What is a Customer Loyalty Program | Examples
In today’s competitive market, businesses find it challenging to retain and engage their customer base. A customer loyalty program emerges as a powerful strategy that can encourage users to make repeat purchases from your brand. By offering rewards and incentives, companies can foster long-term relationships with buyers and boost their bottom line. This blog articulates the concept and types of loyalty programs, along with some practical examples.
What is a Customer Loyalty Program?
A customer loyalty program is a potent marketing tactic designed by businesses to inspire shoppers to buy their products or services repeatedly. The rewards can be free products, exclusive offers, special discounts, or anything else that can motivate customers to continue patronage.
The primary objective is to foster buyer loyalty by offering tangible incentives that encourage repeat business. 75 % of the consumers prefer a brand that offers a loyalty program.
Types of Customer Loyalty Plans
Whether you’re a small business or a large corporation, implementing a customer loyalty program is highly significant for your brand advocacy. According to an April 2022 US survey, 79% of responding consumers said that they made purchases from the brand more frequently due to their participation in a free or paid loyalty program.
There are different types of reward plans, and each strategy offers unique incentives to enhance customer retention. Here are some of the common forms of loyalty schemes.
Points-Based Programs:
In this popular reward program, the customers earn points for completing designated actions like purchasing or leaving reviews. They can redeem these points for discounted offers, free products, or other perks.
For example, the McDonald’s Rewards program allows customers to earn points with each purchase. The buyers can then exchange the points for free drinks and food items.
Tiered Loyalty Programs:
Tiered base schemes reward customers based on their level of spending or engagement. Businesses offer various rank memberships to their customers, such as silver, gold, diamond, or platinum. The higher tiers offer more significant rewards. It motivates loyalty members in the low tiers to enhance their spending to get premium offers.
The Sephora Beauty Insider program is a perfect example, where customers can move up tiers to unlock more exclusive benefits.
Paid Membership Programs:
In paid membership plans, the customers pay a participation fee to join the program and receive special perks and discounts. Statista shows that 6 out of 10 US consumers aimed for discounts in return for joining loyalty programs.
The most renowned example of this loyalty scheme is Amazon Prime. This platform provides members benefits like free shipping, streaming services, and exclusive deals.
Loyalty Reward Cards
Loyalty reward cards or punch cards are common schemes mostly utilized by small business setups. They allow the customers to accumulate points or stamps for each purchase they make. Once a certain threshold is reached, these points can be exchanged for rewards such as special discounts, free products, or special offers.
Starbucks Rewards Card has been highly successful in driving customer loyalty and frequent visits.
Custom Loyalty Program Examples
Here are some examples of successful loyalty plans in the market:
- Bodycare retailer Blume offers a points-based loyalty program called Blumetopia. It allows customers to earn Blume Bucks by engaging with the brand on Instagram, making purchases, or referring it to friends. The points can be redeemed for merchandise, free products, and other gifts.
- Delta Airlines employs a tier-based scheme to reward users for booking their flights. They offer silver, gold, platinum, and diamond levels based on the spending of Medallion Qualification Dollars (MQDs). As customers advance through each tier, they can get more benefits, including travel vouchers, priority service, and complimentary upgrades.
- Urban Outfitters is a multinational lifestyle retail company that offers a tier-based loyalty program. It allows customers to earn points by enabling push notifications, entering giveaways, shopping for clothes, and browsing their mobile app or site ten times monthly.
Conclusion
In short, a customer loyalty program is an effective business tool to retain your customers with your brand. By offering reward cards, points, or tiers, companies appreciate their loyal consumers and build lasting relationships with them. It contributes significantly to the brand’s growth and overall success.
