- HoneyHat

What is a loyalty program?

A loyalty program is also known as a rewards program or treats program. It’s a marketing strategy that uses rewards to:

Retaining or attracting new customers
Increase brand loyalty and engagement
Increase the number of users in the funnel

A program that includes a rewards or loyalty card can also double your marketing efforts without having to double the budget.

What Are the benefits of a loyalty program?

You will be convinced if you look at the benefits of a rewards program.

Your brand and your customers will both benefit from a great program. Let’s begin with that.

Brands : Benefits to brands

A rewards program can be a valuable asset to any business. This is especially true for eCommerce where it’s easy to implement.

Customer Retention:It helps you keep existing customers easier than acquiring new ones. They will be more likely to support your brand if they are familiar with your products and brand.
Reduce Customer Churn: You can use your program in order to identify customers who have left and then take steps to bring them back by sending an email campaign.
Increase conversions with customer loyalty programs that offer irresistible discounts and rewards.
Increase Customer Value:A rewards program will help promote the average order value of your business, and influence your advertising costs and product pricing.
Get brand advocacy: Undoubtedly, the greatest promoters of your brand are your loyal customers, so keeping them satisfied and well-rewarded will open the door to word-of-mouth marketing and better engagement/visibility.

You can see that a loyalty program can be beneficial to your brand in many ways. What about your customers?

Customer Benefits

Signing up for a reward program is a good way to get exclusive offers and access early.

Understanding why customers are interested in your program can help you customize the experience for them and lead to all the benefits listed above.

What else can your loyalty program offer to your customers? Here are some of the benefits:

Spend less and get special gifts
Exclusive discounts and promotions
Receive personalized discounts
Celebrate special occasions (birthdays and anniversaries).

A program can also give your customers an added sense of belonging. This is especially true if it’s marketed as a VIP reward program like Michael Cors.

Let’s look at the different types of customer loyalty programs you can create now that you understand the benefits.

Examples Of Loyalty Programmes

By offering incentives and rewards to your customers, you can achieve your retention goals more quickly.

Your business model will be best served by a successful loyalty program. We have compiled the most popular loyalty programs below to help you choose the right model for your business.

Let’s look at them

1. Points Based Programs

The most popular programs are the points-based ones. All customers know how to use them. They can earn points by making purchases or performing specific actions. These points can be exchanged for discounts, free goods, or other rewards.

Create your reward points system using your metrics and data from your customers to maximize your profits and provide your audience with exactly what they want.

Example of Starbucks Rewards

Starbucks leverages emailing in order to market its rewards program. Starbucks uses a branded, eye-catching campaign to communicate the benefits of joining its rewards program. The copy is informative and the visuals are beautiful.

Members will earn loyalty points (stars) when they complete an activity. This is a great incentive to encourage new buyers to take action, to build customer loyalty and to enhance customer relationships.

Businesses that are implementing a digital strategy must use email to enhance their loyalty program. You will need a email platform that is user-friendly and has advanced features like Moosend to start. Then, create email campaigns for your loyalty program.

Want to know what Moosend can offer you? Sign up for a FREE account and try out the edit!

2. Tiered Programs

We have another type of segmentation that is popular where customers are classified into different levels (tiers) based on the level of engagement and purchases.

The rewards and benefits offered by each tier are progressively higher, which encourages customers to “move on up the ranks.”

These programs can be used by brands to create fun experiences that will appeal to their most loyal customers. A beauty brand could name one of their tiers as “beauty experts” to give its loyal members a feeling of accomplishment.

Example: Sephora Beauty Insider

Sephora’s is an excellent example of a multi-tiered program that has multiple touchpoints with rewards.

As customers accumulate points, they can unlock new rewards and product offerings.

The program also offers standard benefits such as $10 off per 500 points, and free shipping to encourage repeat purchases.

3. Punch Cards

This is a classic method that involves giving the customer a card, either physical or digital, which gets marked or stamped after every purchase.

This type is used by coffee shops and restaurants to reward repeat customers with free products and improve their relationship.

Your customers will feel appreciated if you give them a card. This is a cost-effective option that’s perfect for any business.

Subway Subcard

You can see Subway’s Subcard in action below. After a certain amount of stamps, customers received a free sandwich.

This type of loyalty program is perfect for older audiences, as it gives them a nostalgic feeling.

4. Cashback Programs

Customers love these programs. Cashback programs can be used by businesses to encourage customers to continue using their products and services.

Members receive a percentage back of their purchase as cashback that they can use to make future purchases.

Example: Rakuten

Rakuten‘s customers can take advantage of its cashback program. They will receive a percentage back on their purchase, which can be redeemed later.

This type of program requires brands that customers are interested in purchasing from. Rakuten’s collaborations with Victoria’s Secrets, Sheins, Macy’s and others are perfect for meeting the needs of multiple buyers.

5. Membership Programs

In recent years, these programs have become very popular. Customers pay a membership fee and receive exclusive benefits such as free shipping or early access to sales.

Amazon Prime is one of the most popular memberships programs.

Example: Amazon Prime

Amazon’s membership program rewards customers with extra benefits such as free shipping, streaming and exclusive deals.

All of these things keep customers engaged and give them additional reasons to join the program. We can see all the benefits of Amazon Prime by looking at its membership.

One-day/same-day delivery
Enjoy unlimited Prive Video Streaming
Ad-free access to 100 Million Songs
Try Prime Before You Buy
Prime Early Access

Amazon Prime may be huge and you might not be able to compete with it, but creating a membership program that is beneficial will help you boost customer loyalty and build relationships.

6. Frequency programs

These programs are based on the age-old fear of missing out ( FOMO).

Members of the program must purchase products within a certain timeframe to be eligible for rewards. They might get a discount if they shop on certain days.

Example: Dunkin’ Donuts

Customers who join the Dunkin Donuts DD Perks program and successfully complete it can take advantage of special promotions.

You can see that the brand has given members specific dates to earn extra points for certain menu items. To get the points, they simply have to visit a specific store at the specified time and date.

7. Partnership Programs

We now come to the type of partnership, where brands work with other businesses in order to offer joint loyalty programmes. It is possible to earn rewards from different companies.

You can earn points by using your bank card to collect points from various partners.

American Express Membership Reward

American Express cardholders can redeem points earned through purchases made with partners.

The rewards may include travel, gift cards or even the payment of eligible charges. Amex offers a great way to engage customers and motivate them to use the service.

You only need to select the right partners in order to create a shared customer loyalty program that will please your audience.

8. Gamification Programs

Gamification is gaining popularity in recent years. It’s an inexpensive way for brands to engage customers and collect data. For consumers, it is a fun, rewarding way to earn rewards.

You can excite your audience by implementing a gamification reward program. It will also allow them to experience a unique way to collect prizes. These programs allow members to win prizes by completing tasks, entering contests or unlocking achievements.

Example : Simply Be Perks

Simply be launched a gamified reward program to engage with customers and raise brand awareness. The program encourages customers to share pictures on social media of themselves wearing the brand’s clothing or unboxing the monthly gift in exchange for points.

It’s an awesome way to win.

9. Referral programs

Referrals will continue to be among the most popular types of referrals, as they provide customers and business with numerous benefits.

Buyers are rewarded when they refer new customers to a business. Businesses encourage customers to refer friends by offering them free products or incentives.

It’s a win for both.

Example : 100% Pure

100% pure promotes its referral program with eye-catching images and valuable copy.

The brand states here the benefits that the customer and friend will receive by simply sharing the link. Referrals can be a good way to raise brand awareness. You only need to add a section in your emails and you are ready to go.

Want to create a newsletter that looks professional for your loyalty program using an email marketing tool? Why not try Moosend’s affordable email platform?

10. Personalized Programs

You can use customer data in addition to the loyalty programs mentioned above, and offer rewards and experiences that are tailored based on customer preferences and behaviors.

You will get personalized loyalty programs that are perfect for building stronger customer relationships and encouraging advocacy. Sephora’s Beauty Insider Program is highly customized, using data to provide members with targeted product recommendations and deals.

What if you combined the above to create an even more customized experience?

11. Hybrid programs

It is not necessary that a successful program must be of a certain type. You can combine different types of loyalty programs to create an engaging and unique customer experience.

You can also use multiple channels to engage with your audience. For example, you could target them via social media, SMS, or email campaigns. Brands that offer a mobile application can also reward their mobile-first clients with special offers and discounts on in-app purchases.

When creating a loyalty program for your customers, you can combine elements to create a rewards experience unique to your brand and audience.

Let’s now see how you can create your own program.

How to Set up a good loyalty program

We’ve seen so far that investing time and energy in a customer loyalty program is a great way to add value to your business. You can use it as a tool to increase customer retention and strengthen relationships with your customers.

Before you start, here are some things to keep in mind.

Set your goals

What is the goal of establishing a loyalty program for your business? You can create a rewarding reward system that works for your company by setting clear objectives. Ask yourself this question before you start designing it.

Do I want to register more?
How about more referrals and purchases?
You could aim for social shares.
Generate buzz?
Raising awareness about a cause is important.

After you specify your goals, it’s time to create your value proposition. Giving your customers $10 for every 500 points that they accumulate is a great incentive to use your program. They will also invest more money in order to receive the discount.

Once you have set your goals it is time to develop your offer.

Find out what you have to offer

How can I redeem my points?

Remember that there should be an obvious relationship between the money spent and the rewards earned. Be clear that every dollar is worth one or more points. It will be easier for customers to become excited about your product.

They will also engage with your brand more, spread positive word of mouth about your loyalty program and generate more referrals.

As a result, you should carefully design the points system or tiers to provide value for your customers. Make sure that you also make it clear what your customers will receive.

Here is a great example from Caudalie.

How does the brand provide transparent information on the rewards, benefits and gifts that they can claim to?

Create a budget

If you want to make this work, it is important that you set a budget for marketing.

Before you sign up, make sure that the average spend of your customers is worth it.

If your customers spend an average of 40 dollars each time they come to you, and your first milestone in your loyalty program occurs when they reach $300, then you know that anything below 10% of this amount will take away from the value of your program.

This shows to your customers that they should give their money to you and not the other way round.

Make rules

It is crucial to set up your Terms and conditions to avoid any misunderstandings which could lead to issues with your brand.

Clarify all details in your T&Cs in order to legally cover any claims or demands that customers may have.

Establish the laws that will apply to your business.
Create a draft as well as an outline.
Select the clauses that you want to include.
Use simple and clear language.
Please refer to the following resources for more information.

Set up the rules for earning points in your reward program once your T&C are ready. North Face, for example, has a dedicated webpage that details its rewards program.

You can also add benefits to encourage customers to sign up and earn.

Write a name on the item

To attract your customers, a great program must have a catchy name. You could choose a clever pun or something more creative depending on your target audience and industry.

If this is not possible, choose a name that emphasizes the benefits, such as a rewards card.

Don’t forget. Subliminally, the feelings that you create in your visitors will be associated with any reward program you promote.

Make sure to include enough brand elements. Stickers, loyalty cards and wallet pens or USBs with credit card information could be among the little gifts you give your customers.

Let’s look at a few tips that will help you to succeed in your program.

Select the Right Tools

A loyalty program is usually created by combining software and tools that manage different aspects of the program. These include member registration, point tracking, rewards management and customer communication.

Be sure to create a solid business plan before selecting the platforms that are right for you. This will help you avoid unnecessary costs.

Here are some tools that you will need to promote and set up your program.

CRM Software: Manage your customer data, track customer interactions, and segment the customer base. Tools: HubSpot and Zoho.
Loyalty Program Software: Simplify the creation and administration of your loyalty program. Tools: Smile.io LoyaltyLion and Yotpo.
Mobile App Development Tools:If your plan is to create a mobile application for your loyalty program you will need mobile app development software. These can be iOS and Android frameworks such as Flutter or React Native.
Marketing Platforms: To send SMS or mobile notifications to members of a loyalty program. Email marketing platforms such as Moosend will help you to promote your loyalty program in a cost-effective manner.
Data analysis and reporting software. Track the performance of your program and gain insight into customer behavior. Tools: Google Analytics or Adobe Analytics. Or, specialized loyalty analytics platforms.
Surveys and customer feedback: To collect feedback from your members and improve the program. SurveyMonkey and Typeform are good tools.

You will need these tools to build your reward system. You may use more or fewer depending on your budget and needs.

This guide contains more information about customer loyalty programs.

Tips for Loyalty Programs

A competitive loyalty program is more important the more competitive your business. You will find below some tips that can help streamline your process.

Tip#1 – Create a tiered system for online purchases

Give them extra points for every purchase. They will stay more engaged.

Email marketing can streamline your process by using automated sequences. Moosend’s Customer Loyalty 1, Customer Loyalty 2 and HTML2_ Customer Loyalty 3 are two automated sequences that can help you score leads based upon their buying behavior and reward customers at the right moment.

Want to automate your loyalty program? Sign up for a Moosend free account and utilize the Marketing Automation feature.

Tip#2 Create a persona for your loyalty program

Create a persona to make the program more personalized. It will let members know where they are in the program and how far they have to go before they reach the next level.

You can personalize your website to an incredible degree.

Tip#3: Organize surprise events

Engage users with exclusive events in-store and digitally for members, or randomly draw a winner each week.

By combining the history of their purchases with their loyalty card, you could give away or complement items that they have purchased most often.

By participating in these events, or by gamifying the experience to make it more exciting, you can help your customers double their points.

Tip#4 : Offer incentives to new or disengaged members

Create a loyalty programme that targets members who are either new to the program, have only redeemed points once or have points over a certain number.

Send them personalized recommendations for X points, etc. You can reward those who have redeemed points with another X-point so that they can reach their next milestone.

Avoid Loyalty Program Mistakes

Making rookie mistakes can reduce the effectiveness of a program.

Avoid these common mistakes:

Undefined goals: Launching a loyalty program before understanding the business’s goal is one of the most common mistakes. Do you want to increase customer retention? Are you looking to boost the average transaction value or collect valuable customer data. Before designing your program, clearly define your goals.
Copies competitors: While analyzing your competition is important, copying the loyalty program of your competitors may not work well for your customers and create an unoriginal feeling.
Complicated customer loyalty programs confuse employees and customers, which can lead to reduced participation or even no participation.
Ignoring feedback from customers: Listening to your customers and optimizing your program according to their input. Surveys, reviews and active engagement with customers are all ways to gain insights.
Do not segment your customers. Treating all customers the same results in a generic and non-personalized programme. should instead segment your customer base according to their behavior, preferences and spending habits.
Focusing on discounts: Discounts are a popular reward for loyalty programs, but relying exclusively on them could harm your profitability. Offer non-monetary rewards such as exclusive access, personalized product recommendations or early product releases.
Not promoting it: The effectiveness of a loyalty program depends on the knowledge and awareness among customers. Invest in marketing to let customers know about the program and its benefits.

Try to avoid misleading customers, overpromising but underdelivering. Listen to your customers and make adjustments.

These customers are loyal to your brand, and they won’t want to be disappointed.

Get inspired by the best loyalty programs

Looking for some inspiration to create your own loyalty program? Here are some examples of loyalty programs that you can create.

Delta SkyMiles For frequent flyers, Delta Air Lines SkyMiles offers a variety of benefits including miles earned for flights, priority board, and lounge access.
Hilton Honors Hilton’s loyalty programme rewards members with points when they stay at Hilton hotels. These points can then be redeemed for free nights, upgrades and other benefits. The company has a large portfolio of hotels.
Marriott Bonvoy Marriott Bonvoy is a program that offers hotel points, similar to Hilton’s Bonvoy, for stays at Marriott hotels. These points can be redeemed in a wide network of Marriott properties around the world.
Costco’s Executive Membership : If you are a frequent Costco customer, an upgrade to the Executive Membership may provide additional benefits and cashback rewards.
Southwest Airlines’ Rapid Rewards Southwest Airlines’ loyalty program offers flight point, no blackout date for reward travel and the Companion Pass which allows you to bring a friend along for free.
REI Cooperative Membership Outdoor enthusiasts are invited to join REI Cooperative Membership, which offers an annual dividend based upon purchases as well as access to special sales and events.
Ulta Beauty Ultamate Reward: Ulta Beauty’s loyalty program rewards beauty purchases with points that can be used to redeem discounts on future purchases.
Chick Fil-A One : Chick-fil A’s loyalty program offers rewards and freebies to fast-food fans.
T-Mobile Wednesdays T-Mobile rewards its customers with discounts, freebies and other perks through the T-Mobile Wednesdays program.

Rewarding loyalty one reward at a time

You can easily create a loyalty program that is engaging, fun and affordable. It will not only increase your growth, improve customer retention and boost your brand’s image, but also give your audience an unforgettable experience.

Select the type of loyalty program that best suits your business. Decide your budget, rewards for loyalty, and terms and conditions.

You are now ready to move your business into the land of high conversion! What are you still waiting for?

Why not try Moosend if you are looking for a reliable email marketing tool that will help you promote and encourage your reward program or sign-ups?

FAQs

Answers to some common questions.

1. What is an example loyalty program?

Starbucks Rewards is a good example of a loyalty program that works. The program encourages customers to visit Starbucks more often, to spend more money, and to engage with the brand via the mobile app. This is a great example of how companies use loyalty programs in order to boost customer loyalty and build brand loyalty.

2. What are the three R’s in a loyalty program?

The 3 Rs are reward, recognition and retention. These are usually used to describe what businesses hope to achieve with their loyalty programs. For example, creating a positive experience for customers, strengthening the relationship between the brand and the customer, and increasing customer loyalty.

3. What are the benefits of loyalty programs?

Loyalty programmes reward and incentivize customers who return to a brand and continue to engage with it.

The post Create a Loyalty Programme: The Ultimate Guide 2023 appeared on Email marketing automation platform for Thriving businesses.

Author: Marilia Dimitriou

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