Blog Article

6 Things the Best Customer Loyalty Programs All Have in Common

Have you ever wondered what attracts customers to brands like Starbucks or Amazon? Why do these multi-billion dollar giants consistently outperform their competition? The answer to this is customer loyalty!

What is customer loyalty?

57% of customers spend more when shopping with brands they’re loyal to. Likewise, companies with more loyal customers grow their revenue roughly 2.5 times faster than their industry peers. Both of these statistics point to one fact - loyal customers help your business make more money in less time. 

But, how exactly can you build customer loyalty? If you want to keep your customers coming back, customer loyalty programs are a great place to start.

What are loyalty programs?

A loyalty program is a rewards system that offers incentives to your customers, encourages their continued business, and helps them emotionally invest in your brand.

Today, customers are spoilt for choice. However, this choice overload is often stressful for consumers who find it simpler to stick to brands they know and trust. A loyalty program ensures that customers are incentivized to choose your brand over competitors.

The three most popular types of customer loyalty programs

  1. A tiered system where each new membership level (achievable through higher value shopping) unlocks more exclusive rewards 
  2. An accrual system where customers’ purchases give them points that are redeemable as store credit
  3. A paid membership that provides customers with access to features that non-members cannot enjoy

First implemented in 1981 by American Airlines, frequent flyer programs are one of the best examples. Regular customers were awarded airline miles, redeemable for discounted flights or free upgrades. This incentivized customers to make more bookings with American Airlines in order to enjoy the subsequent rewards. This effectively established them as a familiar brand that offers many lucrative rewards every time you spend money with them. This model has proved to be so successful that it has been implemented by all major airlines globally. 

A well-thought-out loyalty program can increase the likelihood of customer retention and continued business by 79%.

We evaluated some of the most successful loyalty programs to understand how they work and what they are getting right. Here's a look at some customer loyalty examples:

Six things all successful customer loyalty programs have in common

Companies with the best rewards programs employ these techniques to retain customers, provide customer satisfaction, and capture their loyalty.

1. Exclusivity

The best loyalty programs make customers feel like ‘insiders.’ You can achieve this by notifying loyal customers about new products and features before their release to the general public. Larger businesses can issue limited invites for loyal customers to attend exclusive events, enhancing the customer’s sense of belonging and attachment to the company.

Exclusivity also acts as a tangible difference that the users can see immediately after enrolling in a loyalty program. If a customer enrols in your program, they should feel like they’re being given a special privilege over the regular customers. This helps them justify the emotional attachment to your loyalty program to themselves and recommend it to other people.

2. Personalization

A good loyalty program shows your customers that you don’t just appreciate the business they bring in but also value them as individuals. You can achieve this personalization by wishing your customers a happy birthday via email or offering them a discount or special product as a birthday gift. 

Some brands even send across occasional loyalty hampers to delight their customers. Another way to get this right is by tracking purchase information in order to find out what items are frequently bought by a customer. You can then incentivize the purchase of any item in that specific category by offering extra credit points/discounts. Credit card companies do this by offering special flyer programs to frequent flyers and retail incentives to avid shoppers. 

3. Savings opportunities

Since customers always appreciate opportunities to save money while making purchases, you can extend cashback offers, discounts, and giveaways, or offer store credit in exchange for simple tasks that help your business.

For example, you can offer rewards to customers who spend above a specific limit, fill out surveys, leave customer reviews, and refer your business to others. Another good opportunity to do this is public holidays or festivals. Many brands make great use of the spike in shopping around the holidays to offer extra incentives to users. And you frequently see customer loyalty programs in retail and software for example.

4. Emotional investment

Emotion is one of the biggest drivers of customer loyalty. To build an emotional connection with your customers, you should ensure seamless two-way communication by training a dedicated and courteous customer service team.

Depending on staff resources and budget, you can even consider unified communication services and bundle several key business communication systems into one unified platform and interface.

Moreover, showcasing your brand’s values, vision, and customer-oriented mindset through advertisements or social media posts will help customers emotionally engage with your company. 

If you plan on boosting your social media marketing, make sure you keep your posts relevant and regular. All of your content should be catered toward your target consumer base in a way that keeps it fun, relatable, and up-to-date with trends.

Also, using relevant hashtags helps increase the discoverability of your content on social media platforms which allows you to reach a broader and more engaged audience.

5. Ease

Having a seamless user experience is crucial to building customer loyalty. You need to create a smooth customer experience by ensuring a bug-free site that loads quickly. Many companies also let customers view their loyalty status and points on the website.

You can also offer special customer experiences like free meals, no-cost delivery, and extended warranty periods to customers who are a part of your loyalty program. 

6. Supporting social causes

You can display social responsibility by partnering with nonprofits and giving your customers the option to redeem their points for donations towards social causes. When customers see that your company is responsibly contributing to society and connecting with causes they care about, they feel drawn to the opportunity to make a difference by participating in your loyalty program. 

Today's consumers are especially drawn to conscious brands that support human and environmental causes. This also helps develop brass tacks connected to the community image of the brand, which goes a long way as far as customer loyalty is concerned.

How to build customer loyalty by implementing a loyalty program

What your loyalty program should look like purely depends on your brand. You can start with basic customer loyalty program ideas like simple discounts for regular shoppers. Then start moving towards coupons, cards, and other more elaborate personalized marketing tools. Your goal should be to craft a program that helps you generate organic customer traction.

If you are thinking of starting a loyalty program, consider signing up with Paystone. Our built-in marketing automation feature will help you personalize your loyalty program and boost customer engagement. We also offer reporting tools to track the impact of your program and make tweaks based on collected data. 

Akshat Biyani

Akshat Biyani

Akshat is a B2B content marketer who enjoys analyzing trends in SMB marketing, software technology and customer reviews for Google and Facebook.