I bet each and every one of you has a preferred brand or company you always go back to when you’re in need of products or services they offer. Have you ever wondered why that’s the case?
In most cases, it’s not just a plain coincidence, mere convenience, or simply the fact that they offer quality – it’s highly likely a part of the elaborate customer loyalty programs they’ve been meticulously working on.
That being said, if you represent a brand or a company, it’s vital to make sure you have a loyal base of customers, and here’s why.
The Importance and Benefits of Customer Loyalty
Studies have shown that acquiring a new customer costs an average business around 5-25X more than re-selling to a current one. Moreover, it was found the existing customers spend 67% more than the new ones. That being said, it’s clear that customer loyalty pays off.
But what does customer loyalty exactly mean?
According to Referral Rock, customer loyalty is a concept that presumes a customer’s willingness to engage in a business relationship with a brand or company (whether to buy their product or service or take part in any kind of cooperation) again and again. In most cases, it comes as a result of outstanding customer experience and the real value they get from your products or services.
Here are some of the main benefits of having a loyal customer base:
- Better customer retention (and less churn)
- Customer referrals (or word-of-mouth marketing)
- Reviews, testimonials, and other user-generated content
But how do you create a loyal customer base? Having satisfied and happy customers is hard enough. Making sure they become loyal and repeat customers is a whole new level.
Luckily, that’s where customer loyalty programs kick in.
What Are Customer Loyalty Programs?
Customer loyalty programs are reward programs specially designed by brands and companies to incentivize regular customers (those who frequently buy your products or services).
That being said, a customer loyalty program may involve giving away free products, coupons, discount codes, early access to new products and services, and so on, to the most loyal customers.
The Loyalty Report shows that, on average, a typical consumer takes part in 14 customer loyalty programs but only has the capacity to actively engage with no more than 7. What does this mean? Basically, even if you manage to get people on your loyalty program, it doesn’t necessarily mean they’re actually going to buy more from you.
You need to make sure you stand out from the crowd of similar customer loyalty programs out there, so here is our selection of 7 best reward-based programs by famous brands and small businesses from different industries and niches to learn from.
7 Best Customer Loyalty Programs Examples
1. Starbucks Rewards
With the Starbucks Rewards program, each purchase brings a customer closer to free drinks and food. To earn Starbucks loyalty stars, you need to order or pay using a special app.
Using dedicated mobile apps to manage customer loyalty programs is now a common thing for many retailers, but when Starbucks first launched My Starbucks Rewards, they were among the pioneers.
If your business can implement a loyalty app, it could be a great way of collecting and centralizing customer data and transactions. That way, you’re not only making it easier for your customers to make orders and pay without waiting or having to sign-up every time, you’re also gathering data on customer behavior and preferences that can be used for your marketing efforts.
If you’d like to learn more about how the coffee-making giant goes about their marketing efforts, here’s an overview of the Starbucks marketing strategy.
2. Virgin Atlantic Flying Club
Okay, earning miles and using them for future flights is one of those customer loyalty programs every airline does. But some companies go the extra (high) mile.
Virgin Atlantic, for instance, has introduced its Flying Club a customer loyalty program that allows members to earn tier points. There are three loyalty tiers – Club Red, Club Silver, and Club Gold, each of which provides different benefits to the most loyal customers.
To make sure their customers know the exact requirements and benefits for each level, they made a comprehensive benefits overview. Of course, the main reasoning behind such a loyalty program is to hook the customer into using your services by providing benefits in the early stages.
3. Amazon Prime
Amazon Prime is a premium Amazon membership that provides its regular buyers with a bunch of benefits (at a cost of $119/year) including free 2-day shipping on a wide range of products.
Even though not a customer loyalty program per se, as it still involves a paid membership, Amazon prime is still a great example of providing enough value to regular buyers so that it really benefits them.
From Amazon’s perspective, even though their Prime program causes them to lose money (allegedly, $1-2 billion per year), they make up for it through increased frequency of shopping transactions – namely, an average Prime member spends around $1,500 a year compared to $625 spent by the non-Prime members.
4. The North Face VIPeak
The North Face, American apparel and outdoor retailer, has a VIPeak rewards program that enables their loyal customers to “turn their passion for adventure into real rewards.”
The North Face customer loyalty program enables customers to earn points the traditional way, with every purchase they make. For example, for every $1 you spend on their website you’ll earn 10 Peak Points. If shopping at The North Face outlets, you’ll earn a bit less – 5 Peak Points for every $1 spent.
In addition to purchase-based points, you can earn points by attending special events organized by The North Face, checking in at particular locations, downloading their app, and so on. The points you collect can be further used to redeem unique travel experiences. Anyone up for mountain climbing in Nepal?
Why does The North Face customer loyalty program work? First and foremost, it doesn’t offer generic discounts on general use products – it speaks directly to their loyal customer, offering them a tailored experience that fits their individual needs.
5. Sephora Beauty Insider
There’s no doubt customer loyalty programs are particularly popular and effective in the beauty industry. One of the most popular is Sephora’s Beauty Insider rewards program.
This is a traditional old-school points-based reward system where customers earn points for each purchase they make. The main reason for its success lies in the fact that it lets members choose how they want to spend their reward points. There’s the so-called Rewards Bazaar, where new rewards are up for grabs every Tuesday and Thursday.
6. Annmarie Gianni Skin Care Rewards
Of course, it’s much easier if you’re an industry giant such as Sephora. But what about smaller-scale businesses, how can they take advantage of customer loyalty programs? Let’s take Annmarie Gianni, a small business dealing with skin care and beauty products, as an example.
They created a customer loyalty program based on a set of compelling offers given to customers who took the quiz titled “What’s Your Skin Score” placed on their website. Among other things, they offered a sample kit for a promo price, free shipping, a free ebook, a $10-promo code for the next purchase, and the money-back guarantee.
As it turned out, the combination of a quiz and a compelling offer is a powerful one – they managed to generate $200,000 and 20,258 leads in 2 months.
If you’re looking to learn more about how to create an online quiz and use it for customer acquisition and retention, here’s a detailed quiz maker guide for you to follow.
7. Uber Rewards
From UberX over UberLUX and UberBLACK to UberSUV, Uber spoils its customers with a variety of options carefully designed to cater to each individual’s specific needs. Another vital part of Uber’s marketing strategy is Uber Rewards.
This customer loyalty program enables Uber users to earn points that can be used to redeem a number of rewards, ranging from meals to miles. It’s a program carefully designed to provide Uber customers with benefits that allow them extra time, flexibility, and control.
For example, some of the rewards Uber offers include flexible cancellations, price protection, priority pickups and support, and so on. Here’s an overview of all the benefits you get with each membership level:
Hopefully, these customer loyalty program examples have taught you the value of customer retention and having a loyal customer base and inspired you to create such a program of your own.
Feel free to comment down below with your own ideas and experiences on how to come up with and implement a perfect customer loyalty program.