This article is part of a larger series on Retail Management.
Customers have no shortage of options when shopping in-store and online, and keeping customers loyal to your store is no easy task. Customer loyalty programs that incentivize engagement and loyalty with your business are important to your bottom line.
You can implement your customer loyalty program manually; however, we recommend using customer loyalty software to ensure that your program can scale, stay organized, and innovate with new features to rival loyalty programs of national brands.
Here are 11 proven customer loyalty program ideas:
1. Know Your Customers
Before you set out to create your customer loyalty program, it is important to understand your target market and the strategies that will speak to them. For example, the demographic that shops at a baby boutique would probably love to get a free bottle with a $75 purchase, but this same rewards structure would not be an effective way to create loyalty among the market that shops at outdoors stores.
The effectiveness of your loyalty program matters. Consumers who participate in high-performing loyalty programs (programs that have positively changed respondents’ behaviors and overall satisfaction) are 80% more likely to choose the brand over competitors and twice as likely to recommend the brand to their friends.
Consider your specific audience and brand as you are crafting your customer loyalty program. Whenever you brainstorm ideas or devise new strategies, ask yourself whether your idea is something that customers will like. Will it make them want to come back? Is there anything I can do to make my idea more on-brand?
Another thing you can do to test new ideas and weed through strategies that do and don’t work is to use reporting tools within a customer loyalty software, like TapMango. Use A/B testing and real-time reports and monitor how your loyalty program is performing over time so that you can make adjustments and create the most effective program for your business.
In Action: Kaldi’s Coffee
Kaldi’s is a local coffee shop franchise based in St. Louis. Located in neighborhoods around college campuses and in walking neighborhoods, Kaldi’s knew that its target market was the neighborhood regular. This shopper makes frequent small purchases and is either on the go or taking over a cafe table to camp out for the afternoon.
In efforts to speak to this customer, Kaldi’s created a punch card style loyalty program that rewarded regular customers with a free coffee after 10 purchases. Additionally, when they filled out three punch cards, they got a Kaldi’s mug that they could bring with them for their daily cup. Not only this, but employees would make efforts to know loyalty cup holders’ names and know their regular orders.
This program was highly successful, fostering regular visits and brand loyalty hedged in a sense of community.
2. Keep Your Program on Brand
Building on the concept above, you should also ensure that your loyalty program is consistent with your brand to create a cohesive experience for your customers. This is not just for appearances; presenting your brand uniformly across all platforms can increase revenue by up to 23%. Additionally, good branding in your loyalty program will help reinforce your business in customers’ minds and make it more recognizable in the future.
Did you know?
It takes around seven interactions with a brand for people to purchase.
When branding your customer loyalty program, you want to be sure that the verbiage you use is in your brand voice, the images reflect your brand image, and any strategies you choose make sense with your overall branding scheme.
In Action: WeWoreWhat
WeWoreWhat is a growing clothing brand with a huge emphasis on branding in its customer loyalty program. Its brand is a fashion-forward city girl, who is always on the go and forever stylish. Some may call her “the girl boss.”
WeWoreWhat refers to all its members as “babe,” uses sassy messaging, and offers a loyalty structure that rewards large, infrequent purchases. This all makes sense for the WeWoreWhat brand. The tone of the program is in line with its city girl aesthetic, and the rewards structure helps foster big sales for its infrequent drops.
3. Go Paperless
Our world is becoming increasingly digital, and people’s preferences are changing right along with it. More so than ever, customers do not want a physical loyalty card that they have to carry around with them. Rather, the modern shopper demands a completely digital experience, and physical aspects tend to be frustrating or a complete turn-off.
Did you know?
63% of consumers would increase the amount of coupons used while shopping if the offers were available online.
If you are using a loyalty program software, creating a digital loyalty program is easy, as most software track customer points and rewards and allow you to access purchase histories and more. Additionally, most software options have an integrated customer portal via an app or website that lets customers access their loyalty member accounts and check their status online.
Try to cut out paper wherever you can, and use digital options whenever possible. You can also send text or email announcements rather than handing out flyers, have a digital points tracking system in place rather than physical punch cards, and give out digital coupons rather than supplying physical ones. Whatever you can do to make your customers’ lives easier will help you attract people to your loyalty program and grow your base.
In Action: Safeway
A great example of this is Safeway’s digital loyalty program. Unlike traditional grocers, Safeway does not use any physical cards; rather, an employee signs you up on their computer. Then, each time you checkout, you provide your phone number. This pulls your account up and gives you access to your rewards.
In this program, customers do not have to worry about keeping track of anything or filling any paperwork out. Rather, joining Safeway’s loyalty program is painless, and continuing to get access to deals and rewards requires no effort.
4. Give First-Time Purchase Discounts to Attract New Members
80% of customers say they feel encouraged to make a first-time purchase with a new store if it offers a discount or special. So, give new shoppers a first-time purchase offer to help them get over the hesitation that comes with trying a new retailer and incentivize a sale.
You can also offer a discount for joining your loyalty program to incentivize new people to join. At my boutique, for example, we offered new VIP members $10 off their first VIP purchase. This was a huge factor in getting people interested in joining our program and helped turn one-time shoppers into loyal customers.
First-time offers are a very important part of acquiring new customers, especially for ecommerce stores. Shoppers cannot touch or experience online products, and it is hard for them to know what to expect from an unknown retailer. This generates more buying hesitation and a greater need to create incentives for people to take the plunge and try your shop.
In Action: Pampelone
Pampelone is an online women’s clothing boutique that sells high-end women’s dresses and knits. With its pieces running a high ticket and there being no way for people to experience them firsthand, Pampelone works to overcome first-time purchase hesitation with a $30 discount for new shoppers.
This is a smart move. The discount’s generosity is on par with the price point and effectively boosts first-time purchases and builds a strong customer base.
5. Reward Referrals to Build Your Customer Base
Another strategy that you can use in your customer loyalty program is a referral program. This is a word-of-mouth (WOM) marketing strategy where you offer rewards to current shoppers when they refer their friends to your store. This strategy not only helps boost your overall traffic; referred customers are 18% more loyal and have a 16% higher lifetime value and a 13.2% higher spending rate than non-referred shoppers.
One way you can introduce a referral program is through custom links that are tied to customer accounts. Customers can copy the custom link on their account and share it with friends, then you can track and reward that customer based on the actions that happen on that link. You can acquire custom links either from a referral service or through customer loyalty software.
Alternatively, you can give customers a discount code to share with friends. They then get access to a discount once their friends redeem their codes. For example, you can give customers a sharable 20% off code, and when their code gets used, they, too, get a 20% off code.
You can (and should) also use social media as part of your referral program. You can host contests where people have to tag their friends for entry or create custom links to your social pages that customers can share with their connections. Social media is one of the best ways to grow your business and reach new people, so leverage its power to grow your customer base.
In Action: Glossier
A few years ago, Glossier was a small makeup and skincare brand that was just coming on to the market. It grew rapidly, however, and is now one of the most successful independent beauty brands out there, and this was largely due to its straightforward, easy to use referral program.
Glossier offers a 20% off code to anyone that uses a custom link to refer and convert a customer. This—coupled with its branding as a young, girl’s girl brand—made its name spread like wildfire as girls shared their links and got their rewards.
6. Award Points to Promote Spending
Another way that you can boost customer engagement in your customer loyalty program is through a points program. With 75% of consumers saying that they favor companies that offer rewards, points programs are a great way to increase customer spending and create brand loyalty.
In a points program, you award points that can be redeemed for rewards (e.g., discounts, gift cards, and special offers). What you award points for, however, varies from business to business based on what strategy works best. Here are several ways that you can structure your loyalty points program:
- Spend-Based Program: A spend-based program offers points based on dollars spent. This type of points program is best suited for companies that want to incentivize larger purchases.
- Visit-Based Program: This points program gives points based on the number of customer transactions and is best for businesses that rely on frequent, small purchases.
- Loyalty Actions Program: A loyalty actions program is when award points are based on your defined loyalty actions. These actions might be commenting on a social media post, reviewing your products, shopping on a sale day, or buying more than two items. You define the actions that you want to see from your customers and that most benefit your brand. You can also create incentives with rewards and watch as customers start acting.
In Action: Nordstrom
Nordstrom has a very popular loyalty program dubbed “the Nordy Club” that operates on a points system. In the Nordy Club, customers earn points based on how many dollars they spend and get both cashback and exclusive access as they accrue more points. It is a great example of a points program that not only leverages money-back rewards but also exclusivity to grow its program.
Did you know?
In the book Marketing Metrics, they found that businesses have a 60% to 70% chance of selling to an existing customer, while the probability of selling to a new prospect is only 5% to 20%.
7. Create a Sense of Exclusivity With Tiered Loyalty Programs
Exclusivity is increasingly important to the modern shopper, with 94% of Americans saying that they would take advantage of an exclusive offer if presented with one. You can capitalize on this desire for exclusiveness in your loyalty program by creating a tiered membership structure.
In this model, as customers engage and spend more at your business, their loyalty status increases, giving them access to exclusive deals and offers (similar to The Nordy Club example above). Shoppers are incentivized to continue to frequent and spend at your business so that their status and offers improve and become more exclusive.
Tip: Be sure to advertise the offerings that come with a higher membership so that people know what they are missing out on at their lower tier and are incentivized to shop more.
Typically, tiered programs have at least three levels and are tied to a points system. In other words, the number of points you have determines what membership tier you get to be in. This helps streamline the membership process and makes things easier to track and implement.
In Action: Sephora
Sephora, a major makeup retailer, has a popular tiered loyalty program known as “the Beauty Insider Program.” Here, members can either be an Insider, a Very Important Beauty, or Rogue based on their points.
As members climb the ranks, they get access to better deals, greater discounts, and exclusive freebies and events. Additionally, at Sephora’s rare sales, they get earlier access and a higher discount. The Beauty Insiders program uses exclusivity as a weapon to drive Sephora’s loyalty program and incentivize spending.
8. Offer Exclusive, Members-Only Deals
One of my favorite ways to boost interest in your loyalty program is to offer member-exclusive deals. This will not only create a sense of exclusivity that will motivate people to join, offering an exclusive deal is a great way to motivate spending.
Be sure that you pitch your member deal when trying to convert customers and highlight it in any promotional materials. You want people to know what they will get if they join your program. Additionally, because these offers are exclusive, you can target your discount to promote spending in a strategic area. For example, you could discount slower sellers or hot items, depending on what you need to move immediately.
In Action: Inspyre Boutique
Inspyre Boutique is a local women’s clothing franchise in downtown Denver that I managed for several years. We had a loyalty program that we called the “VIP program,” and as a member, you got access to the “Item of the Month” (IOM) deal. For this promo, we would pick a category of items—say hats, sweaters, or shorts—and offer 20% off to our VIPs for a month.
The IOM offer not only was the selling point for joining our program, but it also was a huge incentive for people to buy our discounted items. There were times where we would run out of IOMs, and we would hold monthly contests to see which associate could sell the most. Overall, it was a great loyalty program strategy for driving sales and boosting our program’s interest.
9. Gamify Your Loyalty Program to Boost Engagement
Gamification: The process of introducing game elements—like competition and scoreboards—into areas where they are not typically found, like your loyalty program. The goal of gamification is to boost engagement and drive sales.
As the world is increasingly distracted and difficult to engage, gamification is becoming an important part of retailers’ marketing strategies. In fact, 87% of North American retailers are planning to use gamification to engage customers in the next five years.
You can gamify your loyalty program your program in a few ways:
- VR: Get customers to interact with your brand in an exciting and engaging way by using technology like VR.
- Contests: Contests with prizes boost your engagement. Maybe you do a raffle where every referral counts as an entry or you offer a special discount to your top monthly point holders. Get creative and get people motivated with prizes that they actually care about.
- Prize Wheels: Let customers spin a wheel with different prize and discount offerings. You can either create a prize wheel pop-up for your website or install a physical one into your store. Either way, you are sure to get people involved.
- Scratch Off: Create a scratch off game that customers can get involved in as they buy more products. For example, say you add a scratch off sticker to your large coffee’s, and if a customer gets a three of a kind, then they get a free large drink and pastry of their choosing.
In Action: throtl
throtl is a car parts and gear ecommerce website that uses car giveaway contests to get people excited about spending and to boost engagement. If you are a throtl VIP member, you pay $10 a month to get access to your special rewards and offers, and those $10 count as 10 entries into the car raffle. For everyone else, every dollar spent equals one entry into the contest. This way, customers are incentivized to spend because of the prospect of a car prize.
10. Employ Outreach Marketing
One of the best ways to keep people involved in your loyalty program is by reaching out to them via text or email. Let your loyal members know about your upcoming sales or discounts, remind them of their points and rewards, tell them about new products or exciting changes, or offer them an exclusive deal.
Did you know? For every dollar brands invest in email marketing, they receive $42 in return.
Some loyalty software like Smile.io and Fivestars have automated loyalty messaging where you get to choose certain triggers, and then messages get sent out automatically. For example, you could have a trigger that sends texts to people who haven’t been by your coffee shop in a week or an email trigger that correlates with your sale schedule.
In Action: J.ING
J.ING is a contemporary women’s clothing brand that uses text outreach to keep in touch with customers and keep them engaged with its brand. In order to become a J.ING loyalty member and get your 15% off discount code, you have to provide your phone number. J.ING then uses this to let all its loyal customers know about upcoming sales and other exciting promotions and collections.
11. Celebrate Special Events With Rewards and Limited-Time Offers
Offer exclusive member discounts for member birthdays, special events, and anniversaries. These limited-time and event-centered promos are highly effective at motivating shoppers. It has even been found that compared to promotional emails, birthday messages have a 481% higher transaction rate.
Most loyalty software allow you to send messages and emails to promote events and offers. If you want to incorporate a birthday promo, be sure that you are collecting member birthday information and that you have a program that has a birthday promo option. We suggest Fivestars for an automated solution.
In Action: bareMinerals
bareMinerals is a makeup brand that offers a free birthday gift and sends discounts and offers for most holidays via its loyalty texting and email program. The beauty brand capitalizes on every opportunity to do event-based limited-time offers and has become a successful company doing so.
Loyalty programs are a great way to boost customer retention, foster loyalty, and drive sales. You can choose to implement your program either manually or via a software program, depending on your available time and size. Use the strategies above to design a program that makes sense for your business and helps yield results.