5 Best Practices To Optimize Loyalty Programs For Retailers

More than 90% of businesses have some form of client loyalty program. Loyalty programs have shown to be one of the most successful strategies for growing income and instilling consumer loyalty. As many as 84% of consumers believe they are more likely to remain with a brand that provides a loyalty program.

Customer loyalty programs, although beneficial, are nothing new. The majority are divided into four categories: points, levels, social media, and sponsored programs. As a result, some merchants are attempting to mix things up and discover new and imaginative methods to develop rewards programs and encourage consumer loyalty.

So, let us show you how to maximize your loyalty programs for your customers!

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1. How the loyalty programs work

Customer loyalty programs reward customers who connect with a brand on a regular basis. It’s a customer retention strategy that encourages customers to keep buying from your company rather than rivals. The more a person purchases or interacts with the company, the more benefits they receive.

Customers might be given points or incentives by businesses. In exchange, users may use their points to get discounts, free items, awards, or insider access. The objective is to encourage repeat purchases and to foster trust between the client and the business.

Customer loyalty programs are tools for changing the behavior of certain customers. However, depending on their business strategy and competitive position, the behaviors that companies demand from their customers might be extremely diverse. If you are currently unable to identify your clients across channels, shops, or business divisions, a loyalty program can assist you. Alternatively, if you can keep track of your clients individually but have little opportunities to communicate with them, a loyalty program might give you more.

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2. Appealing benefits of the loyalty programs

Running a customer loyalty program necessitates the distribution of something. Discounts, deals, early access, and so forth. However, the advantages of implementing a rewards program are enormous:

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  • More customer recommendations: People may inform their friends and family about your excellent loyalty rewards program. More customers means more referrals.
  • Increased customer retention: People that see value in your program are more likely to continue around for a longer period of time.
  • Increased sales: Do you want to increase the average order value? According to recent loyalty data, 49 percent of consumers say they have spent more money since joining a reward program.
  • Brand evangelism: A well-executed loyalty program may convert repeat consumers into brand supporters. This group assists your firm in reaching out to new clients by word of mouth, which is a low-cost marketing method compared to sponsored advertisements.

However, not all loyalty programs are the same. There are several sorts of incentives programs that may be used to increase client loyalty and repeat sales.

3. Up-to-date types of rewards programs in 2022

Now that you understand how rewards programs function and their benefits, let’s have a look at a few typical varieties that you may use in your ecommerce store:

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  • Loyalty programs based on points: The most frequent sort of incentive scheme is a point system. Customers may earn points that can be used for freebies, rebates, and other benefits. Customers do not just accumulate points through purchases. They may also earn points for sharing on social media, posting reviews, celebrating a birthday, or engaging in gamification.
  • Paid loyalty programs: Also known as fee-based loyalty programs, provide clients with instant and continuing advantages in exchange for a participation fee. These charges might be either ongoing or one-time. Paid programs may need proof-of-worth to acquire signups, but members can provide greater customer value to the firm.
  • Value loyalty programs: A value-based loyalty program seeks to interact with customers on a more personal basis. It entails contributing a portion of your purchases to charity or humanitarian groups. You may have many alternatives for different charities to pick from, or you can have one that truly resonates with the beliefs of your consumers. Customers are not rewarded through this scheme. However, it has a particular place in their hearts since the benefits are used to help society. Using this strategy, brands frequently develop a hybrid loyalty program.
  • Tiered loyalty programs: Tiered loyalty programs are a sort of membership in which clients receive varying advantages based on their rank. Businesses frequently assign membership to groups based on indicators such as sales or engagement. Customers are given a goal by participating in these reward schemes. The higher their rank, the more exclusive and superior the benefits.
4. Examples of the best customer loyalty programs

Here are our top 5 recommendations for the most inventive customer loyalty programs, as well as what you can learn from each of them. This will provide you with some ideas for client loyalty programs that you can use right away.

4.1 Sephora Beauty Insider

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Source: Sephora Beauty Insider

The Beauty Insider rewards program at Sephora is quite popular. It has over 25 million committed members, and members account for up to 80% of Sephora’s yearly revenue. Customers get rewards based on their purchases using a typical point system. Members may pick how to spend their reward points, which is an interesting feature.

Price is one of the most significant impediments for a substantial portion of Sephora customers—Sephora items aren’t inexpensive. Beauty Insider members may use their reward points to get items like gift cards and discounts, which helps to balance the cost of purchases without depreciating the products. Loyalty members may also use their points to get additional exclusive items, such as limited edition cosmetics or in-store beauty seminars.

4.2 Amazon Prime

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Amazon Prime is a well-known membership program. Prime members receive unlimited free two-day delivery on millions of goods, as well as other benefits such as Amazon’s streaming service and Prime Day deals, for a set yearly subscription.

Amazon faces stiff competition from other stores such as Walmart. The majority of the items on Amazon may also be found elsewhere. Prime is how it distinguishes itself and persuades people to buy things solely from Amazon. And it works: Prime members spend four times as much as ordinary Amazon shoppers.

The loyalty program may become a differentiation and competitive advantage for merchants in comparable sectors when items and pricing points are relatively similar across rivals.

4.3 Uber Rewards

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Source: Ubers

Uber rewards its clients with a choice of alternatives meticulously intended to suit each individual’s distinct demands, ranging from UberX to UberLUX and UberBLACK to UberSUV. Uber Rewards is an important component of Uber’s marketing strategy.

This customer loyalty program allows Uber customers to earn points that can be used for a variety of prizes, including meals and miles. It’s a program that has been meticulously developed to provide Uber customers more time, flexibility, and control.

Some of the benefits that Uber provides, for example, include flexible cancellations, price protection, priority pickups and assistance, and so on.

4.4 The Body Shop’s Love Your Body Club

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Source: The Body Shop

The Body Shop, known for its dedication to corporate social responsibility, is a business that approaches its reward program in a unique manner.

Despite the fact that it operates on a shop-more-to-earn-more model, Love Your Body Club functions more like a community than a point program.

The Body Shop’s reward program begins with a mission statement emphasizing diversity, which is unusual among e-commerce firms. The program is about The Body Shop’s “all-important community” as well as earning incentives. You are rewarded for every dollar you spend in the business, you are invited to membership activities such as parties, and you are given a wonderful $10 voucher on your birthday.

The best part is that The Body Shop lets you use your points for discounts and donations to a charity of your choosing. Purchasing the company’s products with the intention of changing the world is a bold statement. It can, however, help you feel better about spending money in the store if you are doing good at the same time.

4.5 NikePlus

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Source: Nike

NikePlus, the company’s long-standing customer loyalty program, is available through a variety of mobile applications and websites. NikePlus has grown to over 100 million members since its inception, and the firm expects this figure to increase in the next five years. This phenomenal increase demonstrates that loyalty programs, when combined with the correct strategy and technologies, can benefit companies.

With an emphasis on customization and exclusivity, the NikePlus reward program goes beyond discounts and free delivery. NikePlus Unlocks, a feature inside the Nike App, provides users with access to unique discounts, members-only events, music playlists, and other benefits. The app focuses on recommending information and goods that are tailored to the user, and this strategy is carried over to the company’s other applications as well. Users may log their workouts and progress using the Nike Run Club App or Nike Training Club App, and Nike leverages this customer data to give more relevant product and service suggestions.

Nike’s loyalty program likewise combines technology and real location. The NikePlus app uses geo-fencing technology to give users with deals and other notifications when they are near actual shop locations. Nike claims that this method has a forty-fold higher conversion rate than targeted communications.

5. Tips to optimize the loyalty programs

Brands must assess if offering discounts to customers is sufficient, or whether there are other techniques that contribute to client loyalty. With this in mind, which loyalty programs are genuinely effective?

Here are some pointers to help you link your loyalty program strategy with your business plan:

5 Best Practices To Optimize Loyalty Programs For Retailers

  • Data that can help you better understand your present consumer base: Understanding your client is always essential to any plan. Never pass up a chance to learn more about a customer since it may substantially improve the experience and happiness you have with our brand. One of the methods used by the most mature and best-practice loyalty programs is to provide a choice of services or treatments as a reward, and this decision reveals something about a client.
  • Customer service may be improved by the use of omni channels: It is an excellent practice to arrange the loyalty program using modules, since this allows users to mix and match components based on their own preferences. Modular incentives are a practical technique to enable customer-facing personalisation without resorting to total (and costly) personalization. Organizations can devise multiple alternatives to program foundations, such as member qualification, and provide clients with a menu of guided options from which to pick.
  • Improving the Customer Experience through simplicity: A loyalty program with fewer rules and constraints is more appealing and trustworthy to the customer. It is preferable to limit your reward offerings to those that can be reliably delivered rather than including products that cannot be trusted merely because they are unavailable.
  • To swiftly reward loyal consumers, use relationship management: All loyalty programs should be administered based on the connections with program participants, rather than the items supplied, channels used, or geographies covered. Organize a loyalty program’s marketing efforts such that the consumers whose habits we wish to modify are served by personnel whose yearly evaluations are dependent on increasing numbers for those customers. This will not only be a true success insurer with a loyalty program, but it will also send a clear signal that improvement in every consumer category is required.

By being open, modular, and transparent, and by delivering rewards that not only attract individual consumers but also inspire them to act, a good loyalty program strategy provides vital insights and helps establish customer connections. When the best practices for loyalty programs are used, your loyalty program marketing plan may improve the customer experience, boost retention, and ultimately deliver actual business outcomes.

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With Kyanon Digital‘s support, we will assist you in providing the best platform for your loyalty programs in order to identify new and inventive ways to establish rewards programs and increase customer loyalty.

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