences of
exclusive products or services, etc.
Ensure
that customers can easily join your loyalty program online or offline in your
store. You need to reduce the steps needed to start earning points which is
very important.
Always
track the progress of your customers. Use software to track customer purchases,
behavior, and points which may allow you to create personalized offers.
Running
a special loyalty program for festivals is always a plus for you. Make sure
that you are promoting your loyalty program. Without promotion, no loyalty
program will work beneficially. You need to show the loyalty program offers and
it's benefits by push notifications, SMS marketing, email marketing, or direct
display ads.
Loyalty
programs can be a win-win for both the customers and the businesses. Customers
get rewarded for their purchases on the other hand businesses enjoy their
repeat sales, increased engagement, and customer data. You need to invest in
the Loyalty program today if you want to keep your business connected with the
marketing trends.
What Is
Loyalty Program? How loyalty program Works? Get answer if all your questions
here. 5 Reasons why Loyalty program is a win for your business.