There was a time when loyalty programs were simple and easy. You'd go get a coffee at your local cafe, and they'd punch a hole in your loyalty card. After so many punches, you got free coffee. It's called a spend-and-get program.
In 2017, IRI Worldwide did a survey and found that 74 percent of consumers chose a store based on a strong loyalty program. Thus, today, many brands are implementing Omnichannel loyalty programs which are considerably more intricate and nuanced. In this model, not only do customers get rewards in the classic spend-and-get transaction but also just for sharing the brand's content on social media, referrals, and actually reading a promotional email. In effect, they become brand advocates.
Personalization and Exclusivity
Take it a step further and personalize your loyalty program and you've got a win-win for everyone. Forbes writes, "Research reveals a customer is eight times more likely to be satisfied with a customer loyalty program if they’re very satisfied with how personalized it is to them." At Sephora.com they even go so far as to collect data volunteered by the customer about their skin tone and eye color. From there, they can personalize recommendations and promotions, up-sell/cross-sell products, and services targeted to each customer. The data a brand collects also helps personalize the rewards offered. Some consumers may prefer savings (or even free shipping), some prefer free gifts or exclusive product.
Sephora.com also employs a tiered personalized loyalty reward system where the more points you earn from purchases the higher you go in the tier. This results in exclusive offers and promotions not offered to those lower down. Not only does this give customers an incentive to spend more but also makes them feel special - and engaged. Personalized loyalty programs are a lot less guesswork which means they're more effective, result in bigger returns and happier customers!
Programs with a Purpose
Neilsen did a study and found Among the 66% of global respondents willing to pay more [for products and services], over 50% are influenced by key sustainability factors, such as a product being made from fresh, natural, and/or organic ingredients (69%), an environmentally friendly company (58%), and a company known for its commitment to social value (56%)." Many companies are adopting what's called Corporate Social Responsibility Programs. Most notably, Tom's Shoes brilliant success with their One-for-One program. Every time a consumer buys a pair of shoes, a person in need gets a free pair of shoes. It's been so successful for the company (and those they serve) that Tom's has branched out into other areas of need (Vision care, access to water, bullying prevention, and safe birthing.) So for instance, when a customer purchases a pair of Tom's Eye Wear, a person in need gets a free eye exam, glasses, or in some cases sight-saving surgery. Consumers feel good about the products, the company, and feel a part of a worthwhile cause. Tom's gets loyal customers and does some good in the world. Win-win.
Premium Loyalty Programs
A 2017 consumer research study discovered that nearly half (47 percent) of respondents perceived the rewards in fee-based programs as better than rewards in free loyalty programs. Consumers pay an annual subscription fee (or premium) to join and get special benefits. Smart companies like Restoration Hardware have taken in the facts and are developing savvy and profitable strategies. Their paid members receive things like free interior design services and early access to promotional events. In addition to their free personalized program, Sephora.com also has a paid premium membership where beauty enthusiasts enjoy unlimited, 2-day free shipping (With no minimum purchase.) GameStop offers two premium price point programs for gamers. Benefits include free two-day shipping, $50 worth of exclusive monthly offers, and discounts.
Then We Have Amazon...
Amazon customers are known to be loyal and with good reason. Amazon
Prime is a clear leader of the Premium Loyalty Program. However, Amazon has long used Personalization and in recent years added Corporate Social Responsibility loyalty programs. Proving that, today's loyalty program is a far cry from your mama's loyalty program. Employ some of these strategies to enhance your own customer loyalty programs, and take your place among the giants.
Salty Red Dog Marketing, LLC is a marketing agency in Westport, Connecticut, and Red Bank, New Jersey. We service businesses with marketing strategies, digital marketing, social media, and consultations.
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