Most everyone loves a good loyalty program. The chance to earn points and be rewarded spurs our shopping sprees and guides our food and beverage purchases. The best loyalty programs provide customers with the incentive to make repeat purchases, try new items and increase their average order value.
Loyalty programs have evolved from their humble beginnings in the 18th Century. Coming a long way from when merchants provided copper tokens that customers would tuck away to redeem on later purchases. Today, brands’ customized loyalty programs deliver personalization based on explicit and implicit customer behaviors that drive real-time understanding and digital 1-1 offers.
Somewhere in between though some brands have remained reliant on physical cards. Physical loyalty program cards pose several challenges for customers and brands.
- Customers are required to keep their cards in their wallets at all times. If they forgot them, they could be upset about being unable to earn points or decide to go somewhere else.
- If they lose their cards, customers potentially lose their loyalty points.
- Lost cards need to be replaced, which is a cost the brand must incur.
- Brands only know what is being purchased, they don’t know anything about the identity of who is doing the purchasing.
This renders brands unable to build a relationship with their customers. And at the end of the day, brands need to know and understand their customers.
So what is a customer loyalty program exactly? A loyalty program provides rewards, discounts, special incentives and other benefits to keep customers engaged and to encourage long-term business with a brand.
Types of Loyalty Program Structures
Loyalty programs offer multiple ways to keep customers happy. Most customers appreciate a loyalty program structure that is simple and straightforward, without a lot of complicated rules or regulations. Customers want to easily be able to earn and redeem points.
Prior to launching a program brands need to identify the top goals for their program, such as customer acquisition, increased visit frequency, decreased churn, customer advocacy, etc. As a brand identifies and quantifies the customer behaviors they seek, they should also determine the value they can provide in return.
Outlining these business objectives will help brands discover the best type of loyalty program structure to implement. Many brands initially invest in a spend- or visit-based structure, which incents customer with points for every visit or rewards them for completing a defined number of visits.
Top Loyalty Program Structure Types
- Spend- & Visit- Based: Incent customers with points for every visit, reward them for completing a defined number of visits, or offer bonus points for certain interactions or events
- Spend Unlocks Redeemables: Convert customer visits into points and set-up offers with customizable rewards and membership levels for progressive redemption
- Tiered Membership: Encourage customers to earn more attractive rewards and achieve higher membership levels with each visit
- Surprise & Delight: Delight customers with unexpected rewards for every visit they make through offers and gamification
- Stacked Rewards: Customers earn loyalty points from in-person visits and online actions, which can be stacked and used for various redemption opportunities
Why Brands are Investing in Loyalty Programs
$17.65B expected global loyalty management market by 2028 (Grand View Research, Inc.)
84% of consumers are more apt to stick with a brand that offers a loyalty program (Nielsen)
2/3 of customers say earning rewards actually changes their spending behavior (Bain)
10% increase in customer retention yields a 30% rise in the value of the company (Bain & Company)
Loyalty Program Staff Training
Ensure team members understand the benefits of the loyalty program, including “how to” questions, like signing up or earning. Also, make sure your staff understands how to redeem and apply rewards. Remember if your program appears easy and straightforward for your staff, your customers will be more willing to participate as well. Plus, if you give your employees the right training and opportunity to excel, you can create brand ambassadors, who have the ability to exponentially grow your loyalty program. Giving your staff a little incentive to make that happen is well worth it.
If your brand is running any additional promotions, this is a great tool for team members to highlight as an added perk of the program. Offer an iInitial sign-up reward to be used during the customer’s current visit or a future visit really incent guests to join your loyalty program.
Promote Your Loyalty Program in Multiple Ways
Promote your loyalty program on your website and throughout your business. Place marketing material or a QR code at checkout counters and on table tops to generate interest. If you have an eClub, remember to invite members to upgrade to your loyalty program to earn even better rewards. Increase exposure by promoting your program on social channels or running a referral campaign and reward current members who refer a friend or family member to join the program.
Highlight Components of Your Loyalty Program
Make sure that the benefits of your program are clear for guests to understand from marketing material, from team members and within your app. Snooze, an a.m. Eatery recently launched their app with a feature that allows guests to join the waitlist, and receive loyalty benefits from participating. Read more about the details of their loyalty program.
Important loyalty program components and benefits to callout:
- Emphasize online ordering through your rewards app – brands without an integrated digital ordering experience are losing customers to competitors and third-party vendors.
- Announce the different order modes within your app for curbside pickup, in-store pickup or delivery.
- Highlight the value of points as guests are paying by educating them how much they could earn for today’s visit.
- If celebrating a guest’s birthday, encourage them to sign up for the program to come back and celebrate with you next year!
Deliver the Best Loyalty Program Incentives
Brands need to turn their customer loyalty program data into powerful promotions that incentivize valuable behaviors. Based on your program’s goals, create the best offers that encourage loyalty program acquisition and retention.
- Entice sign-ups by encouraging customers to download your app or register for your loyalty program to receive a free item.
- Grow your acquisitions more cost effectively with a referral campaign that gets your loyal fans to introduce their friends and family to your brand.
- Compress time between customer visits by bringing back a customer who is only coming in on the weekends with an offer that entices them to return during a weekday.
Brands that really want to drive engagement can go beyond just offering a deal, and learn more about subscriptions and other offers types that provide customers with interesting incentives.
How Loyalty Programs Deliver Value
At its very core a loyalty program should increase customer happiness and participation. Customer rewards programs help brands reach their KPIs and business goals: Here’s how they deliver on the customer experience and increase brand loyalty in the following ways:
- Visits, sign-ups, and referrals
- Customer participation and retention rates
- Customer lifetime value
- Same-store sales
- SKU-based loyalty (loyalty to specific products e.g. beverages, dress shoes, business class travel, etc)
Ready to turn more guests into superfans with the best loyalty program for what you and your customers need? Punchh’s loyalty program software gives you the tools and structure to create a rewarding experience for customers across every channel they visit you on. Sign up for a quick demo at a time convenient for you.
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