6 Customer Loyalty Programs That Guarantee Better Retention

Customer loyalty is something all businesses strive for. With a short average processing time and fewer returns from orders, it keeps everyone from accountants to marketers happy. Of course, finding new and exciting leads for your business is great. However, having a core customer network that regularly puts money in your pocket is the best way to ensure your business stays profitable.

Offering a great product or service is a great way to do it. Although, after making the first sale with a new customer, it can be difficult to guarantee customer retention. A loyalty program can help with this.

In this article, we’ll look at the benefits you can enjoy from a loyalty program and also outline the different types of programs available to your business.

Loyalty Programs: Statistics

Before we look at the different loyalty programs you can use, we’d better make sure they work. After all, there is no point in going to the trouble of implementing such a plan if it does not equal higher earnings in the future.

There is clear evidence that effective loyalty programs are of great benefit to your business. In 2019, it was found that such a program could increase the order quantity by over 300%.

With 80% of profits coming from 20% of your current customer base, these plans increase long-term value. It has also been found that attracting new customers to a business costs five times more than retaining existing customers if you are not yet sold on the idea.

what makes you loyal to a brand
Image source: Yotpo

Therefore, these programs drive sales, increase profits, and are less costly than bringing in new buyers. Now all you have to do is find the right one for you and your company. Like looking for an alternative to a Zoom phone or a different broadband provider, this can be a case of trial and error. Let’s take a closer look at the six best loyalty programs for your business.

Loyalty Program #1: Tiered

A tiered loyalty program offers customers a goal to reach. Simply put, the more the customer interacts with your business, the more rewards they can access.

Companies decide how to separate their respective tiers and what benefits to offer. They can be broken down by metrics like the number of reviews written or the longevity of the membership.

The most practical examples of businesses implementing a tiered loyalty program are Starbucks, Uber, and Marriott Hotels.

Loyalty Program #2: Paid

A paid loyalty plan means customers get instant access to rewards after paying a fee. This may seem counterintuitive, but if your benefit list is enticing enough, it should still be successful.

If you decide to switch to a paid loyalty system, it’s worth deciding whether the fee will be a one-time or recurring payment. The best example of a successful paid loyalty program with a recurring fee is Amazon Prime.

A one-time payment means less pain for the customer in the long run. A recurring payment gives you the option to cut costs, and flexible scheduling of payment dates can also be an advantage.

Amazon loyalty program

Loyalty Program #3: Based on Points

A points-based loyalty program means you assign points to the value of the money a customer spends with you. These plans allow customers to view each transaction as having a certain value, which can encourage them to collect points more regularly.

When they accumulate a certain value of points, they can exchange them for a certain benefit. From store discounts to sweepstakes entries, how you allow customers to redeem their points is almost endless.

The Body Shop runs one of the most successful of these plans.

Loyalty Program #4: Value

You will see less of this type of loyalty program, but it is one that encourages a different type of purchase from customers. Rather than receiving rewards or benefits for themselves, a value loyalty plan ensures that some of the money spent goes to a cause or charity.

While this sounds great on paper, it has the potential side-effect of limiting revenue with customers who disagree with your charity selection and then decide to spend less. On the other hand, as if there is a strong sense of team cohesion between the job and their boss, there is a possibility of inducing a much stronger sense of loyalty in customers who choose to interact.

In 2020, Sephora allowed customers to use their remaining points to donate to the National Black Justice Coalition.

Sephora loyalty program

Loyalty Program #5: Coalition

A coalition program is a program where companies work together to deliver extra benefits to their shared customer base. This can be a good way for different businesses to enjoy each other’s customer network and act as a source of lead generation.

If you’re going to pursue this type of loyalty program, it works a bit like affiliate marketing, so don’t forget your target audience. Do your best to incorporate this into the type of business you want to partner with.

A great example of this successful work is the Lego and My Nintendo collaboration. My Nintendo users can redeem their points for Mario items.

Lego and Nintendo coalition

If you build a customer base of dedicated, loyal fans, they’ll likely set up social media pages to discuss their shared passions. Integrating it into your online presence by offering a chat room with good video conferencing software or running an in-house forum has the two benefits of being user-friendly and insightful for you.

Online communities are a very effective loyalty program because leaving a website is easy, but leaving a community is difficult.

Loyalty Programs: A Customer’s Best Friend

Loyalty plans work. There are countless real-life examples of why giving back to your most loyal customers has a positive impact on your company’s long-term health.

Throughout this article, we’ve summarized the options available to you and discussed how they work. In doing so, we’ve helped show you which will work best for your specific business needs. While every company is different, the need to generate revenue from customers remains the same. An effective, well-organized loyalty plan is one of the best ways to achieve this.

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