A customer loyalty program is a retention strategy that encourages patrons to repeat purchases and engage with your business instead of turning to your competitors. They can entice customers to stay with you for longer and nudge them to spend more to get better value from your brand. It’s a tried-and-tested practice. These days, over 90% of companies implement a type of loyalty program.
According to a Yotpo poll, almost 68% of respondents say that they would join a loyalty program of a brand they like and 56% of those respondents claim they are willing to spend higher for a brand they are loyal to, even if there are lower-cost options.
Types of Customer Loyalty Programs
There are various customer loyalty program formats, and countless ways to reward your patrons.
- Point-based loyalty programs are the most common and arguably the easiest to roll out. They enable consumers to rack up points based on an action (purchasing, sharing on social media, leaving reviews, etc.) which they can accumulate to redeem rewards.
- Tiered loyalty programs are common amongst e-commerce and retail businesses as they gamify loyalty to entice frequent re-purchase. Consumers “unlock” higher membership tiers by hitting certain targets (i.e., number of points or repurchases) which provides access to exclusive rewards, discounts, and other benefits.
- Paid loyalty has also become increasingly common with the rise of premium or subscription services. Customers pay a one-time or recurring fee to avail of immediate exclusive benefits or services.
- Value-based loyalty programs are not as common but establish strong consumer affinity and deep loyalty. In this format, businesses commit to giving a percentage of their profit to a charity or welfare organization. Consumers may not be rewarded in the traditional sense, but they may feel enticed to repurchase as they feel like they are contributing to something greater than themselves.
6 Powerful Examples of Customer Loyalty Programs
Looking to build a bigger and even more loyal customer base? Here are six great examples of customer loyalty programs. These cases are not customers of nor affiliated with True POS but are thought-starters to get you inspired.
Sephora Beauty Insider
With over 25 million members who make up approximately 80% of the company’s annual sales, it’s safe to say that Sephora’s rewards program is incredibly popular and successful. To address the consumer barrier that Sephora’s product prices are typically steep, the brand rolled out a point-based loyalty program that empowers customers to choose how to redeem their rewards. Points can be used for discounts on high-priced items, and to gain access to exclusive benefits like beauty tutorials or limited-edition products.
Sephora provides more value to customers without having to drive down costs, so it’s a win-win.
Exclusive brand apps are now commonplace for retailers, but Starbucks was one of the first who introduced and normalized the idea in the market. Using a mobile app to run a points-based loyalty program is efficient as it foregoes the risks of losing a physical card and removes the need for frequent sign-ins. It serves as an information goldmine on personal information, consumption habits, and preferences. It’s also an easy and exclusive avenue for personalized marketing.
This is a good example of a paid loyalty program. The retail space is highly congested, so the brand differentiates itself from direct competitors with an enticing loyalty program. It clearly works for them as Amazon Prime members spend about four times more than other Amazon consumers. For a standard fee paid yearly, members receive exclusive rewards such as unlimited free two-day shipping, access to the streaming service, and a members-only sale day.
The brand offers a tiered loyalty program that gamifies the accumulation of points. Think of it as a video game – customers must accumulate a certain number of points to get to the next level, which offers better rewards than lower levels.
DSW designed the tiers of their loyalty program based on customers’ purchasing behaviors and offered appealing rewards such as free shipping. They also doled out points for customers who donated unwanted shoes. The model is sustainable and helps the customers feel like they are growing and changing with the brand. The unlocking of levels gives them something to look forward to with every purchase.
Revamped GAP Good Rewards
GAP offers two types of membership programs – Good Rewards membership and GAP Inc Credit Card membership. They both offer cashback and points-to-discount benefits. For example, a regular member earns 2% back while a credit card member gets 5% back.
Points are automatically turned into discount coupons in increments of $5. You can either redeem the $5 coupons or continue saving up until you get a $10 coupon or higher. The best part is the lifespan of the points: They won’t expire so long as you buy again from GAP within two years of your last purchase. And if you earned enough points to be convertible into a reward, the reward is good for half a year.
The hotel chain employs a points system but enables patrons to track their points through multiple avenues – a physical loyalty card, an online account, and a mobile app. Because their loyal customers are typically frequent travelers, this gives them a seamless experience no matter where they go. Called the Marriott Bonvoy Benefits, members earn points through hotel stays, car rentals, and flights.
They can use points to avail of free accommodations, free dining, free Wi-Fi, and members-only discounts. They can also share points with friends and family who stay at Marriott. Like Starbucks, the membership accounts and app provide in-depth insights into consumer behavior and preferences, so the company can provide customized rewards.
Ready to roll out a loyalty program for your business? True POS is here to help! Our Smart Loyalty program lets you reward your returning patrons, incentivizes them to spend more with you, and helps you build stronger relationships. Request a free quote and let’s grow your business together.