In this article we will see:
- What are loyalty programs?
- How do they work?
- Why invest in a customer loyalty program?
- How to choose and integrate a loyalty program in your business
- Examples of loyalty programs
- What is the future of customer loyalty program?
What are customer loyalty programs?Loyalty programs aim to create relationships of trust between each brand and its customers, offering various rewards, privileges and savings opportunities. Simply put, a customer retention scheme encourages your customers to continue to choose your business over competitors. So the more they buy or interact with your business, the more rewards they get. An effective loyalty program doesn’t just benefit your customers – of course! Instead, it also rewards you for your generosity by providing you with multiple benefits. In particular, a loyalty program:
- Strengthens the engagement of your customers with the brand
- Provides you with useful information about their consuming behavior
- Helps you reach your “dormant” customers with unique reward opportunities
- Turns your most loyal customers into ambassadors of your brand
How do they work?Although there are many types of Loyalty programs, below we will go over a general overview of how they typically work. Program Enrollment: Customers enroll in the customer loyalty program, typically by providing their contact information such as name, email, and sometimes more personal details. Earn Points or Rewards: Customers earn points, miles or rewards with every purchase or interaction with the brand. This can include making purchases, referring friends, writing reviews or interacting with the company on Social Media. Accumulate Points: Over time, customers accumulate points or rewards as they continue to interact with the brand or make purchases. Price Tiers: Some loyalty programs have price tiers, where customers can unlock additional benefits or rewards as they reach higher levels. Reward Gifts: Accumulating points allows users to ‘unlock’ various benefits such as discounts, free products, exclusive access or even cash back. Personalized Offers: Many customer loyalty programs use customer data and purchase history to offer personalized offers, encouraging repeat purchases. Communication: Loyalty programs usually involve regular communication with customers, including sending them updates, special offers and information about the status of their rewards. Retention and Engagement: The goal of customer loyalty programs is to retain customers and keep them engaged with the brand, encouraging repeat purchases and long-term loyalty.
Why invest in a customer loyalty program?The value of introducing a loyalty program lies mainly in the common goal that the concept of loyalty schema shares with your business! A rewards program aims to cultivate the trust of your customers, enhancing their loyalty to your business. Accordingly, the very existence of your business aims in the same direction! In particular, according to a Forbes survey that gathered useful information from different sites:
- 71% of consumers say loyalty programs are an important part of their brand relationships.
- 15% of consumers are more likely to buy from a brand if they are part of a customer loyalty program.
- By adding a customer loyalty program to an e-commerce platform, you can increase average order quantity by 319%.
- 73% of consumers are more likely to recommend brands with good loyalty programs.
- Loyalty program members spend 27% more when the brand creates a positive emotional connection.