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Customer Loyalty Programs: Types, Examples, and How to Build

2022/08/03

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Customer loyalty programs are effective tools for increasing customer engagement and retention. In fact, according to the Harvard Business Review, companies with a strong customer loyalty program have the opportunity to grow their revenue 2.5 times quicker than their competitors. With the positive outcome customer loyalty programs bring; businesses should keep themselves updated with the latest strategies.

As a business owner, you can offer your customers more than just points and discounts. Numerous tried-and-tested blueprints will guide you through utilizing and making the most out of your customer loyalty program.

The infographic below can help you build the most effective customer loyalty program for your business. Through it, you’ll explore the importance of customer loyalty, various types of loyalty programs, and how to build a successful one.

customer loyalty program types examples

 

What is Customer Loyalty?

Customer loyalty results from buyers having a pleasant experience with your business, building trust. It’s a long-term bond between you and your customer, manifested by their eagerness to engage with and purchase from you over your competition. 

Repeat consumers do a variety of things to prove their loyalty; some of these definitive actions include:

  • Purchasing often
  • Using what they've bought
  • Interacting with you via different channels
  • Referring others to your brand
  • Proactively providing feedback

The Importance of Customer Loyalty

Businesses need customers to succeed. But for customers to continuously transact with you, they must be satisfied with your products and services. Customer loyalty can’t happen if you don't satisfy their needs. While new customers are good for business, retaining old patrons is easier for companies since they help you expand and maintain high earnings.

Current customers spend more than new ones because they’ve already tried your products/services and can attest to the quality. There’s a 60–70% probability of a sale for existing customers than new prospects. New customers are more difficult to persuade and spend less money than loyal, repeat customers. 

Loyal customers present multiple benefits to your business, such as solid recommendations to peers, repeat purchases, positive testimonials about your customer service, and an adamant belief in your product/service. As a result, they become your brand ambassadors. This is why customer retention should be at the core of your goals. 

Below are some customer loyalty program examples you can explore and incorporate into your business. 

Types and Examples of Customer Loyalty Programs

  • Rewards points program

    One factor that makes a good loyalty program is the reward system that goes into it. In this program, customers can earn or accumulate points for every interaction with your brand and redeem them for special items, prizes, freebies, or perks.

    This program encourages customers to buy more as the points scheme allows them to collect different prizes. They may also earn points for different brand interactions such as sharing on social media, posting reviews, celebrating a birthday, or engaging in gamification.

  • VIP privilege program

    A key tip for building a customer loyalty program is to focus on what matters to your customers: making them feel important. VIP privilege programs are a great way to provide your customers with exclusivity. The programs can create an "instant culture" of customer loyalty since their patronage is being valued in a way that isn’t offered by competitors. But of course, this type of exclusive membership comes with a fee.

    Shops with VIP privilege programs see increased engagement, as well as higher order frequency and order value because these initiatives are beneficial. Members of premium loyalty programs are 60% more likely to spend more on your brand, whereas free loyalty programs only raise that chance by 30%.

  • Tiered program

    In tiered loyalty programs, customers enter higher tiers the more they spend. These tiers are an excellent approach to boosting member engagement. They provide layers of exclusivity to the program where customers gain access to better rewards as they reach a higher level.

    These milestones will keep customers returning because they have to collect points regularly. The tiered program makes your customers feel valuable every time they level up, as they know their benefits aren’t easily accessible to everyone.

  • Omnichannel program

    Omnichannel loyalty programs focus on engagement rather than just encouraging purchases. They’re more interactive and use high degrees of gamification to create an immersive experience that enables customers to connect with the brand.

    Customers earn points for non-purchase activities such as answering surveys, rating items, or logging into their accounts. With this program, you can also create a more customized experience by leveraging the large client data acquired across various sales channels. 

  • Cashback program

    Cashback is not new; it has been recreated several times as technology evolved. A simple yet addicting formula distinguishes cashback incentives. In this program, customers get a small amount of money back for each transaction. It provides immediate gratification, reinforcing the customer's desire to buy.

    Among the most recent innovations of cashback are:

    - Personalized offers based on the customer's location and buying history
    - App availability for optimal convenience
    - Card-linked technology for instant application

  • Hybrid Loyalty Programs

    Hybrid loyalty programs are combinations of more than one type of loyalty program system. The most common hybrid programs feature rewards points-based and tiered loyalty systems.

    For instance, a tiered program can be combined with a game program, wherein customers can “level up” to reach new loyalty tiers according to the points they earn. Earning more points motivates customers to reach the succeeding loyalty levels through various purchases.

    How to Build a Successful Customer Loyalty Program

  • Determine your goals and KPIs


    Establish what your brand expects from a loyalty program. Understanding the program's aim is crucial to ensuring top-level buy-in and the ability to benchmark in the future. 

    It would be best to focus on overall engagement over time rather than transactional metrics. You can brainstorm how to reward loyalty program members for their social media shares, survey responses, and other forms of brand advocacy.

    • Use customer data to plan your loyalty program

    Loyalty programs can give you a chance to gain insights about your customers. By offering services or treatments, you can discover something new about them. For example, all new members can claim a free year of membership or a ₱1,000-discount at one of your partner institutions. The decision taken by each new member will reveal a lot about that person's needs and preferences.

    The best loyalty programs are seamlessly linked to customer databases. You can collect and use important data to boost sales and improve the customer experience.

    • Encourage reward referrals

    Referral rewards are a simple and effective approach to brand awareness. Not only are your customers rewarded for bringing in their friends, but if those friends become customers, they’re more likely to be loyal customers too.

    Statistics show that consumers trust personal referrals or recommendations 92% of the time. This shows how referrals can help you reduce churn and enhance customer retention across the board, so you must make it a priority.

    • Have reward variety

    Changing your rewards to keep things interesting is an excellent way to get the most out of your customer loyalty program. While a Shopee free shipping voucher may appeal to new members, other offers may be more tempting to those using the app for a few years.

    You can personalize the customer's experience to their needs by keeping a variety of rewards available. When your audience believes you care about them enough to provide what they want, 83% of customers will likely stick with you in the future.

    • Promote on different platforms

    Another shortcoming of customer loyalty programs is the lack of advertising. How will your customers become involved in a loyalty program they’re unaware of? Promoting your program through all available channels is the best approach to get the most out of it.

    While SMS and email marketing are excellent channels, social media and your physical location can be just as great. These marketing tactics can help you increase interaction and ensure your audience knows your program.

    Loyalty is Priceless

    The benefits of loyalty programs are limitless and can affect your business in many ways other than an increased number of customers. To maximize and help you boost your business' reach, Rush offers its effective loyalty solution. This easy-to-use loyalty program builder can turn casual customers into your brand advocates.

    At Rush, we highly value customer loyalty, which is why we’ve made it easier for you to achieve it. We’ve developed three simple steps to help you out:

    1. Register - Understand consumer behavior through data processing and segmentation tools for easier opting-in
    2. Redeem - Customize your rewards program with exclusive perks and offers and push your desired consumer action with uncomplicated rewards redemption.
    3. Repeat - Re-engage with your customers and become the top-of-mind choice with hyper-targeted messaging

    Rush also offers other eCommerce services to help you develop an effective e-store for your business. We want to help you become closer to your clients by providing the resources you need to meet them at every point of their journey. Request a demo today.

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