Loyalty means profit. It’s a fact that most companies are aware of and try to harness by setting up loyalty programs. In many cases, one customer loyalty program vs. the next are rather similar – after all, they operate on the same mechanism. That’s why it’s crucial to focus on the details. It’s not enough to simply come up with a loyalty program idea, as many of your competitors also have one. If you want your clients to keep coming back for more, you need to give them quality. That means personalized incentives, inspired ideas, advanced benefits and experiential rewards. To get that edge and distinguish your customer loyalty program ideas from the rest, you must examine the most efficient solutions and why they seem to be working so well.
Customer loyalty can be understood as an ongoing, mutually beneficial relationship between a client and a brand. Typically, this is observed by looking at how often a customer is willing to engage with and perform repeated purchases due to the benefits they perceive versus the competition.
Seeding from positive experiences and benefits the clients draw from interacting with your company, it’s the backbone of sales. Loyal consumers are highly valuable because they drive revenue and boost brand reputation. They are inclined to spend more than new customers, don’t mind sharing their feedback, and often participate in the referral systems. It is also much cheaper to keep existing customers than it is to win new customers. Loyalty is best created through a combination of appreciation, a sense of belonging, shared experiences, social connections, gamification, and feelings of nostalgia. Simply put, your loyalty members want to feel. Depending on its driving force, this phenomenon can show in many different ways.
The strongest bonds are based on a measure of different types of loyalty:
- Community loyalty: Customers feel a sense of belonging to a community of like-minded individuals.
- Referral loyalty: Customer loyalty manifests itself in the willingness to refer the brand to friends and family.
- Engagement loyalty: A customer is loyal to a brand because of high engagement, e.g. through social media or attending events.
- Content loyalty: Customers are consistently impressed with the quality of the brand's content, such as blog posts or videos.
- Employee loyalty: Customers have had positive interactions with the brand's employees.
- Cause-based loyalty: Customers support the brand's social or environmental mission.
- Subscription loyalty: Customers are subscribed to the brand's service or product, like a streaming service or software.
Customer loyalty is incredibly valuable but difficult to measure, which only increases the importance of setting up ROI KPIs. Some of the customer loyalty program KPIs that help monitor ROI include enrollment, redemption rate, repeat purchase rate, ROI, average order value, and Net Promoter Score (likelihood of recommendation). If you are not analyzing these KPIs and using the data to inform your next decision in your program, you are already behind the competition.
Why Do Members Enroll in a Customer Loyalty Program and Why Do They Leave?
It’s not a mystery that customers enroll in loyalty programs because they want something to gain. Whether it’s rewards, discounts, or access to exclusive products, it’s the benefits that often drive them to pick or pass up a certain brand. Loyal customers don't grow overnight. Clients choose loyalty when they find it convenient, profitable, and useful. That’s why they can always sway towards another brand if the new company offers them something more valuable. The main reasons why members may leave customer loyalty programs often include:
- Complex program rules
- Limited reward options
- Limited earning opportunities
- Limited program accessibility
- Poor customer service
- Infrequent or no communication/too frequent or over-communication
- No exclusivity
- No personalization
- No sense of community
In essence, your customer loyalty programs must give your members enough to generate a sense of value, engagement, and connection -- without creating the perception of being cost-centered. Your loyalty members need to feel special and rewarded for being a part of your community. They also want their rewards program to be exclusive, personalized, and easily (but not too easily) accessible.
6 of the Best Customer Loyalty Program Ideas
1. Valuable and relevant rewards
Loyalty programs can’t exist without rewards. To create the best set of prizes and opportunities for your clients, you must employ a combination of emotional, transactional, and behavior-based actions. This will enhance the sense of loyalty between you and your members as they now see a direct value in giving you their time & data on top of their money. What’s more, the best rewards program should be founded on some form of marketing automation that will amplify the levels of personalization you offer. Here are a couple of features you can expect to grow even more in 2023:
- Personalized rewards: Offer rewards tailored to each customer's individual preferences and buying history. Companies need to pay notice on which rewards are the top choices and continue to expand on those options with growing values to keep members happy with their choices. Product & reward recommendations during their experience are key.
- Exclusive access: Provide exclusive access to sales, promotions, or new products to loyalty program members. The promotion of this exclusive access will lead to increased attention to those special challenges/tiers that grant this access and will give your customers some reward goals to keep working towards.
- Multi-brand loyalty programs: Allow customers to earn and redeem rewards across multiple brands or businesses. Customers want as many options available to them as possible. Some customer loyalty program ideas are simple. By increasing the range of brands they can interact with in your program, you will present clear value and can drive growth opportunities with your partnerships.
- Social media integration: Allow customers to earn rewards for engaging with a brand on social media. Almost 2/3 of the population is using social media today, with an average use time of 2.5 hours daily. If you are able to get your members to interact with you via social media, you are increasing the marketing power of your brand even further, as they will now see your advertisements at a higher frequency than otherwise.
- Community-based loyalty programs: Create a loyalty program that rewards customers for being active members of a brand community. Customers enjoy engaging with others in niche communities when it surrounds values they hold dear and this has been shown to increase engagement among active members.
- Virtual events-based loyalty programs: Host virtual events and reward customers for attending or participating. In today’s online world, it's often hard for brands to break that online-only connection with their customers, so it's important to take that extra step.
2. First Party / Zero Party Data
Zero-party data refers to information that a customer voluntarily provides to a company, such as preferences, demographics, or other personal data. This type of data is considered "zero-party" because it is provided directly by the customer, rather than being inferred from their behavior, buying habits, or obtained from a third party. These days data privacy has become a forefront issue and in response to new laws being passed to protect this data, companies are changing the way data is both collected and shared. Apple and Google are making changes to their platform that will drastically reduce the validity of third-party data, so it is important that companies take matters into their own hands to collect zero-party data. Why is this data so important, though?
- Personalization: Zero-party data allows companies to create more personalized experiences for customers, such as tailored communications or recommendations.
- Improved targeting: Companies are able to better understand their customers' needs and interests, which makes targeting more effective through advanced segmentation capabilities.
- Increased customer trust: Customers are more likely to trust a company that respects their privacy and only asks for relevant information. Customers are also more willing to give companies their data when they see a direct benefit to their data submission.
- Compliance with data protection regulations: Zero-party data collection is often considered more compliant with data protection regulations such as GDPR and CCPA. More and more states and countries are following these changes and matching the regulations set forth.
- Better customer engagement: By using a combination of the above, companies can create a more engaging experience for their customers, which can increase customer loyalty and retention by matching your customers’ needs better than the competition.
By now, every program has introduced some form of gamification into their loyalty program as a way to generate loyalty and interest beyond the basic issuance of points, progress bars, and recognition tiers. And since every program has these features, you must offer your members something that your competition cannot.
Some examples of taking gamification to the next level include:
- Leaderboards: Display the top-performing loyalty program members for promotions or competitions to increase the competitiveness of your members while rewarding the top performers. Members will see their place and get notified when they rise/fall through the rankings to keep them engaged in the race.
- Quests: Set up a series of challenges or quests that customers must complete in order to earn rewards. These quests go beyond basic promotions, as there is a hierarchy your members must go through to unlock the next tier of awards and promotions. Each step of the quest can contain greater and greater rewards with an increasing level of difficulty to encourage engagement over the long run.
- Virtual scavenger hunts: Customers must find and collect virtual items in order to earn rewards. These can be as simple as hiding links on your homepage that customers must search for and click or going as far as watching videos. This increases time on your website, which can expose your members to a number of products or services you want to highlight.
- Virtual slot machines/spin the wheel: Virtual games that customers can play to earn rewards are great for repetitive engagement Daily or weekly opportunities give members a reason to log in to your program that they wouldn’t otherwise have and keep your program at the top of their minds.
- Virtual lottery/scratch-offs: Instead of offering direct prizes as mentioned above, you can go further and present the rewards in the form of tickets/entries for lotteries and auctions. Promotions can be created to give members opportunities to enter into these contests and create desires for non-transactional rewards.
- Auctions: Encourage your members to spend their points in a frenzy created by an auction where you can drive the spending of points in a more controlled manner towards your choosing of rewards, while at the same time, creating a new level of excitement and engagement for your members.
4. Loyalty beyond points
Companies are now going beyond the basic one-point type issuance programs and investing in alternative methods. By utilizing these unorthodox customer loyalty program ideas, you can foster longer-lasting relationships with all of your customers. Some of the best rewards program don't rely on simple point systems. It is always wise to look outside your own industry at what some other companies are doing and how they can be leveraged for your own program; here are a couple of new features that can help you engage your members more in new ways they haven’t seen from your competition:
- Multiple Virtual currencies: Instead of traditional discounts, some of the best loyalty program ideas are experimenting with virtual currencies that can be used to purchase items in-store or online. These programs can contain multiple currencies, which can drive customers to complete specific actions as certain rewards can only be obtained with specific currencies.
- Social media integration: Programs are being integrated with social media platforms to allow customers to share their rewards and progress with friends and followers. Set up promotions to reward for following on social media or participating in an online campaign.
- Crypto & NFT technology: Some programs are testing the use of new technology to enhance their program. Allow your members to redeem their points for crypto directly or reward certain achievements with NFTs that can grant them access to new benefits and experiential rewards such as early access, exclusive events, and more.
- Subscription-based loyalty: Programs are experimenting with monthly or annual subscriptions that offer exclusive benefits and rewards to customers. These subscriptions can be added to encourage members to take the next step and commit to the program financially. Tying promotions to the longevity of someone’s subscription is a great way to increase the benefits of that subscription service in the first place.
- Experiential rewards: Programs are experimenting with experiential rewards such as travel experiences, concert tickets, or spa days. Linking these to gamified features such as tiered challenges or leaderboards to increase that customer competitive spirit.
- AI-based personalization: Programs are using AI-based personalization to predict customer behavior, target rewards, create personalized experiences, and even create new segments. By figuring out what your customer wants before they do, your personalization levels will be a step above your competition. AI is also able to bring your journey full circle by creating personalized messaging for every demographic within your program.
5. Frictionless enrollment
Joining your loyalty program needs to be as easy as possible. By eliminating barriers to entry and creating quick opportunities to join your program, you will see a much greater return on your investment. Different methods work best for different demographics, so it is best to employ as many possibilities as possible:
- Online registration: No need to use clumsy POS screens or even visit a physical location. Send already established contacts in your database enrollment forms through email or SMS.
- In-store registration: Use a self-service kiosk, or get assistance from a store employee Build this into your checkout process and train the store staff to encourage signups.
- Mobile registration: Using their mobile device, they can scan a QR code, download an app, or by text message. Placing these QR codes in easy-to-notice spaces in your store or directly into your advertisements to make it easier for customers to find your program.
- Social media registration: Avoid long signup forms by gathering information from their social media accounts, such as Facebook or Google. Launch campaigns through your social media accounts to bring attention to the program and how fast it can be to sign up by providing direct access.
- Automatic enrollment: Avoid the signup process entirely by combining enrollment with other actions, such as making a purchase, connecting to the WIFI, or signing up for a newsletter.
Mission-driven loyalty program ideas are those that align with the company's social or environmental mission and reward customers for supporting that purpose. As we have seen in recent years, social causes and awareness are valid factors in the consumer’s decision-making process because customers are now prioritizing brands that share their beliefs and values.
Some of the best mission-driven customer loyalty program ideas active today:
- Patagonia Action Works: Rewards customers for taking action to support environmental causes, such as signing petitions or volunteering. Patagonia also rewards customers for supporting their mission of sustainability by providing discounts and rewards for customers who opt for used clothing and repair services.
- TOMS Passport Rewards: Rewards customers for taking action to support social causes, such as signing petitions or volunteering. Toms also rewards customers for supporting their mission of providing shoes to people in need, by giving a pair of shoes to someone in need for every pair purchased.
- Whole Foods Market Rewards: Rewards customers for making sustainable choices, such as using reusable bags or opting for digital receipts.
- The Honest Company's Honest Points: Rewards customers for taking actions to reduce waste, such as using refillable containers and recycling.
- Warby Parker's Buy a Pair, Give a Pair: Warby Parker provides glasses to people in need by giving a pair of glasses to someone less fortunate for every pair of glasses purchased.
- Lush Rewards: Customers who support their mission of ethical and sustainable business practices are given discounts and special offers.
- Eileen Fisher Rewards for Recycling: Customers who recycle their clothes are rewarded within this program
Why invest in loyalty programs?
Loyalty programs are very valuable when it comes to customer retention and acquisition strategies. It’s true that creating them takes a lot of work, creativity, and market knowledge. Numbers don’t lie, though. Loyalty programs do work and are worth the effort. Here are a couple of facts that show just how powerful they can be:
- Companies that use loyalty programs see a 20-40% increase in revenue.
- 63% of consumers are more likely to return to a store if it has a loyalty program.
- 50% of customers are more likely to make a purchase when they have a loyalty program reward available.
- 40% of customers said they will stop doing business with a company if they feel their loyalty is not being rewarded.
- Loyal customers are worth up to 10 times as much as their first purchase.
It’s also worth noting that loyalty programs have become the new normal – they are currently employed by more than 80% of companies on the market, which means that a lack of one puts you at a disadvantage. To really stand out from the crowd and create the best loyalty programs in your market, you need innovative and creative customer loyalty program ideas that engage your clients and keep up with constantly changing market trends. Otherwise, your program will drown in the sea of many such platforms already in use. If you are interested in learning more about how Comarch can help design, implement, and manage a successful loyalty program for your company, read more here.