Finding the right success strategy for your business is a hard shell to crack and if you’re a retail marketer, there are fair chances of you being thinking about the best-suited loyalty programs. Yes, Loyalty Program has variants and a business owner must select the one which seems the most suitable as per their customer retention strategy.
According to Businesswire “The global Loyalty Programs market size is expected to grow over USD 200 billion at a Compound Annual Growth Rate (CAGR) of 13.0% during the forecast period of 2019-2024”.More than anything, you’re required to give your customers more reasons to shop from you or simply choose you over the other offering similar products/services. Customer loyalty programs are the right solution to retain more customers and let your business stay at the top! But, which kind of loyalty program would be the perfect fit for your business? Let’s find out!
Types of Loyalty Programs
Let’s break down each kind of loyalty program and understand which one could be the best choice!
Earning something on every spent is quite an attractive way to maintain customer stickiness and a simple way to reward them as well. Point-based loyalty programs reward customers for making purchases at a particular brand. The principle of shop more earn applies perfectly well with this system. Now how will you take it forward? Firstly, create a points structure like how many reward points will your customer get after purchasing a product (depending on the cost). There can be specific product categories that will have different points-earning structures. We recommend not
have a complex structure so that your customers would not have a tough time calculating their reward points. Secondly, once customers have earned the reward points they need to redeem them, probably against the best possible option. For this, you need to offer your customers a wide variety of options to keep them motivated.
It’s the best for new businesses and simple purchases. This system works well with most business types, specifically when the business has frequently purchasing customers.
Customers love variance and it’s great when a brand provides variance in rewards at each level. Basically, tiered rewards offer multiple levels or tiers of rewards for customers right from joining the loyalty program to the time they are frequent buyers. For instance, a tiered reward program offers customers a joining reward, promotes them to the next level once they complete a preset parameter of a certain purchase amount and the process continues further. To implement the same, one should clearly define each tier and the parameters so that the customer has a piece of complete knowledge, the points earned should eventually increase at the next tier. There should be a fair variance between each tier and that should be defined properly.
Its best for the businesses where purchases are infrequent such as travel agencies, booking sites, and other companies in the travel industry.
Being somewhat similar to a tiered reward program, a threshold program offers customers to advance through levels and get eligible for a certain bonus once they receive a higher particular level in the given timeframe. Though, unlike tiered programs its perks are not permanent, they last for a short span of time and require a certain number of purchases in a preset tenure as decided by a brand. some of its best practices include clearly defining all thresholds, and what exactly the customers would require to reach the next level. Brands can implement a progress bar or track sheet to let their customers know how far they have reached, a ranking chart is a better and more engaging option.
It's best for retail or e-commerce stores where customers purchase frequently.
This seems quite a common loyalty initiative as many mobile wallets and e-commerce companies provide cashback deals on purchasing various products. For running the best credit or cashback program, always clarify the customers about the total spend required, if there’s any particular tier to receive cashback. Allow them to redeem cashback on the next purchase with a predefined time limit so that there’s absolutely no scope of confusion. Program’s best practices include allowing customers to use their cashback rewards anytime so that the customers can feel special while shopping. The program is easy to understand, just like the points program, it is quite suitable for driving more sales with the principle of spending more and get back a large chunk!
It’s best for retail and eCommerce businesses who have frequently purchasing customers.
Brands have become real innovative when it comes to retain more customers and grab the attention of new customers as well. Gamified loyalty programs are one of the best strategies used by leading brands wherein the loyalty program turns brand engagement into a game by making use of elements from a customer’s most loved mobile games and applications. Though exact structure varies from one another (depending on how a brand requires its loyalty program to be). Leading brands implement gamified loyalty programs wherein they have a separate leaderboard where customer can compare their performance to other in the competition, they can have achievement-based rewards having engaging content and lucrative redemption options. Mostly these loyalty rewards programs are about driving engagement and making customers easily earn rewards by either purchasing products or simply playing games. A few of the common examples include spin the wheel, quizzes, etc.
It's best for businesses who are looking to level up their engagement through a customized loyalty approach.
As binge-watching is the official millennial pastime, almost all of us must be familiar with pay-to-join programs wherein customers pay a certain fee to join the program which grants instant VIP access or a yearly subscription with various benefits. A few membership programs offer yearly subscriptions while some even offer lifetime memberships. Taking the most popular example of Netflix or Amazon Prime, both are different industries but offer yearly subscriptions along with some benefits. while creating a pay-to-join program, keep in mind that these practices require a lot of planning to back up, the features post subscription should be lucrative enough that customer
won't find it hard to spend a sum of money on the brand. another aspect here is where the customers are either paying a flat fee of a preset amount or they have an option to pay on a quarterly/monthly basis as well. Keep it planned what suits your brand well and if it’s the right strategy to help your brand grow.
It's best for large-scale businesses with the scope to offer impactful loyalty benefits. Alongside it requires huge investment and smart strategies to take it forward.
For instance, here’s Sephora’s Beauty Insider Reward Program https://www.sephora.com/profile/BeautyInsider
- Card-Based Loyalty Programs
Card-based loyalty programs are very popular amongst the traditional approach to loyalty initiatives. Being the simplest of all, most of the brands who have started loyalty programs earlier have used this approach. It works once a customer completes certain punches and they can redeem their rewards. This sort of loyalty program can run either physically or through virtual aspects too! Punch card programs are the smoothest running programs, this way people don’t have to log in to the mobile app to check their reward points, alternatively they can carry a physical loyalty card or have a virtual loyalty card to redeem their reward points. It is beneficial because it lessens the possibility of fraud. It is imperative that the terms and conditions are prior stated to the customer.
It's best for small retail businesses or the ones where the purchases are mostly low cost.
The Bottom Line
Amongst the various kinds of loyalty programs, your business should find the best suited, analyze what seems the best and pick the one which offers your business convenience and your customer better options to stay gripped with your brand. Another aspect which shouldn’t be ignored is that the customers must always be the center of all strategies, every marketing plan made should cover customer’s requirements. Getting them to register is just the first step, letting them stay with you for long is the real battle you a brand need to keep fighting!