folder E-commerce Tips & Tricks

Want To Keep Customers Coming Back? Here Are Seven Innovative Loyalty Programs (And How To Start One)

calendar 2021-09-16 | glass 10 min read | user Ricky Hayes
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A customer called an online cake shop and asked for a refund. 📞

According to him, the product he received had a wrong spelling on the top. 

(Source)

The customer rep listened to the complaint, accepted his mistake, and refunded the money.

Two days later, the cake shop sent a complimentary cake to the customer with the word 'SORRY' written on the top. 🍰

(Source)

This is a perfect example of customer service.

This act of professionalism and generosity touched the customers. Not only the shop became a go-to place for his special occasions. But he also recommended it to his friends and family.

That's how you turn buyers into happy customers and eventually brand loyalists. 

I am sure you too want to keep your customers happy and win their loyalty, right?

Don’t worry, I’ve got you!

In today’s blog post, I’ll talk about how you can keep your customers happy and keep them coming back by introducing a loyalty program.

Why is Customer Loyalty Precious?

As they say, customer acquisition is costly. In fact, it can cost businesses 5-25 times more to have new customers than to keep the existing ones.

Also, loyal customers spend 67% more on products and services than new customers.

Customer loyalty improves profits and contributes to sustainable growth. How you can achieve this is a real challenge, though.

To begin with, you first have to understand that your customers are REAL humans. They have certain needs and wants. 

Understand what they want from a business and provide them with that. Trust me, they will come running to you for all their needs.

And by introducing a loyalty program, you provide them with a more tempting reason to come to you.

Customer loyalty programs have proven themselves as one of the best strategies to keep customers.

What are they? 

How do they work? 

Why do successful brands trust them to build long-lasting customer relationships

What innovative customer loyalty programs can you start today to reward your loyal customers?

Find out answers to these right here in this post.

But let’s start with the basics first…

What Are Customer Loyalty Programs And How Do They Work?

Loyalty programs, as their name suggests, reward customers for their loyalty.

Brands launch these programs to encourage customers to buy from them rather than their competitors.

Wondering how these programs work?

Every time a customer engages with a brand, they earn a point. Once they get enough points, they can redeem them for discounts, deals, and free products.

The result? You get repeat sales, and customers get a chance to enjoy freebies.

It's a win-win. ✌

But just like anything else, not every customer loyalty program is the same.

Here are a few common types of customer loyalty programs you can use today to improve retention:

Point-based loyalty (spend more to get more!)

The most common type of customer loyalty program is a point-based system.

Customers collect points on every purchase they make. They can then redeem them to win prizes and avail discounts.

Some brands even reward points on social sharing.

Want to see this in action? Check out Starbucks’ official website. They offer many customer loyalty programs for their valuable customers.

Have a look at this:

Point-based loyalty (spend more to get more!)

You can claim a cup of your favorite brew by collecting stars all the way. ⭐⭐⭐

Getting started is easy. And the reward is huge - a drool-worthy cup of Starbucks coffee. ☕

The next is...

Tiered loyalty (higher level = more rewards)

Tiered loyalty programs are goal-based programs. The higher the customer’s tier, the better rewards they will receive.

ThirdLove uses a tiered loyalty program to reward its customers. They have three different goals for their customers to achieve.

You can either become an admirer, enthusiast, or devotee based on your spending.

This goes without saying that each tier comes with its benefits and rewards.

Tiered loyalty (higher level = more rewards)

Another type of loyalty program you can launch is...

Paid loyalty (VIP membership programs)

Paid loyalty programs are also called fee-based programs. Customers pay a certain amount of money to become part of your VIP membership programs. 

Amazon Prime Insider can be the best example. 

The popular streaming service rewards its VIP members in several ways. Here are a few benefits they offer to their Amazon Prime Insider members:

- delivery benefits

- streaming and digital benefits

- reading and shopping benefits 

Paid loyalty (VIP membership programs)

But because you’re charging money against these benefits, it is important to offer something that clearly outweighs the fees. 

Up next is…

Value loyalty (Welfare programs)

Some customers value welfare work more than individual benefits and rewards.

With value loyalty programs, customers can donate a percentage of purchases to charity.

Sephora allows its customers to use their points to give back.

Value loyalty (Welfare programs)

These programs do not directly benefit customers. But brands can better connect with their customers when they have these value programs running on. 

What you should or shouldn’t choose depends on your target audience.

You’re the best judge here.

Conduct research to find out which loyalty program will attract your customers more.

Not sure where to start? Conduct a survey. It will help you know your customers better.

Do you want to fuel your retention strategy through loyalty programs?

The next section will help you get started.

You don’t have to copy them. But yes, you can have a clear idea of what works best for your brand.

Seven Innovative Loyalty Programs For Your Inspiration!

1. Beauty Squad

e.l.f cosmetics offers a tier-based loyalty program (Beauty Squad) for its customers.

The tier system revolves around earning more points.

The more customers will spend on e.l.f products, the greater rewards they receive.

The Beauty Squad loyalty program has three tiers - Extra, Epic, and Icon. You’ll receive rewards based on your qualifying point score for each tier.

Beauty Squad

Takeaway: Create a loyalty program that helps members ascend based on loyalty. Consider buying frequency, engagement, and other metrics. Now, offer discounts and rewards to those who fulfill the set criteria.

Another customer loyalty program idea you can try in 2021 is…

2. Hyatt Loyalty Program

Just like e.l.f, Hyatt also has a 5-tier loyalty program.

What I loved about their loyalty program is it is open to everyone.

Yes, you read that right. Hyatt offers free membership to everyone. Also, there is no minimum threshold requirement members need to meet.

Their highest-tier, however, requires customers to travel a great deal. But all in all, the free membership is a benefit everyone can enjoy.

Customers can also choose how they want to use their points.

Hyatt Loyalty Program

Takeaway: You can also twist your tier-based loyalty program like Hyatt. 

Want to keep tough requirements for your highest tiers? Then, at least offer free membership to allow everyone to become part of your loyalty program. 

Another brand that took its loyalty program to the next level through personalization is...

3. XPLR Pass

What sets The North Face's loyalty program (XPLR Pass) apart from others?

They offer flexibility in how customers can redeem their points.

Customers can earn and collect points on every purchase.

But the real magic begins when it comes time to redeem rewards.

Whether you want to climb mountains in Nepal or get your hiking trip sponsored in Alaska, the North Face loyalty program will help.

XPLR Pass

Takeaway: Sometimes, customers aren't looking for generic discounts on products. Think out-of-the-box ideas to offer curated experiences through your loyalty programs.

You can also earn miles by joining the Virgin Atlantic loyalty program. Here’s how it works...

4. Virgin Atlantic Flying Club

You can also earn points (miles) traveling more and more with Virgin Atlantic. Also, you can earn points on the ground on all the things you buy with the brand and its partners.

Save your rewards and spend on anything you’d like.

There are three tiers for their customers: Red, Silver, and Gold.

Each tier comes with its own benefits/rewards. Again, the more a customer spends, the greater the rewards.

With 30+ points, you’ll get their Silver membership.

The benefit is you’d be able to access all benefits of the Red+Silver tiers.

When you reach the top with Gold status, you’ll get the benefits of Red and Silver.

Also, you’ll unlock the extra benefits of the Gold tier.

Virgin Atlantic Flying Club

Takeaway: Go creative with a conventional tier-based system. Let users unlock all the benefits once they hit the highest tier.

Customers will work hard to reach there.

A new type of customer loyalty program 2021 you can try is a subscription program. 

What is it? How does it work? Let’s find out…

5. Bean Box Subscription Program

A subscription program is something that doesn't offer benefits as a reward.

Rather, you offer your products on subscription.

Bean Box offers its buyers different types of coffee subscriptions.

Now, what does a brand get in return?

They increase the lifetime value of their customers.

How? Let me explain...

Inviting buyers to subscribe to subscriptions has more value to a brand than if they shop only once.

Bean Box Subscription Program

Takeaway: Offer your products/services as a subscription. Incentivize your offers so that you get more subscription holders than onetime buyers.

6. Nike Run Club App

You can also encourage progress through your loyalty program. This way, you can bring your buyers closer to their goals.

Let's take the example of Nike here...

The Nike Run Club app is a performance-based loyalty program. 

The more active you're, the more you get rewarded.

The brand knows that the more customers achieve their goals, the more loyal they will be.

Nike Run Club App

Takeaway: Motivate customers to achieve their goals and offer rewards in return.

Did you know sometimes having a no-loyalty program can do wonders for your brand?

Confused? Don't be!

Apple is doing the same. How? Let's find out...

7. Apple

If there is one brand that doesn't need any loyalty program to create a loyal fanbase, it's Apple. 

I have seen people ditch everything to buy the latest iPhones. 

And trust me, you can't convince them to try any other brand. 

Sure, you can't compete with Apple when it comes to product appeal and brand credibility.

But what you can do is create unique products and services that no one else is offering at the moment. 

Apple

Takeaway: Let your products and services serve as a loyalty program your customers can't ignore.

It's now...

Time to Create Your Own Customer Loyalty Program…

Starting a loyalty program doesn't have to be hard. Follow these 5 easy steps to get started.

Step#1: Decide on the types of rewards you want to offer. For example, you can offer free discounts, BOGO deals, vouchers, gifts, and even a free shipping offer.

Step#2: Decide what action you want to reward. This could be anything - a requirement to spend certain dollars, reach a tier, or more.

Step#3: Review steps 1 and 2 to ensure your loyalty program offers enough value to the buyers. 

Step#4: It's time to choose your app. With apps like Shopkick or Spendgo, it will be easier to create a loyalty program for your business. You can use them to set up a widget on your site to gain visitor's attention. 

Apart from that, you can use these apps to:

  • allow customers to earn points on every purchase
  • offer redeemable personalized rewards
  • track customer activity 
  • reward redeemable digital gift cards

Step#5: Promote your program like crazy. You can use in-store and POS signatures to sign up more customers. Also, send out promotional emails to let customers know what you have in store for them.

Happy Customers Are Loyal Customers...

Customer loyalty is precious. Innovative customer loyalty programs are a great way to have more loyal customers. More loyal customers mean your business’s Customer Lifetime Value will also be high. Which means higher retention and more profits!

Did you know you can design and launch more creative loyalty programs using Debutify's Loyalty Builder Add-ons?

Turn Your One-Time Visitors Into Loyal Customers With Debutify!

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Written by

Ricky Hayes

Ricky Hayes is the Co-Founder and Head of Marketing at Debutify - free Shopify theme, helping dropshippers build high-converting stores in minutes. He is a passionate entrepreneur running multiple businesses, marketing agencies and mentoring programs.

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