An Beginner’s Guide To Creating A Customer Loyalty Program In 2020

How to generate repeated sales from loyal customers?

Loyalty? You can hardly get enough of it– feels like a rare commodity mostly where customers have wild options to consider. Even with a loyalty program in place, the competition is boundlessly growing. It's getting fiercer each day. There's totally no doubt about that.

But do you want to make your target clients creep back to your retail store?

Setting up an entrancing loyalty program is one engaging step a retailer can use to reach out to their most loyal customers in a gratifying manner. 

Superficially, boosting your sales roughly equates to widening the customer base. A  solid customer relationship management (CRM) gameplan is just part of what this objective requires.

And surprisingly enough, the acquisition cost for new customers lies between 5 to 25 times more than the price you'll incur to retain your old clients. The bottom line is, it’s way cheaper to keep a good rapport with your regular customers; just like the fortified bond, you could have for your pet. 

While running an online business, for instance, you want visits that convert. Put differently, an ecommerce retailer needs customers to hit the checkout button over and over again. 

And to do that concisely, a wide-reaching loyalty program would suffice. It precisely works for both brick and mortar stores, and online retailers in a pretty much incisive way. 

It’s more of a marketing scheme which suits almost all businesses, to sum it up. Keeping your customers constantly motivated is one essential move a seller needs to put careful thought into. And that’s where a rewards program steps in. 

As an extra factor…

It helps a retailer grow a business to optimum levels. One way to do this is by retaining your returning customers. They're a laudable sign of loyalty, to begin with. At first glance, that might seem like too much homework.

But that’s not the case once you set up a top-notch loyalty program for your business. Giving pleasant rewards sort of sends most of your clients into a frenzy in quite a boundless measure. A retailer’s marketing bucket list needs to take in all the attributes needed to optimize customer satisfaction.

And what brightens up this marketing option is the fact that it’s not limited to physical store owners. That is to say, this strategy works exhaustively even for ecommerce retailers

This guide puts into light a couple of handy tips to make your target customers be obsessed with your loyalty program. You get to come to terms with why your brand needs to put a loyalty program in the prime position.

Second, this guide churns out a few examples that could help you kickstart your loyalty scheme. And most of all, a simplified formula to help you measure your loyalty program's overall perfomance. 

So let's get started…

What’s the point of having a customer loyalty program? 

Optimizing the users' experience might prove to be a labor-intensive exercise especially for a beginner in the retail business. You just can't keep customers stepping back to your store if you don't put smiles on their faces, repeatedly.

Satisfyingly, an automated loyalty program could potentially help you deal with alarming sales downshifts.  

There are so many precedents set that validate and illustrate why a customer loyalty program is appropriate for any business looking to heighten the projected revenues. The biggest notion here is that regular customers tend to spend more on purchases than new ones. Some infographics show that the number is 67% higher than that of new customers. 

Thankfully, there’s so much to bank on as far as the widespread presence of customer loyalty platforms is concerned. 

The result?

A fine-drawn loyalty program is ultimately meant to help a business exist even for the coming decades. To automate this marketing concept in your business, it’s seemingly constructive to first, learn from companies that do it superlatively. 

One real-life and practical case in point is Amazon’s loyalty program. The leading online retail giant has perfectly swung into action by giving a rewarding and mutual consideration to all customers. 

Inside its massive loyalty program, are data-driven metrics that issue loyalty rewards to regular customers who meet up the preset threshold by various brands that sell on Amazon. If you have an American Express card, you can easily use your points to shop.

So let's go back over the same ground.

You should think of setting a loyalty program if you need to bolster the customer relationship. That's the only way to make your business thrive and grow.

To make things a little more hands-on, you can optimize repeat business by issuing clients a custom-designed loyalty punch card. Such kind of creativity is going to make your customers edge off the loyalty perks more often.

The Subway Rewards Punch Card is a well-suited example worth looking at. 

subway customer loyalty program

 

Subway uses this option to allow a customer to earn a free drink once they make five visits at the urban eatery. The same technique prevails for McDonald's' loyalty punch card

How to make your Loyalty program work flawlessly.

One open-ended way to make customers so loyal to your brand is to make it easy for them while redeeming their earned points. The process itself requires minimal effort. But if it seems difficult to untangle, you can leave it to the experts.  

In the B2B space, however, things are far off the norm. Here, you're more of making a pitch or better still, a proposal to another established entity that deals in the same products or services.

With the B2C structure, a business owner aims at addressing a particular audience directly. In any case, the fact in issue here is to understand how practical it is for customers to come back and make a purchase, times without number. This implies that the customers' loyalty program needs to be nothing less than user-friendly.

For that to come into fruition, you need to build salient incentives that are quite incomparable. You need to strike down your competitors with the most unmatched product value that's so captivating to your target customers. 

And once you get a hold of your loyal customers, the following are imminent pointers to put into perfect use while building your business’ loyalty program;

Choose a loyalty system that’s well-connected to your business.

Well, I don’t want to blindly make assumptions that you’re proficient with each loyalty system option. That being so, let’s briefly illustrate put each of them into perspective. Below are some of the dominant loyalty models you might want to make a run at;

Points-based system

Nothing too tricky here. No sweat at all. 

The points-based system is in fact, the most utilized technique among all other loyalty strategies. What makes this option peculiar is that customers earn points once they successfully make a purchase. 

Later on, they can redeem their earned points and get rewards or use the very same points to make purchases for products or services. That’s a proven blueprint that works as a motivating factor in a widely applicable manner. 

Put another way, the more customers spend, the more points they earn. Literary, it’s easy to set up such a system especially for e-commerce businesses. The fact is, about 73% of loyalty programs use this system to engage their customers at a more engrossing level. 

Both DSW and North Face use the point-based system to reward their loyal clients. For quite a while now, they’ve given loyalty gifts to prime members who shop regularly.

What ties-up closely to this strategy is referral marketing. 

Here, a returning customer fetches the set forth perks anytime they refer a new buyer to your retail store. Then again, you don’t necessarily need to make it a purely transaction-based reward program. 

With the accelerated sway in social selling, your loyal customers can earn points just by sharing your products on mediums such as Instagram or Facebook. As long as there’s immense website traffic heading your way, you can potentially generate sales that are in check with your prospects.

Sequentially, you can reward your regular customers with freebies or discounts on purchases for each referral they make. In essence, the point-based system can help fine-tune the customers’ shopping trends and fix up all the sales shortages. 

Tiered loyalty system

The name itself gives some rough idea of what it symbolically entails. The tangible value that a customer gets is clustered into groups. 

Otherwise stated, a customer earns a reward upon making purchases of a certain amount. The levels of reward are different; which of course, encourages customers to make more purchases. 

Best Buy, an online retail store uses the tiered loyalty program to give exclusive offers to buyers who enroll for the program.

best buy customer loyalty program

The system is tiered in the sense that each level comes with extra perks. 

A tiered loyalty program is a low-cost option since you don’t need to put in so much cash in rewarding customers that buy your products infrequently. To boot up your sales, the gamification technique thrills your customers to reach the most rewarding levels. 

No matter how pragmatic it seems, there’s also a dark side of the tiered loyalty program. The biggest slowdown is that it’s a bit complicated especially for beginners. 

Paid loyalty program

I bet that you might have come across this alternative, more precisely, while shopping from an e-commerce store. 

For the most part, this loyalty option runs on a membership basis. To put it briefly, here’s how it works; 

The registered members get to pay a preset fee at certain intervals. It could be monthly, quarterly, or even on an annual basis. In turn, they get to leverage on special offers, services, and discounts quite regularly. 

Amazon Prime has been sitting on the throne for a long time with its winning paid program. It’s premium loyalty program outrightly understands the needs of customers far much better than most of its competitors. 

A retail setup can simulate its model to keep up with the ever-changing trends in the loyalty programs sphere.

If your system is more inclined to the expectations that the current demographics of potential consumers indicate, there’s no doubt that your business ends up shrinking your rivals’ customer base. 

The paid loyalty program is, on the flip side, vulnerable to getting hit with some degree of skepticism by some consumers. Your prospects might get screwed up if you have an unbalanced marketing strategy. 

In other words, you need to incorporate the right attributes that show significant value in the idea or product you want to sell to your target audience. You want to maintain a customer base that doesn't miss out on all their scheduled recurring payments. 

So having a paid program that’s up and running isn’t enough input that’ll make your customers not to look at the other side. After all, a clear-sighted study shows that about 77% of consumers tend to lose interest in a paid loyalty membership way sooner than anticipated. The common reason is that they don’t get to figure out the significance of incentives, a specific program comes with. 

Long story short, retailers need to reinvent their steps and broaden the reward that consumers anticipate when they sign up. The rewards system needs to be generous enough.

Partnership loyalty program

Two minds think alike. Isn’t that what they say? 

A partnership loyalty program is typically a solid option that could help you scale up and incredibly maintain a prevailing customer retention strategy. 

One key objective for integration in a loyalty program is to bring out optimized results, eventually. 

Think of it this way:

You own a brand that’s closely linked to a particular customer base. How else would you optimize future purchases? 

The simple answer is — you need to partner with a few renowned brand ambassadors. This way, it’s far much easier to reach out to your target audience say, via social media platforms. At other times, big brands mutually agree to merge up to give loyalty rewards to their esteemed customers. 

The Apple and Nike partnership is such a brilliant real-life scenario for this case in point. The two joined hands to elevate the consumer experience for runners. The Apple watch series 5, Nike edition is a model that seems to work without fault as far as partnership loyalty programs are concerned. 

Not long ago, Uber and Spotify seemed to correlate so well. A quick takeaway here is that brand owners need to make pace-setting goals that have a practical idea of what needs to be achieved.

The most essential bit of integration is to make customer satisfaction a top-tier priority. With that at hand, it’s so easy to choose the most compatible partners for your loyalty program. 

Develop an omnichannel system for your target audience

If most of the newer customers who sign up for your loyalty program end up opting out by forced marches and without delay, then that’s a pretty huge red flag, unfortunately. The unadorned fact is you don’t need to wait for extremely hard times to make a savvy move. 

But what’s the antidote for such a repulsive outcome? You might be so much bewildered. 

So listen intently…

The quick-fix here would be to upskill the user’s experience. To do that exquisitely, you need to come up with a user-friendly cross-channel platform that’s convenient for customers. To give an illustration, your content marketing strategy needs to be at the top of its game. 

Walgreens, a pharmaceutical establishment with numerous franchises in proximate locations, has a lofty loyalty program that’s close to none. 

walgreens customer loyalty program

Besides the ever generous discounts, the loyalty program allows customers to shop for featured products and prescriptions using their points at any of their outlets. Customers have some possible options to count on.

To earn rewards on Walgreens, you can sign up via an app either on iOS or Android devices or go to any of their physical stores and make inquiries at the checkout counter.  

In preference to the two alternatives above, customers can opt to sign via the official website. 

With over 87 million active members, there’s no hesitation that Walgreens has an elementary multichannel system for their loyal customers to use. Not to mention the accessible perks that customers can scoop anytime they earn substantial ‘Balance rewards points’. Same as other active loyalty programs, Walgreens gives access to coupons and issues cash back on purchases. 

To optimize the customer experience, you need to design a user interface that perhaps keeps everything pretty concise and responsive. As a result, users can make subscriptions efficiently and without any hitches. 

For e-commerce merchants, things are much easier. Online sales channels such as Shopify and WooCommerce sync so well with quite several eminent loyalty and referral program apps

An app like ReferralCandy is precisely built to track down your revenue from referral transactions.

 

Huge companies such as Reebok, Magneto, Volusion, Yahoo trust Candy’s system. 

This suggests that it’s a reliable solution for users who need to boost their brand’s dominance in the market. 

Charge a fee for premium services

I know this will set you thinking — how the heck do I charge for customer engagement? 

Well, the tables need to turn if there are some VIP perks over and above the preset rewards structure. It’s the only way to foot bills incurred while striving to make your brand stand on the right side of the escalator. 

While most VIP oriented loyalty programs charge an annual fee, this allows members to bypass the entry barriers to exclusive offers and overwhelmingly impressive rewards. 

Both Amazon Prime and Netflix promote their services by offering a 30-day free trial package for newbies. Such a funky concept helps online service retailers and merchant account holders to reduce cart abandonment issues by a significant value. 

This model has an insane performance potential for most e-commerce setups, but the veracity is, the perks need to induce repeat purchases from VIP customers. That’s however, not an easy goal to achieve if the merchant doesn’t work with the rightful recurring payment processors. 

Build a captivating gamification model

Everybody wants to win.

Even so, you shouldn't perceive your business’ loyalty program as a money minting channel. Rather, you need to be mindful of your customers’ needs by being generous to a moderate extent.

This is an eye-opening starting point for business owners who want to thicken the number of repeat customers. The bulk part of a loyalty program should evoke interest to the target audience through a lively and amusing game. 

The game itself needs to resonate with the brands’ depiction and entire objectives. The driving factor needs to hold intriguing interest and have conditions that are within reach. 

If not, customers will view it as any other recurring payment that has no real value. In due course, you risk the possibility of getting slapped with tons of canceled memberships.

The domino effect of being a little generous and using a decisive gamification model is no stranger to high-yields and a broader awakening of the brand’s image. 

Measure your Loyalty program’s value

Practically, it’s pretty much worthwhile to measure your program’s success rate. 

If your loyalty scheme doesn’t include a tracking formula, you better do a top to bottom overhaul.

The whole point is to measure how happy, significant and receptive your customers are. You can use analytics tools to assess the matching metrics. A key metric to factor in is the customer retention rate.

Besides calculating your business’s conversion rate, leads generated, cost per acquisition(CPA) and so forth, it’s crucial to track down the retention rate.

This calculates in percentage, the period in which a business keeps a returning customer. To come up with a precise number, you need to fetch these details:

  • The total number of customers at the close of a determined period;
  • Number of loyal customers in the course of the prevailing period, and finally;
  • The total number of customers at the beginning of the same period.

The main objective is to come closer to the number of loyal customers at the end of the period. Therefore, we have to take away the number of new clients(NC). Once you keep the filtering options in check, you can deduct the number of current customers(CC) from that of the closing period(CP); to get X. 

To come up with a percentage, we need to divide this number(X) with the total number of customers at the starting phase and later on multiply the result by 100.

Examples of First-rate Customer Loyalty Programs 

The North Face

the north face customer loyalty

North Face has a well-expressed loyalty program dubbed ‘VIPeak’.

The sign-up process is pretty easy for customers. You can earn points either by making purchases or playing a part in any of the North Face’s events. One impressive attribute about this program is that both the earning and spending rules are easy to understand. 

North Face seems to be so keen not to overwhelm their returning customers with burdensome guidelines.

Let me breakdown the rewards formula:

So, for every $1 you spend at its official site (thenorthface.com) or any of its retail outlets, you get to earn 8 points. The VIPeak rewards system is tiered oriented. In a few words, it has 3 distinct levels;

The Basecamp level allows members to earn a $20 reward when they reach between 2000- 3499 peak points.

Conversely, the Halfdome level(level 2) offers a $25 reward members who hit between 3500-4999 points. Lastly, the high-end package which is the Summit level lets customers scoop a $30 reward. The precondition here is that one needs to earn 5000 or more points.

Starbucks Rewards

starbucks customer loyalty program

Yet another hands-one case study we can’t miss to feature. 

The coffeehouse chain has a leading-edge loyalty program that moves along with customers’ expectations. Customers can pay using a registered gift card or via the Starbucks app. They can also create an account using Starbucks’s online page. 

Still, on the same online site, customers get to submit Star codes and earn points; ‘stars’ in this context.

For each dollar spent, customers earn 2 stars. The app baits repeat customers harder than ever. All the same, Starbucks uses the gamification strategy to offer bonus stars. 

The terms of use are easy to get the drift of. You must know that for you to earn stars, you need to pay using a registered Starbucks card. On that account, customers can, therefore, redeem their earned rewards at any of the participating outlets. 

Kohl’s (yes2you rewards program)

At Kohl’s every single point counts. So let’s leave no stone unturned to get an easy glimpse of how it works….

Kohl’s allows its registered participants to earn 1 point for every dollar spent. The e-commerce retail site honors its promise on the first day of each month. The catch is you need 100 points to earn a $5 reward. 

But that's not all guys!

There's still more to it.

Members get birthday gifts and access to special bonus point events. The latter allows loyal customers to earn rewards way quicker than the bare bone programs that you're familiar with.

To create a shopping account, you can either use the Kohl’s app or sign up using its formal site. You can get the app on both the Apple App Store and Google Play. Seems like Kohl’s loyalty program isn’t running short of a mobile-friendly and responsive environment for its customers. 

Certainly, this goes a long way to elevate a higher spend rate per customer. Most of all, Yes2You program’s level of precision is, by all means, unmatched. A customer gets a Rewards ID number that holds all the requisite information.

Still, on the incentive side, customers get a 15% off on the next purchase once they sign up from their email sales alerts. Kohl’s pushes prompt notifications on massive sales, clearance events, promo codes, and free shipping sales.

Amazon Prime Loyalty Program

This is, in all probability, a winning program that’s taking center stage quite well in the online retail zone. 

With over 100 million members, Amazon Prime still looks glossy even on the surface. We all love great deals. And while we are at it, we often lookout for one that doesn’t squeeze the wallet. 

Well, Amazon tends to be at variance with this factuality. Customers need to fork out about $100 to join the program. Such a figure is technically far off the mark. Despite this foregoing fact, Amazon seems to liege over emotional loyalty, quite outstandingly.

And not counting the tyranny of numbers it has, Amazon doesn’t use any of the most noticeable loyalty structures. In other words, there are no points to joyride. Instead, Prime materially conserves the overall customer behavior by creating irreproachable value in all their products and services.

Amazon Prime offers premium shipping for all purchases, live streaming of movies, and tons of books. 

Even without a rewards system, the program makes same-day deliveries on all orders. In that case, Prime is more likely to beat its competitors consistently, yet in the same vein, keep up the emotional loyalty spirit. 

Final Take

Is a loyalty program right for my business?

Well, it’s seemingly working out for massive revenue-generating setups as seen above. 

So what’s your excuse?

It’s fair to say a loyalty program, principally improves your business’s customer retention gameplan. You can keep your highly valued clients at close range only if you boost your program's efficiency. 

So if you're thinking about launching your brand very soon, this guide could be a101 blueprint that could to help you catch sight of the basic concepts needed. 

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