Have you ever wondered about what leads to a customer’s return to a particular brand or a store repeatedly? Well, it is only the customer loyalty programs that lead to scenarios like these. Such programs are introduced to value, reward, and incentivise loyal customers. This creates a sense of belonging and appreciation in the customers’ minds. Moreover, such perks, discounts and even personalized experiences lead a business to a more robust customer relationship and even encourage them to make repeated purchases.
In this highly competitive market, especially in the retail industry, brands have to keep fighting to gain maximum reach among consumers. Besides different approaches, reward programs or retail loyalty programs are considered the best tools. According to Statista, 7 out of 10 US consumers prefer brands that offer loyalty programs. This is why investing in the best customer loyalty programs is essential for the business.
This article provides insight into defining customer loyalty programs and their benefits, as well as some industry examples that could give you a better idea of how things work.
What is a Customer Loyalty Program?
Customer Loyalty Programs or retail loyalty programs are strategic marketing initiatives undertaken to reward loyal and repeat customers. This marketing strategy mainly works by incentivising loyal customers with discount coupons, BOGO offers, early access to prime sales, and more.
Customer loyalty programs in retail usually collect customer data, including their purchase history and preferences, through a mobile app or even loyalty cards. To make it work, a customer is generally rewarded for every purchase made in the form of loyalty points or any other best customer loyalty programs, which can be redeemed from the next purchase for free products, offers, and discounts.
When customers are entitled to a customer loyalty program, they can attain ample benefits. The dynamic nature of customer loyalty programs in retail encourages customers to visit your store again. In fact, using loyalty programs is one way to bring back your customers and stay in the business for a long period.
There are a few types of loyalty programs that are well-suited for small retailers:
1) Points-Based Rewards:
Suppose you’re searching for an effective loyalty program model. In that case, you must probably go for Points-based rewards, which not only derive repeat business but also enhance the overall revenue for your business. It is one of the most effective and best customer loyalty programs. Moreover, this is one of the most common loyalty programs that businesses often rely upon for their loyalty program needs. Why? Because this customer reward program is not just simple to understand but makes it easier for both businesses and customers to participate in it.
ARI POS, through its loyalty program software, offers simple methods to create customer reward programs, such as point-based or loyalty plans. These programs could boost your retail performance and wider customer reach.
2) Subscription Programs:
Subscription programs help increase customer loyalty and encourage them to repeat purchases. Under this program, retail owners can frequently offer customers discounts over one-time purchases or exclusive items, materials, or services that are not available to non-subscribers. If your small retail business provides consumable products that may be purchased again, subscription programs may be a wonderful customer loyalty program for you.
There are numerous subscription programs available that fit your retail business and target audience.
3) Paid Membership Programs:
Certain brands’ main aim is to offer premium perks to their customers, and a paid membership program can be one of the most beneficial options. How does this work? By charging a membership fee, the company offers exclusive perks to the customers in the form of free shipping, discounts, early access to sales, and passes for special events. Such programs are best suited for those who want to sell high-value services or products to their customers.
4) Referral Programs:
Another effective customer loyalty program for small businesses is the referral program which is usually the word-of-mouth marketing tactics that is another solid tool of marketing used to attract customers. Well, such programs aim to incentivise existing customers to refer their friends or family members to the business. How does this work? In return, both the referring customer and the new customer receive rewards which may be in the form of discounts, free products, and more. This is the most cost-effective way to acquire new customers and grow the customer base of your business.
5) Adding Gift Card:
Gift cards are the best way and one of the important types of loyalty programs. Using the software tool, you can offer gift cards to customers in exchange for items. The gift card carries an expiry date and can be used for further purchases in your retail store.
Benefits of Successful Retail Loyalty Programs
Using the best customer loyalty programs can act as a weapon to keep your customers stuck in your retail business. Customer retention isn’t easy and requires you to invest in loyalty programs. There are many customer loyalty program examples that you can follow, which will further help you know the benefits. These programs come with certain benefits that could help your business. Some of these are-:
1) Increased Customer Retention and Repeat Purchases:
According to one research in 2022, it was found that 55 per cent of consumers from the United Kingdom stated that they would repeat their purchase from the respective clothing and fashion retailers. If a business keeps on offering incentives and value to its loyal customers, there are chances that those customers will feel a bit discouraged to switch to competitors.
To keep them retained, you need to make sure to offer them exclusive perks from time to time. This will create a habit of shopping at your store, making it a go-to choice for varied needs. Furthermore, loyal customers probably make frequent purchases, which leads to a higher customer lifetime value (CLTV).
2) Enhanced Customer Engagement and Satisfaction:
Retail loyalty programs help businesses easily collect customer data so that they can offer tailored offers and recommendations to them. Loyal customers also receive priority customer support, which enhances their sense of belonging and exclusivity. When you reward your customers, you not only create an emotional bond with them but a bond that goes far beyond the transactional relationship.
3) Boosted Brand Loyalty and Word-of-Mouth Referrals:
When your customers are fully satisfied, they tend to promote your brand through word of mouth to their friends and other relationships. Customer loyalty programs for small businesses have proved to be highly beneficial. Not just this, they even spread positive reviews about your brand on various social media platforms, which would help your brand acquire new customers.
4) Valuable Customer Data for Personalized Marketing:
When you have access to customer data, it helps you identify ongoing trends. The trends may be on how to improve the brand’s marketing tactics and optimize the product offerings. However, segmenting the customer base would help deliver highly targeted marketing messages that resonate with specific groups. Furthermore, advanced analytics would also help you anticipate customer behaviour and needs, enabling you to actively come up with an offer that’s relevant to your promotions.
5) Higher Average Order Value and Monthly Sales:
With Loyalty Programs, customers are posed to purchase additional products or higher value products. When a brand runs exclusive offers and limited-time promotional sales, this drives impulsive buying. When you offer deals and discounts on bulk ordering or larger products, the chances of an increase in average order value increase.
8 Customer Loyalty Program Examples in Retail
We now take you through customer loyalty program examples giving you insight into how these reward programs work and are successful.
1) Starbucks Rewards:
Starbucks Rewards is one of the best customer loyalty programs examples. It rewards its loyal customers who make frequent purchases with loyalty rewards. Customers can redeem the loyalty rewards via the Starbucks reward card or even through their mobile app. Customers earn “Stars” with every purchase, and hence, the rewards can be redeemed on any of their purchases. These may include free beverages, food items, and even exclusive merchandise.
Performance
According to the analytics, the Starbucks reward program has been an immense success throughout the years, with approximately 30 million active users globally. Moreover, this loyalty program has contributed immensely to Starbucks’s overall revenue, as it encourages customers to make repeated purchases and even increases their overall average order value.
2) Sephora Beauty Insider:
Sephora’s Beauty Insider program has been a tiered program that is mainly designed to reward beauty enthusiasts. Moreover, this loyalty program has three main tiers, including Beauty Insider, VIB, and VIB Rouge. There are certain perks offered under each tier, including birthday gifts, freebies or free samples, and early access to new products. Not just this, loyal customers even get personal recommendations along with exclusive offers based on their purchase history.
Performance
According to the analysis, Sephora’s Beauty Insider program has been successful. It increases customer retention, which in turn generates more sales. This program has contributed to a 15% increase in customer retention and sales.
3) Amazon Prime:
Amazon Prime is a paid membership for which users can pay and avail of all the benefits. They’ve kept Amazon Prime as a paid service because of the immense benefits. When you enroll for their membership, you get faster and free shipping, which even includes a free two-day membership for their prime members.
Subscribed users are even entitled to faster delivery options like one-day or same-day delivery. Furthermore, the paid membership even includes streaming services. Prime Video has a vast library of TV and movie series, including exclusive and original series content. Prime Video even includes ad-free music streaming.
Performance
Amazon Prime has been immensely successful, with over 200 million members globally. This loyalty program not only increased customer retention but also helped drive huge sales, leading to boosted growth for Amazon.
4) Walmart+:
Walmart+ is a paid membership program that has ample benefits for customers. When a customer enrols for its paid membership, members can enjoy free delivery on groceries and even other items. What’s the best part? There would be no minimum order value that the customer has to maintain. Moreover, there are ample discount coupons that the subscriber member would be receiving. These coupons are fully redeemable at Walmart and Murphy USA gas stations.
Performance
Walmart+ is among the best rewards program that has boosted customer loyalty and even increased the company’s revenue through subscriptions. Moreover, the program has attracted millions of members, particularly those who shop frequently at Walmart.
5) H&M Member Program:
Surprisingly, H&M doesn’t charge for its loyalty program. It only rewards its customers who purchase. Moreover, when a customer enrols in the loyalty program, they are entitled to earn points on every purchase made. These points are redeemable for vouchers, discounts, and even exclusive access to new collections.
Performance
As per the analysis, the H&M program has been successful. It helped the brand track customers’ purchase behaviour and points and even make personalized offers for them. With the help of such insights, the brand doesn’t just optimize the loyalty program but gains customer loyalty.
6) Nike Membership Program:
Under Nike’s rewards program, customers can enjoy a range of benefits. These can include exclusive access to new products, limited-edition releases, and more for subscribed members. Moreover, Nike’s membership program also integrates perfectly with its fitness apps, like Nike Run Club and Nike Training Club, and offers access to various exclusive challenges, workouts, and more.
Performance
Nike’s loyalty program has been instrumental in increasing customer retention and brand engagement. These exclusive benefits enhance customers’ digital experience and keep them engaged in shopping online. This strengthens the user’s relationship with the brand, ultimately generating sales.
7) Ikea Family:
Ikea Family runs a free membership program that offers ample benefits to its members. This can be in the form of discounts on selected products and many more perks. Furthermore, the Ikea family even runs a free workshop for all of its members throughout the year which may be on varied topics like sustainability, cooking and even interior designing. Furthermore, there are exclusive promotions and offers that keep on running for the subscribed members on Ikea that turn out to be fruitful for both the customers as well as the brand.
Performance
The Ikea family has been successful with its loyalty program, which has led them to boost online engagement and increase footfall in the customer segment. Moreover, as more benefits are rolled out to loyal customers, there is a chance that they will be able to generate huge sales.
8) Dunkin DD Perks:
Well, another popular rewards program is run by Dunkin DD Perks. They run this program for members in which they earn points on every purchase made. These points can be redeemed to buy a free beverage. Programs like these do not just encourage customers to make frequent purchases but also visit to grab their morning and evening coffee.
Performance
Dunkin DD’s loyalty program has been instrumental. It has helped the brand increase its revenue growth and customer buying frequency.
Conclusion- How Customer Loyalty Programs Can Level up Your Monthly Sales
Well-designed and greatly executed best customer loyalty programs not only enhance the brand’s monthly revenue but also impact the business metrics a lot. Not just this, when a customer is entitled to an exclusive perk by the brand’s side, it not only encourages them to make repeat purchases but also fosters a base for loyalty between the customers and the brand.
Using loyalty program software can further assist in creating strategies and handling the program for good returns and customer retention. In the end, a customer loyalty program is a powerful tool for not only achieving business success but also nurturing customer-brand relationships.