How to Choose a Loyalty Program for Your Business
When it comes to customer loyalty programs, they’re a worthy investment for your business no matter your size. But when it comes to choosing and implementing a loyalty program, you might be wondering where to begin.
In this article, we’ll help you understand the benefits of different types of loyalty rewards and what fits best with your business objectives.
What’s a loyalty program?
A loyalty program is a marketing strategy that encourages your customers to return to your business frequently and purchase more in exchange for rewards (free products, discounts, exclusive member events etc.).
Loyalty programs also happen to be one of the marketing strategies with the best return on investment if executed properly.
Types of loyalty rewards:
There are plenty of different ways to reward your customers, but you’ll want to make sure you’re rewarding your customers strategically to get the most out of your loyalty program.
Here are some of the different types of rewards and how they fit with your business objectives:
1. Classic Punch Cards
You probably know at least one independent coffee shop that uses a punch or stamp card to grow their customers’ loyalty and boost their sales (ie: buy 10 coffees and get a free coffee and doughnut ).
While punch cards are an easy way to incentivize customers to keep coming back, they can be prone to loyalty fraud (fake cards), and businesses have no way to collect customer data which can be used to re-engage the customer — more on that later.
2. Digital Punch Cards
Digital punch cards work basically the same way as the paper ones, but there are a few major differences. With a digital loyalty program, you’ll be able to gain insights about your loyalty members’ behaviours and measure how effective your program is. For example, you’ll be able to see how frequently your loyalty members stop in, their average purchase amounts, and the number of new loyalty members. This is important if you want to understand your loyalty program’s return on investment and optimize your program.
Customers also tend to prefer digital loyalty programs to paper ones. It won’t clutter up their wallets and they’re less likely to lose their cards.
3. Point Programs
The PC Optimum card is one of the most successful loyalty point programs in Canada. Your customers earn a set number of points for every dollar they spend with you, and if you want to re-engage your customers you can push out offers like “double the points” events or bonus points on specific products. Bonus points on frequently purchased items is an easy way to personalize your loyalty program and create more value for your customers.
Having access to specific information about what your members buy and how much they spend will help you to send out more relevant and timely offers. You’ll also be able to re-engage them with enticing promotions if they haven’t interacted with your brand in a while.
4. Tiered Rewards and VIP Rewards
If you want your customers to spend more, a tiered reward structure might be for you. Companies offering tiered rewards tend to have loyalty member perks and VIP member perks.
After loyalty members surpass a spending milestone, they get promoted to VIP status and gain access to additional perks. For example, VIP members could be entitled to free shipping, early product releases, samples, and exclusive events. Cultivating a great VIP member program encourages all members to spend more while building up a group of brand advocates.
5. Game Programs
Some businesses opt for gamified loyalty and customer engagement solutions. Getting rewards for engagement on social media, sharing content, and text-to-win games are a few ways to add value and fun to your customers’ shopping experiences.
These programs are helpful to grow your reach and stand out from other brands’ more traditional points programs.
6. Referral Program
Finally, a referral program is a loyalty model that turns your customers into brand advocates. If your customer loves your brand, you can get them to convert new customers by incentivizing them with a referral program.
Effective referral programs reward both the new customer and the referrer (your brand advocate). This model is particularly effective to grow your business because customers tend to trust recommendations from a friend or family member over traditional advertising.
Once you’ve outlined your business objectives and understand how each type of loyalty program contributes to your business, you’ll be able to find the right fit for you.