Customer Loyalty Program: What Is It and How to Build It

Once a marketer has enticed prospective clients to use their products or services, their marketing mission immediately turns to ensuring these same customers will return. A satisfying user experience is essential to making that happen.
One strategy, an effective loyalty program, has proven infallible in bringing customers back, even for decades, after that initial purchase.
What are Loyalty Programs and Loyalty Marketing?
Loyalty programs, sponsored by retailers and other businesses, usually consist of rewards, discounts, freebies, or other incentives to entice buyers to come back to buy future products or services.
Customer loyalty programs not only retain more customers for future purchases, but these clients are more likely to try new products. And, on average, these consumers will spend 31% more than first-time buyers.
In any instance, the lure of a free airline flight, hotel stay, prizes, gifts, and discounts earned with a certain number of purchases becomes an irresistible draw that comes them coming back.
How to Create an Effective Loyalty Program
If you have not already implemented a loyalty program, creating one can be a low-cost, high-return strategy to lock in and grow your client base.
Businesses spend five times more to attract a new client than to keep existing ones. Increasing customer retention by just 5% can create a 25% to 90% increase in profitability, depending on the starting point.
So, how does a new or existing company go about creating an effective loyalty program?
Types of Loyalty Programs
Types of loyalty programs vary depending on the products offered. These may include:
- Points
While programs have different requirements, some offer a single point for each dollar spent during a specified period. In some instances, points should never expire. However, setting a time limit may encourage more frequent visits. While a weekly visit to a grocery store can be a natural frequency, airlines do not expect their less-than-elite customers to fly as often. So, their rewards “miles” may never expire.
One of the most popular point programs is Sephora’s Beauty Insider rewards program. Customers earn points for each purchase they make: 1 point for every dollar spent. When there are enough points, they can exchange points for limited cosmetics.
- Cashback Programs
When customers spend a certain amount of money, they may be rewarded with coupons or cash to be used at the issuer’s business. Bank credit cards also offer cashback awards that can be redeemed as credits on balances, deposits to checking or savings, or purchase items at specified retailers.
- Punch Card Programs
Each time a customer purchases, one or more holes of their customer loyalty cards get punched. When the card is “fully punched,” the customer receives a free item. This is if we’re dealing with paper cards. When it comes to digital punch cards, they exist within a mobile app, but the idea is the same.
- Promo Codes
Promo codes to loyal customers can enhance your relationship with prospective and current customers. These may be personally directed or general and can be presented through multiple platforms.
- Partner Programs
These programs involve earning “points” at more than one business to be used at any of the participating companies.
Conclusion
An intense focus on customer care will benefit your company in very significant ways. Satisfied customers will relay their positive experiences to friends, thereby creating new business and will positively represent your brand to others. An effective loyalty program is an integral part of customer care.
You might be interested in:
Online stores lost more than four billion dollars in 2021 due to incomplete purchases on the site. It is worth working with abandoned carts.
Read moreLet's discuss 3 myths about email marketing that both customers and businesses have.
Read moreIn the digital world, information is an attractive source for hackers, so the safety of data is an important task in business.
Read more