Creating a Loyalty Program That Keeps Your Customers Coming Back!

Loyalty programs are everywhere. I’m willing to bet you have several loyalty cards in your wallet. You may even have loyalty memberships you’ve forgotten about. Customers love them – and with good reason.

A well-thought-out loyalty program provides benefits to customers that can range from reduced prices for products to giveaways to exclusive access to special events and offers. For businesses, they help with customer retention by incentivizing loyalty.

The trick, of course, is creating a loyalty program that does both. There are lots of different options, including referral programs.

So, with that in mind, let’s talk about loyalty programs. Should you create one? What benefits and features are best for your customers and you? Here’s what you need to know.

The Benefits of a Loyalty Program

Let’s start by talking about the benefits you’ll reap if you start a loyalty program that appeals to your customers. There are several that make loyalty programs a must for marketers and business owners.

• They can help you retain customers. One study found that a 5% increase in customer retention led to an average 25% increase in profits.
• 60% of loyal customers say they buy more frequently and make more purchases from the brands they love.
• Surprisingly, loyalty programs don’t cost companies as much as you might think. It costs far more to acquire a new customer than to keep an existing one. When you offset the cost of a loyalty program against the cost to attract new customers, it’s still a far less expensive option.
• Customers who participate in loyalty programs feel valued and that triggers a cognitive bias known as Reciprocity. That’s the instinct that makes us feel that we should return a favor when someone does something for us.
• Research shows that loyalty programs increase sales. According to one study, members of loyalty programs generated between 12% and 18% more revenue for businesses than non-members.
• Loyalty programs can help you learn about your customers. It may take a bit of trial and error but creating a loyalty program allows you to collect valuable data about your customers and their buying habits. You can use what you learn to fine-tune your loyalty program and to create offers that will appeal to your most loyal customers.

Loyalty programs offer benefits to you as a business owner while also giving your most loyal customers a reason to return to your business, increase their purchasing, and recommend your business to their friends and social media followers.

Features of a Successful Loyalty Program

What features should your loyalty program have? There’s no one correct answer, but there are some things that most successful loyalty programs offer. Here are the ones that you should seriously think about working into your program:

• A structure that incentivizes customers to purchase frequently and spend more money than they normally would. A good example is the beauty supply store ULTA. Loyalty members earn one point for each dollar they spend and may redeem points for over 20,000 products. There are platinum and diamond levels with additional incentives.
• Early access to special offers and products. A lot of loyalty programs offer members insider status where they get first access to new offers and a heads-up on the release of new products. It’s a good way to make your loyalty program members feel valued and special.
• Ease of use. Providing a frictionless experience is a must if you want members to participate in your program. It shouldn’t be difficult to join, and you should make it simple to accrue rewards and use them.
• Personalization. It’s a great idea to create a mailing list for your loyalty members and personalize what you send to them.
• Freebies. Customers must accumulate points to earn rewards, but there’s nothing wrong with offering them something just for joining your program. A key example here is Sephora, which offers a free birthday gift to members every year. It’s a nice reminder that they care about their customers – and who doesn’t like a birthday present?
• Brand relevance. Finally, your program should be relevant to your brand and deliver what your customers want.

“The key here is to think about your business, brand values, and customers and create a loyalty program that delivers on your customers’ expectations while helping your bottom line.”