Brand Loyalty Programs
Loyalty programs can be an invaluable retention strategy that creates authentic brand advocates while decreasing dependence on net new customers to drive profit growth.
Target strategic partnerships that align with your mission and resonate with customers. Examples include Thrive Market, an online marketplace that curates relevant content for its members; and Sephora’s Beauty Insider program, which promotes aspiration with tiered benefits like exclusive events and gifts for its subscribers.
Engaged Loyal Customers
Loyal customers spend more often and with greater value than non-loyal shoppers, which in turn drives long-term brand growth by encouraging advocacy and referrals – each having an exponential effect on revenue potential. Loyalty programs play an integral part of brand development by encouraging such habits.
Brand loyalty programs that stand out are built around engagement and emotion, balancing transactional rewards with deeper relationships. Furthermore, they integrate real-time feedback for more tailored communications that create experiences audiences want to share with others.
Implementing and managing an effective loyalty and engagement program takes careful planning. Start by clearly outlining your business objectives, selecting an scalable software platform to implement and manage it, as well as selecting software to integrate with ecommerce and marketing systems. IKEA’s Loyalty program takes advantage of customers visiting stores as an investment in time; in return they offer numerous experiences both in-store and online that reward their loyalty perks. Sephora uses their Beauty Insider program as an innovative take on VIP to engage their 34M members through gamified challenges, exclusive perks, tiered tiers.
High-Value Loyal Customers
An effective loyalty program targeting high-value loyal customers can have tremendously positive effects. These customers rely on your brand and spend significantly more than average customers; plus it’s five times cheaper to keep existing customers than acquire new ones!
Numerous companies offer points-based loyalty programs that reward customers for spending a certain amount. Sephora Beauty Insider members, for instance, can earn points with every purchase to redeem for products and experiences.
Encourage customers to spend more and increase lifetime value with exclusive benefits for loyalty customers such as free events, subscriptions to products and services, cash back or credit. Showing that you value them shows your gratitude, building emotional connections with them as brand advocates who will expand your business.
Low-Value Loyal Customers
Loyalty programs encourage increased buying frequency of low-margin products with shorter sales cycles – coffee shops, bookshops and apparel brands all work as great examples – creating a “flywheel effect,” in which each new customer brings increased revenue at decreased costs; furthermore, loyalty programs help mitigate revenue shocks as existing customers remain loyal despite price increases.
Brands can attract low-value loyalists by emphasizing value beyond discounts – for instance by providing an effortless shopping experience, high-quality products, strong brand values or sustainable initiatives.
Loyalty programs needn’t just offer discounts; consumers are also motivated by non-financial rewards like exclusive experiences or vouchers. Brands should use customer data to tailor experiences for different segments, using AI-driven platform integrations such as personalized recommendations and point multiplier events; personalization is achieved via social sharing tools or referral incentives to scale experiences at scale.
Referrals
Brand loyalty programs help retailers move away from competing solely on price by using customer retention to drive growth. Studies show that existing customers spend 67% more than new ones; therefore, retaining loyal customers can have a tremendous effect on profitability.
Loyalty programs can boost profits by encouraging referrals. Programs offering special rewards for referrals can attract high-value customers while creating a diversified and engaged user base.
REI offers referral rewards such as their Co-op Membership program, which gives cash back on purchases based on business profits and allows members to elect candidates to its board. theSkimm also gives out $10 bonus coupons when new customers subscribe to its newsletters.
No matter the form or function of your loyalty program – points-based, tiered like Sephora Beauty Insider or offering referral incentives like NerdWallet’s referral programs – it is vitally important that its value be communicated clearly and prominently. Consider using social media channels, incorporating it into website design or engaging influencer marketing as ways of spreading its reach.