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A well-designed loyalty program can have a big impact on your brand.
From enhancing customer engagement and retention to maximizing sales and revenue, loyalty programs are a valuable investment. But creating a strong program that brings results can be easier said than done.
Read on to discover everything you need to know about loyalty programs and why they’re important. You’ll also find 13 innovative examples to inspire your next steps.
What is a Loyalty Program?
Loyalty programs offer rewards, incentives, or special benefits for customers who regularly make purchases. These initiatives increase customer retention and make existing customers more valuable.
Loyalty programs are increasingly popular because, well, they work!
They are mutually beneficial to you and your customer. While you get their repeat purchases, they get a free coffee or ten dollars off their next purchase.
Why Loyalty Programs are Important for Brands
A well-designed loyalty program can be a game-changer for your retail brand, driving customer retention, increasing revenue, and setting you apart from the competition. Loyalty programs offer many key benefits, including:
- Increased customer retention: Loyalty programs incentivize repeat purchases, ensuring that customers return to the brand more frequently. This not only boosts sales but also strengthens the bond between the brand and its customers.
- Higher customer lifetime value: By encouraging repeated interactions and purchases, loyalty programs increase the total amount a customer is likely to spend with the brand over their lifetime, maximizing profitability from each customer.
- The ability to drive valuable customer actions: Through rewards and incentives, loyalty programs can motivate customers to take specific actions, such as writing reviews, referring friends, or making frequent purchases, all of which benefit the brand.
- Personalized customer experiences: Loyalty programs often gather data on customer preferences and purchasing habits, allowing brands to tailor offers and communications to individual customers, enhancing their overall shopping experience.
- Enhanced brand loyalty: By offering exclusive rewards and benefits, loyalty programs make customers feel valued, fostering a deeper emotional connection to the brand and increasing the likelihood of them choosing the brand over competitors.
- Competitive advantage: In a saturated market, having a robust loyalty program can set a brand apart, making it more appealing to customers and giving it an edge over competitors.
- Brand advocacy: Satisfied members of loyalty programs are more likely to recommend the brand to friends and family, turning them into brand ambassadors and expanding the brand's reach organically.
- Data collection & insights: Loyalty programs provide a platform for collecting valuable customer data, which can be analyzed to gain insights into customer behavior, preferences, and trends, helping brands make informed business decisions.
Different Types of Loyalty Programs
Now you’ve decided you need a loyalty program, you need to decide on what type will work best for your brand. Here are a few types of loyalty programs and why brands use them:
- Points-based: This type of loyalty program allows customers to earn points for every purchase or specific actions they take. Once they accumulate a certain number of points, they can redeem them for rewards or discounts. Brands use this system as it encourages repeat purchases and engages customers by giving them a tangible goal to reach.
- Tier-based: Tier-based programs categorize members into different levels or tiers based on their purchase history or engagement. As customers move up the tiers, they receive better rewards or exclusive benefits. This system motivates customers to spend more to reach higher tiers and enjoy premium benefits, fostering long-term loyalty.
- Paid membership: In a paid membership loyalty program, customers pay an upfront fee to become a member and in return, they receive exclusive benefits, discounts, or access to premium services. Brands use this model to generate immediate revenue and offer exclusive perks to their most loyal and invested customers.
- Stamp cards: Stamp card programs are a traditional form of loyalty scheme where customers receive a stamp for every purchase. Once the card is filled with stamps, the customer can redeem it for a free product or a discount. Brands use stamp cards as they are simple to implement and offer a tangible way for customers to track their progress towards a reward.
What Makes a Good Loyalty Program?
Not all loyalty programs are created equal, which is why it pays to design yours carefully. Pay attention to the following loyalty program best practices:
- Designs fully integrated with brand: Your brand consistency is important and your loyalty program should be an extension of that brand. This reinforces your brand’s values, personality and positioning to create a cohesive experience.
- Mobile friendly and omnichannel: Loyalty programs must provide a seamless mobile experience. They should also be accessible across all channels, whether the customer shops in-store, online, or on your mobile app, for example.
- Deep integration with other marketing tools: It is essential to maximize your program’s effectiveness to achieve a higher return on investment (ROI). Integrating your program with your marketing tools allows for data synchronization which in turn helps you improve the personalization and targeting of your marketing campaigns.
- Valuable & compelling rewards: Rewards, points, discounts, or perks shouldn’t be too difficult to obtain. Customers will be more compelled to spend if the reward is within arms reach.
- Transparency and communication: The rules of the program, as well as any changes, should be communicated to your customer promptly and clearly.
- Personalization: The more personalized your loyalty program, the more your customers will engage with it. You could offer a personalized member dashboard that shows your customers’ activity, points balance, and available awards. Friendbuy’s loyalty program software, for example, provides easy-to-use templates so you can get live fast while maintaining brand consistency.
13 Successful Loyalty Program Examples
So what does all of this look like in action? Here are 13 real-world examples from brands who are running robust loyalty programs. Let’s start with a few brands that use Friendbuy’s loyalty software to run their programs.
OLLY Smile Miles
Vitamin and supplement brand, Olly, turned to Friendbuy to better communicate their customers’ progression within the loyalty program.
Customers earn points by spending money, interacting with the brand, and even on their birthday. When a customer earns 100 points, they get $5 off their next purchase.
“We had literally no way to personalize any communications, or to even indicate to a customer that they were on a loyalty journey. One of the things that was so cool about Friendbuy was seeing all the communications capabilities, and the best practices and learnings from other brands that are in the same space.” — Jennifer Peters, Senior DTC Manager, OLLY
Saalt Period Perks
Sustainable health and beauty brand, Saalt, uses Friendbuy to tailor their reward strategies to customer behavior. Customers earn 100 points for just signing up to their loyalty program, Period Perks. They can then redeem the points on purchases over $40.
“Seeing that 41% of members who have earned a loyalty reward then come back and make a purchase was a wonderful surprise - that's definitely higher than what we see looking at just repeat rate for our customers.” - Ian Mahanes, Technology Partner Manager, Klaviyo
Annmarie Skin Care’s Wild & Beautiful Collective
The "Wild & Beautiful Collective" is a loyalty program by Annmarie Skin Care. By creating a customer account, individuals automatically become a part of this community and start earning points for their purchases and other specified actions. For every dollar spent, members earn one point. Benefits of the program vary based on membership tiers.
The basic tier offers redeemable rewards and exclusive discounts, while the "Collective Insider" tier, which is attained by subscribing to a product(s), provides additional perks such as educational resources, exclusive discounts, early access to new products, and more.
Insiders also enjoy special events like double or triple points days and receive surprise gifts as part of their membership.
MZ Wallace Rewards
The MZ Wallace loyalty rewards program is designed to offer its members a range of benefits based on their spending. By creating an account and ensuring they are logged in during checkout, members can earn points on their purchases.
Specifically, for every $1 spent, a member earns 1 point. These points can then be redeemed, with every 10 points equating to $1 off.
The program also categorizes members into different tiers based on their spending: Silver (for spending $0 - $199), Gold (for spending $200-$1199), and Platinum (for spending $1,200+). Additional perks of the program include early access to product launches, surprise double points days, VIP events, free shipping and returns, birthday surprises, and exclusive gifts.
REI Co-op Member Reward
REI Co-op, an outdoor adventure gear and clothing brand, operates a paid membership loyalty program. Customers pay a $30 one off fee to enjoy membership for life and get up to 10% back annually on eligible purchases.
Best Western Rewards
Best Western Hotels and Resorts’ loyalty program allows customers to collect points when they stay at their properties. Guests can then use these points to redeem free nights, exclusive member rates, and other rewards and incentives like early check-in and late check-out.
Kohl’s Rewards
American department store retail chain, Kohl's, allows customers to earn rewards on every purchase with their loyalty program. For every $1 spent at Kohl's, members earn 5 points. Additionally, Kohl's frequently offers special promotions and bonus points events, allowing customers to earn even more rewards on certain purchases.
Barnes & Noble Rewards and Premium Membership
Bookseller Barnes & Noble has two reward tiers, Rewards, and Premium. Both programs offer one stamp for every ten dollars spent. When ten stamps are collected, customers can redeem a five dollar reward.
The Premium Membership costs $39.99 a year and includes perks like 10% off selected items, free shipping, and many more.
Customers can track their stamps and rewards electronically through the B&N app.
Cinemark Movie Rewards
Movie theater chain, Cinemark, offers a tiered loyalty program called Cinemark Movie Rewards. Customers earn points for every purchase made at Cinemark theaters, including tickets, concessions, and more.
Loyalty tiers include “Movie Fan”, “Movie Club”, and “Movie Club Premiere”. Rewards and benefits include special offers, promotions, advanced screenings, and priority booking.
Dick’s Sporting Goods
Dick’s Sporting Goods offers another tiered loyalty program called ScoreCard Rewards. Members earn points for every qualifying purchase made in-store or online. Tiers include “ScoreCard”, “ScoreCardSilver”, and “ScoreCard Visa”.
The program occasionally hosts special events and member-only experiences, offering a unique way for members to engage with the brand.
Office Depot OfficeMax Rewards
Office Depot’s OfficeMax Rewards allows customers to earn rewards on purchases made in-store, online, or via phone. They offer two tiers: “Basic” and “VIP”.
Office Depot has been known to offer recycling rewards, allowing members to earn bonus rewards for recycling used ink and toner cartridges.
GameStop Pro
For $25 per year, GameStop customers can sign up to GameStop Pro, their loyalty program that promises $70 in annual value. Members earn points with every purchase and receive perks such as a $10 welcome reward, exclusive deals, magazine access, and more.
Petco
Petco offers a tiered loyalty program based on your pet type. Tiers include the free version, “Vital Care Core” and “Vital Care Premier” for $19.99 per month.
Both tiers offer member-only pricing and offers, personalized care notifications, and Vital Care points back on every purchase, every 8th groom free, and every 10th bag of nutrition free.
Summary
Loyalty programs are one of the best ways for brands to drive business growth. The best programs are mutually beneficial and help you understand your buyers the more they shop with you.
However, the strength of your loyalty program depends on how well it’s designed. What data and insights does it collect? How integrated is it with the rest of your marketing technology? And are the rewards compelling enough?
Keep your customers coming back with Friendbuy’s Loyalty Platform
