How to Create an Effective Loyalty Program

The key to building a successful business is not only attracting new customers, but also how to keep existing customers loyal. This is where the importance of implementing a loyalty program comes in .

Because, this loyalty program can bring many benefits such as helping to increase customer retention, encourage repeat purchases, and even bring in new customers through word of mouth recommendations.

Understanding Loyalty Programs

Customer loyalty is a condition where customers continue to return to buy products or use services at a particular business or brand. This usually happens because of the satisfying or enjoyable experience they get.

Our databases are essential for your business if you want to use digital branding to promote your firm to the public. This way, people will be able to identify france phone number library your items and learn more about it. On the website of the French Telecom Regulator, you may also obtain information about phone numbers.

 

Meanwhile, a loyalty program is a program offered by companies to their most frequently purchasing customers, with the aim of encouraging loyalty and long-term business.

Examples could include giving away free items, gifts, coupons, or even early access to released products as a reward for their repeat transactions.

Customer loyalty is very important because satisfied customers tend to help your business grow faster. Because according to a study, loyal customers are 50% more likely to try your new products compared to new customers.

Other statistics from Merkle’s 2024 Loyal Barometer Report show that 77% of consumers participate in up to five customer loyalty programs, and 93% of them claimed or redeemed their rewards within the past six months.

This shows that loyalty programs can encourage customers to make more transactions, because they feel they get more benefits from the program.

Types of Loyalty Programs

So, it’s clear that having a strong customer loyalty strategy can go a long way in helping your business succeed. For reference, here are some types of programs to consider:

1. Points Based Program

The principle of this program is very simple, so it is very commonly used. That is, customers who shop frequently will get points that can be exchanged for prizes such as discount codes, free products, or other special offers.

Because it is points-based, this type is best suited to businesses that encourage short-term, frequent purchases, such as fast food chains or retail stores.

2. Tiered Loyalty Program

The next type of customer loyalty program is the tiered loyalty strategy . In this system, customers will first be given a small gift as a basic offer to join the program.

Then over time, they will be encouraged to make b2c phone list more purchases to move up to higher tiers, with bigger rewards. This type is commonly used by airlines or hotels.

3. Paid Program (VIP)

Next, there are paid loyalty strategies that require customers to pay a one-time fee or annual fee to get various exclusive benefits, such as free shipping or early access to products.

Although it sounds contradictory because the system actually charges loyal customers, this program can actually be very profitable for both businesses and customers. More or less, it works the same way as subscriptions .

4. Value-Based Programs

Value-based loyalty program is a type of customer loyalty strategy that emphasizes non-material values ​​to the target audience. For example, donations denmark mobile phone numbers list or charities that are in line with the brand image .

For example, a company that focuses on sustainability or has an eco-friendly image can offer a reward in the form of a donation to an environmental organization. So, this can create a strong emotional connection with customers.

5. Collaborative Program (Partnership)

Next, there is a collaborative loyalty strategy ( coalition loyalty program ) which involves strategic partnerships between several companies to offer added value to customers, which cannot be provided by one party alone.

For example, a cat food company could partner with a veterinary clinic or pet grooming facility to offer a joint deal that could benefit both parties.

6. Game Based Programs

This system is very unique, because it uses a game-like system to encourage customers to make repeat transactions. However, it is important to ensure that customers do not feel like they are being played or disadvantaged.

Like a game , here the system is competitive to encourage customers to continue to increase their level. For example, by giving a mission to transact a certain amount in order to get an attractive reward .

How to Create an Effective Loyalty Program

The steps to designing a successful customer loyalty program are actually not difficult, as long as you know the secrets. Here are some guidelines you can follow:

1. Create a Catchy Program Name

A catchy name should arouse curiosity and interest, and encourage customers to join. It should be different from other loyalty programs your customers may have already joined.

For example, Sephora’s “Beauty INSIDER” program or Tokopedia’s “TokoPoints” are examples of clever and unique names that can attract customers’ attention.

2. Creating Deeper Meaning

Instead, create a loyalty program that is not just about giving discounts or gifts. In order for customers to feel more engaged, the program must reflect the values ​​and mission of your business. An example is a program in the form of donations.

3. Offering a Variety of Prizes

Discounts/price cuts aren’t the only way to add value to your customers. One idea for a customer loyalty program is to offer a variety of rewards.

This could be free event tickets, vouchers for subscriptions to additional products and services, or even a donation in their name to a specific charity.

4. Make Valuable Points

Next, make sure the points offered have a clear value for customers. Clearly state the monetary value of each point earned. For example, 1 point is equivalent to Rp1000. Also explain what the points can be used for.

5. Give Rewards for Various Actions

Don’t just focus on giving rewards for purchasing actions. You can also give rewards or bonuses for other activities such as watching product videos, interacting on the application, sharing content on social media, and so on.

Successful Loyalty Program Case Studies

To show the effectiveness of loyalty programs for businesses, you can look at the following case study examples:

1. Amazon Prime

One of the most successful examples of a customer loyalty strategy in the e-commerce sector is Amazon Prime from Amazon, which implements a paid type of program.

By paying a certain annual subscription fee, Prime members will get access to several extra benefits such as free two-day shipping, video streaming , music, special offers on Prime Day events , and more.

In addition to increasing Amazon customer retention, this also encourages its members to make more frequent and larger purchases, as they feel the cost is worth the benefits.

2. Starbucks Rewards

In the F&B sector, there is Starbucks Rewards which uses a points-based system. In this program, customers will get one star (point) for every dollar they spend.

Then, customers can redeem those points for free menus. Starbucks also offers additional promotions such as Happy Hours where members can earn up to double points on certain purchases.

With this program, the frequency of customer visits will increase. In addition, they will be motivated to continue making additional purchases so they can get rewards faster .

To retain customers, you can also promote loyalty programs with digital marketing strategies . At Dreambox services, we provide Digital Marketing Campaign services to maximize your business strategy. Contact us now!