Know Your Secret Weapon: Customer Loyalty Programs
Customer loyalty programs are among the most effective tactics for increasing revenue and inspiring customer loyalty. Over 90% of companies have customer loyalty programs, and around 84% of customers say they would rather stick to a brand that offers them. Also, 66% of consumers say that the possibility of earning rewards can change their spending behaviour.
What is a customer loyalty program?
Customer loyalty programs is a reward for customers who continuously return and interact with a brand. It’s a customer retention strategy that encourages customers to continue buying from your brand instead of your competitors. The more customers purchase or engage with your brand, the more rewards they’ll earn.
How do customer loyalty programs work?
With a loyalty program, a business can offer free benefits to customers. And in return, they’ll redeem the points or points for discounts, rewards, inside perks, and even free products. This aims to motivate repeat purchases and build trust for your customers.
A recent poll revealed that customers are willing to go all out for the brands they love. Almost 68% of respondents from Yopto said they would join a customer loyalty program for a brand they love, and 56% of them are willing to spend more with a brand even though cheaper options exist.
The study also revealed that people seek more benefits than discounts and free shipping. They would also be happy to get early access to sales and new products.
The 3 biggest types of reward programs
Now that you know more about reward programs, let’s look at the most common types you can use for your online business.
- Point-based loyalty programs
Points programs are considered the most common reward program type. They let customers accumulate reward points to redeem for cashback, freebies, perks, etc. Besides earning points from purchases, customers can also earn points from leaving reviews, sharing on social media, playing mini-games, or simply having a birthday.
2. Tiered loyalty programs
Tiered customer loyalty programs are a kind of membership where customers receive various benefits depending on their rank. Businesses usually rank membership in groups based on metrics like engagement or sales. These customer reward programs motivate the customers and give them a goal. The higher the tier, the better and more exclusive rewards they will get.
3. Paid loyalty programs
Paid loyalty, known as fee-based loyalty programs, offers customers ongoing benefits for a fee. These can be a recurring or a one-time fee. Paid programs may require proof of value to get customers to sign up, but the business may gain higher customer value from members. Recent data from McKinsey shows that consumers are over 60% more likely to spend more on a brand after they join a paid loyalty program.
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