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Better pricing doesn’t always have to be dropping your prices instantly. It’s somehow psychological in nature. There’s a subtle art to make it appear that you’re offering a better price without sacrificing your bottom-line.

Whether you run a print-on-demand or dropshipping store, this is where presenting offers, discounts, and deals will help your store achieve your revenue goals. In fact, 96% of consumers use coupons and 92% of consumers always look for a deal when shopping. As a general rule, most customers are attracted to buy a product if they see more value in it.

Now, we’ll look at some of the most popular ways you can use discounts to drive customer loyalty and conversions and, of course, how to most effectively use them.

Types of offers, deals, and discounts

Here are the most commonly used types by popular online stores:

  1. Cash Discount
  2. Percentage Discount
  3. Free Shipping
  4. Value-added offers
  5. Member-exclusive rewards
  6. Product bundling

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A direct price-off incentive that an eCommerce store offers to a shopper in return for a purchase made, e.g. “Apply $5 Discount”. A price-off incentive can appear as a direct cash discount or with the use of a coupon code.

E-commerce stores often use cash discounts to take advantage of the principle of urgency, as these cash discounts are most of the time only available for a limited time. If shoppers won’t purchase the item now at a discounted price, chances are they’ll miss out saving money when they purchase at a later time.

Percentage Discount

A percentage-based incentive works the same as a cash discount/coupon, except that you are offering the incentive with a percentage reduction of the item’s value, e.g. “Apply 5% Discount”. The same principle of urgency applies, however, the effectiveness now becomes relative because of the customer’s perception.

Free Shipping

Free shipping is the number one option why shoppers checkout online. It even motivates shoppers to take an action just to qualify for free shipping. Just like 48% of shoppers add more items to their carts to qualify for free shipping and 41% of shoppers even search online for a free shipping promo code.

Value-Added Offers

Without discounting your product’s price, you can offer your shoppers with a value-added item, e.g. free gift, in exchange for their purchase. Most of the value-added offers can be complementary items or you can use your slow-moving inventories as a free item or offer a free service.

How to use offers, coupons, discounts, and deals to drive sales and customer loyalty

When it comes to applying offers, coupons, discounts, and deals you have limitless options. But, let’s explore some of the best practices in the eCommerce industry today coupled with the most creative ways and examples to use them to drive your online revenue and influence customer loyalty.

1 – Email Subscription Offer

Email seems a bit traditional but email marketing is still one of the most cost-effective marketing strategies with enormous ROI of $38 for every $1 spent. This means that growing your email subscribers list is a good investment for every dollar you spend on marketing.

By getting your shoppers’ email addresses, you have the avenue to build a relationship, drive sales, and foster customer loyalty in the future. You can entice your visitors to join your email subscription or newsletter by placing an email opt-in form together with a discount offer as an incentive.

For instance, this is an email opt-in form created by Better Coupon Box. You can offer a discount coupon for 5-15% off the shopper’s first purchase in exchange for his email address.

Checkout boost

2 – Customer Loyalty Rewards

91% of consumers reported that they are a member of a member-exclusive loyalty program. They said they entered into a loyalty program because of member-only discounts or offers. There’s a willingness from customers to be part of an online store’s membership program because of the perceived exclusivity and access to rewards and deals.

An example of this is Target’s REDCard is a customer loyalty program which rewards its shoppers with additional 5% discount every time they shop. REDCard members also get early access to rewards and upcoming deals and discounts.

Customer loyalty rewards

3 – Gamified Deals

Gamification is a fun and engaging activity that you can apply to your offers and deals. The element of surprise and entertainment will help attract your shoppers to participate. Gamification amplifies your customer engagement and helps you foster a positive customer experience. And a satisfied customer means a customer who comes back to your online store and makes repeat purchases.

A perfect example is the “Play! By Sephora”. The game mechanics are simple. Each month Sephora curates a whole new selection of their latest and best-selling products and then creates a game incorporating these products. The winners will receive free trials of the game’s featured products plus Sephora bonus points that they can use for their next purchase.

Gamified Deals

Another way to create a little fun for your offer:

Try gamification feature from Checkout Boost. This feature allows you to show offers only to customers whose order value reaches a goal amount. A heading bar will show up to encourage customers to spend a little more in order to receive a sweet offer.

It’s a win-win offer that both you and your customers will definitely love!cboost-noti-demo

4 – Product Bundling

Product bundling is a type of upsell and cross-sell strategy that entices shoppers to order more items and enjoy the benefit of a bundled pricing. Product bundling works because shoppers will perceive that they will save more money by buying two or more items together rather than purchasing them individually. It’s also one of the most used strategies to increase a customer’s average order value.

Let’s take for example BaubleBar’s “Positive Vibes Special Pack!” product bundle which allows customers to select 3 bracelets for a lower bundled price.

cross-sell 3

The tool they’re using to create product bundles is Boost Sales.

5 – Influencer Offers

Influencer marketing has grown exponentially over the years because it generates 37% higher customer retention rate compared to other acquisition channels. To expand your reach and help you drive revenue, collaborate with influencers. Find the influencers that match your brand ideals and goals and then check their authority, reputation, and engagement.

What you can do is to provide your selected influencers with an exclusive discount code that they can share with their followers. Depending on your budget, you can ask these influencers to post the discount code via their social media sites. If you have more budget, you can sponsor a Youtube vlog with your chosen influencer.

Usually you can get product placements and mentions on the sponsored vlog just like how Native sponsored this influencer to feature their products. The viewers get a unique promo code which they can use to purchase the featured products. This unique promo code also helps your online store to monitor and track the redemption rate.

influencer

6 – Re-engagement Deals

You will encounter one-time customers who will go inactive and dormant after their first purchase. For some online stores, they will just let that relationship left unattended. Instead of wasting that relationship, you can still reignite that connection by presenting re-engagement offers.

For instance, you can use your online store’s app to send push notifications and app messaging to reach out to your inactive customers. You can also use SMS to send an incentive to your list of inactive and dormant shoppers just like how Zalora sent an 18% off deal to its inactive customers.

re-engagement deals

7 – Cart Abandonment Offers

The average worldwide cart abandonment is 68%. This means that there’s an alarming number of customers who leave your store without completing a purchase. You can still recover that seemingly lost opportunity by reminding the customers to complete their purchase with an exciting offer or discount.

Traditionally, popular eCommerce stores send out abandoned cart emails as a reminder of the customer’s forgotten products without a discount or incentive. However, if you want swift action from the shopper and drive the purchase, send a cart abandonment email including a tempting offer. For example, Toms sends a cart abandonment email with an exclusive free shipping offer.

cart abandonment offers

8 – Exit Intent Offers

Online shoppers are sometimes still undecided when they visit an online store. If you want to quicken their path to purchase, you can employ an exit-intent popup that will trigger when the shopper is about to leave your site.

Make the exit intent popup more appealing by including irresistible deals and discounts. This exit intent offer is your last-second incentive to push your shopper to purchase. Gap has this exit intent offer in place so every time a customer leaves their site an 25% exit intent offer pops up.

exit intent offers

9 – Customer Milestones Deals

Important customer milestones and moments such as birthdays and anniversaries can also be an avenue for you to drive revenue and customer loyalty. If you want to make your shoppers feel extra special then you can leverage on celebrating their birthdays and anniversaries.

For example, you can email them with a celebratory birthday email and then incorporate an exclusive birthday gift such as free product or an exclusive discount. Steal this strategy from Marks and Spencer wherein they send a birthday greeting email to its shoppers accompanied by a 25% discount offer.

M_S_birthday_email

10 – Referral Offers

A referral program is another way to reach more potential customers and drive your revenue. Also, one of the reasons why people remain loyal to a brand and begin referring it to their family and friends is because they want something in return.

To have an effective referral program, your store should present referral offers or incentives to drive your shoppers on inviting their loved ones to check your site. A referral incentive can be given both to the person referring and the person being referred to. Sperry’s “Give $20, Get $20” is a groundbreaking idea that demonstrates how you can drive more revenue by incentivizing both existing customers and new shoppers with cash discounts.

referral offers

11 – Feedback Offers

Feedback is an important way to gauge your customer’s experience. It’s also a way to tell your shoppers that their opinions matter to you. Customers trust and stay loyal to online stores that make them feel important.

You can send an email asking for your customer’s feedback and at the same time, you can leverage this email to bring them back to your site and make a purchase. Motivate them by feedback offers such as coupon codes which they can use for their future purchase or a chance to win a raffle promo just like how Shaver Shop entices shoppers to leave a feedback in exchange for a chance to win $200 gift card.

feedback offers

A Profitable Business with Loyal Customers

If you want to drive revenue and customer loyalty, using offers, coupons, discounts, and deals should ensure that creativity and value proposition are applied in order for them to be effective and stand out from the competition.

Customers begin their loyalty to online stores that provide a positive customer experience and a consistent excitement by providing the above examples of irresistible offers, coupons, discounts, and deals to accelerate sales and at the same time improve brand affinity.

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1. Sephora Beauty Insider

Best customer loyalty programs: sephora beauty insider

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Sephora offers a points-based loyalty program. Customers swipe their Beauty Insider cards at every purchase to track the amount of money they spend. Depending on a customer’s average purchase threshold, they’re grouped into one of three types of Beauty Insider — these tiers identify the top spenders among the already loyal group of customers.

Every dollar spent earns the member one Beauty Insider point — shoppers can redeem points for top-notch beauty products at checkout. Sephora speaks the language of its audience by measuring points in dollars and rewards in cosmetic items.

Why We Love It

One of the best parts of a Beauty Insider at any tier is the free samples! Being able to try before you buy is very beneficial for skin care and beauty products.

2. Virgin Atlantic Flying Club

Best customer loyalty programs: virgin atlantic

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The Virgin Atlantic Flying Club allows you to earn miles and tier points by flying as well as through your daily purchases — you can apply these miles to your future travels.

Within the Club, there are three tiers customers are grouped into — each of which offers different benefits. Each tier provides many perks for the customers — but, the more customers spend, the higher their tier, and the greater the benefits.

Why We Love It

The Gold tier benefits are top-notch because they are extended not only to you but also to guests that are traveling with you.

3. Amazon Prime

Best customer loyalty programs: amazon primeImage Source

For a little over $100 a year, Amazon Prime users get free, two-day shipping on millions of products with no minimum purchase among other benefits. For example, because of Amazon’s acquisition of Whole Foods, Amazon offers Prime users substantial savings on their groceries.

This deal on efficient, reliable shipping on almost any product imaginable offers enough value to frequent shoppers that the annual payment makes sense (think about how much you normally pay on standard shipping for your online purchases).

Why We Love It

Saving on the thousands of products on Amazon itself plus saving on all your groceries at Whole Foods equals a ton of savings!

4. TOMS Rewards

Best customer loyalty programs: TOMS rewards

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TOMS Rewards has a free, point-based reward system that shows their customers what they value as an organization and how they give back to different communities.

Customers sign up for free, make their purchases to earn points, and then use those points to purchase more products, obtain offers, or donate the points (which have a one-to-one monetary value) to support a giving fund or foundation.

There are three tiers customers are placed in that determine their special offers and perks based on the amount they spend with the company.

Why We Love It

TOMS has a variety of awesome grassroots partners that are incorporated into their rewards program. Being able to donate your points to the causes you support is an impactful benefit.

5. Hyatt Loyalty Program

Best customer loyalty programs: hyatt loyalty program

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Hyatt has a five-tier loyalty program to encourage customer loyalty — although their highest tier requires customers to spend dozens of nights in hotels every year and travel a great deal more than the average person might, they offer a membership that’s completely free and has no required thresholds members need to meet — meaning, Hyatt’s loyalty program is open to everyone.

Member perks include discounts at their participating hotels, access to special member-only offers, and the ability to earn points on nights spent at the hotel, dining, spa, Exhale classes, and more. Customers can also choose how they want to spend or apply the Hyatt points they earn (e.g. free nights at the hotel or flight miles).

Why We Love It

Most rewards programs with different tiers have two or three levels. Hyatt has a total of five which means that there is always a benefit that fits how much the customer spends.

6. Swarm Perks

Best customer loyalty programs: Swarm Perks

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Swarm, a check-in app, uses Swarm Perks to gamify and incentivize users to check-in to different locations and share what they’re up to with friends. With Swarm Perks, users can get discounts for the locations they check in to, such as a 20% off coupon at Best Buy.

Swarm keeps their loyal users coming back weekly to compete in their sweepstakes challenges — customers are entered into a drawing after check-in at a participating location to win things like vacations, spa days, and shopping trips.

Why We Love It

Swarm not only incentivizes you to keep visiting your favorite spots, but it’s also a fun way to earn rewards by being encouraged to check out new places in your area that you otherwise might not have.

7. REI Co-op

Best customer loyalty programs: REI Co-Op

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REI’s Co-op membership program harkens back to the outdoor gear company’s roots as a co-op — a consumer organization that is truly owned by the consumers and managed to meet the needs of its members.

The program makes customers feel good about spending their money at REI because of the company’s commitment to this cooperative vision of giving back to outdoor conservation and their prioritization of the members over the profits.

Co-op customers become lifetime members after paying a flat fee of $20. Then, they’re rewarded with 10% of the total amount they spent at REI in the previous year, access to deeply-discounted “garage sales,” discounted wilderness and outdoor adventure classes, and members-only special offers.

Why We Love It

Being able to support the cooperative vision of REI and all the impactful work that they do is an extra perk on top of the regular rewards benefits.

8. United MileagePlus Program

Best customer loyalty programs: united airlines mileageplus program

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United’s MileagePlus Program is meant to streamline the process of earning points on daily purchases and applying those points to payments for global flights, hotels, rental cars, and more for customers.

For the most frequent United customers, they can choose to become a Premier user and receive a MileagePlus card (associated with their tier) to use on purchases so they can rack up even more points and reach greater travel-related perks (e.g. free, checked baggage, upgraded seating, priority boarding, and access to deals with partner hotels and car rental companies).

Why We Love It

United has the most global destinations of any airline, so it gives you the most opportunities for where to earn and redeem points.

9. Odacité Rewards

Best customer loyalty programs: odacite

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Odacité Rewards is a program that encourages customers to return to the brand for their regular skincare purchases. Customers earn one point for every dollar spent and are grouped into one of three tiers depending on the amount they spend.

Odacité’s program offers rewards unrelated to purchases as well. Customers can earn points for sharing their Facebook page, inviting a friend, following them on Instagram, sharing their birthday, and creating an account.

Points can be exchanged for a monetary value and applied to a customer’s purchase for a discounted price at checkout. These tasks are easy to complete and benefit both customers and the business.

Why We Love It

Having ways to earn points that don’t require you to spend money is a big plus because it’s essentially getting free rewards!

10. Starbucks Rewards

Best customer loyalty programs: starbucks

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Starbucks Rewards is a star-based loyalty program in which customers download the Starbucks app or sign up online, add any amount of money they’d like to their digital card, and scan it upon checkout, whether that’s in-store or via mobile order.

Every purchase results in the earning of stars — two stars per $1 spent. Within the app, there are prizes and games such as double-star days (customers earn double the normal amount of stars they would), free beverage coupons on their birthday, and other ways to earn bonus stars.

Members can apply the stars they earn to their purchases for discounts and free beverages (and food).

Why We Love It

The Starbucks Rewards program makes it fun and exciting to earn rewards with games, bonus challenges, and double star days.

11. PetSmart Treats

Best customer loyalty programs: petsmart

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What pet owner doesn’t love treating their best friend to delicious food, new toys, a haircut, and more? The PetSmart Treats loyalty program makes this easy for pet owners to do while also saving them money.

Pet owners earn points every time they spend (eight points per dollar, to be exact). They can redeem these points in-store or online. Members get free shipping and are notified about member-only sales and in-store discounts, and can use their earned points on grooming, PetsHotel, puppy training, or even donate their points to a PetSmart-affiliated animal charity.

(Not to mention, members earn a free surprise for their pets on their birthday.)

Why We Love It

Pet care can be quite expensive, so being able to use points for things like grooming, puppy training, and pet hotels is a great way to save.

12. SweetGreen Sweet Rewards

Best customer loyalty programs: sweetgreen

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SweetGreen Sweet Rewards has a money-based loyalty program. Members can use their app to purchase a salad in-store or via their app and that payment goes toward their rewards. Members receive $5 off a meal every time they spend $35.

Additionally, they pay nothing for delivery and they get $5 off their first online order. Sweet Green has an app to make the management of profiles and rewards simple for all customers.

Why We Love It

Delivery fees can add up if you order food frequently, so removing those provide a lot of great savings for rewards members.

13. DSW

Best customer loyalty programs: DSW

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Designer Shoe Warehouse has a long-standing VIP loyalty program that is points-based. Customers earn rewards on a tiered system that gives more as they spend more. A convenient part of the DSW loyalty program is that it doesn’t require a physical card. The company’s online system can recognize program members with their name, phone number, or payment information.

VIPs earn 1 point for every $1 spent and Elite members earn 2 points per dollar. Plus, each purchase also earns 5% back in rewards, 10% for Elite members. The program also includes free shipping on every purchase, a 50-point reward for donating old shoes, and a birthday reward.

Why We Love It

Shoe lovers are often recycling out their old shoes as they buy new ones, so being able to get rewards for donating them is a big plus.

14. The North Face

Best customer loyalty programs: The North Face

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The popular outdoor apparel and gear retailer has a loyalty program named the XPLR Pass. It’s easy for customers to earn points through more than just spending. Attending The North Face events, bringing a reusable bag when shopping in-store, checking in at National Parks, and participating in surveys are some of the other ways to rack up rewards. Members earn 1 point for every $1 spent, and a $10 reward for every 100 points earned. However, members are limited to 100 points per calendar year.

Another great benefit of the XPLR Pass is the Renewed Trade-In Program. Members can trade in their gently used gear from the store for a gift card. As well, members can freely return any purchased gear that didn’t work for them within 60 days. The program also offers early access to limited edition collections and chances to wear test products before they are made available to the public.

Why We Love It

The members-only field testing is a very useful benefit because there is a lot of gear that you can’t know will fit your needs until you try it out for yourself.

15. The Body Shop

Best customer loyalty programs: The Body shop

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As a business with a long-standing commitment to social responsibility, The Body Shop brings that sentiment to its rewards program. The Love Your Body club is points-based but focuses a lot on the community aspect. Members get 1 point for every $1 spent, and a $10 reward for every 100 points earned.

The Love Your Body club offers exclusive members-only parties and sneak peeks of new collections. Points can be redeemed for discounts but also donations to a variety of charities. Members also receive a $10 coupon for their birthday.

Why We Love It

The community aspect of the Love Your Body club is a special benefit because it makes you a part of something special and gives you access to events where only others in the community can attend.

Now that you have some ideas for your new customer loyalty program, or how to enhance the program you already offer, you’ll also need to ensure you have a reliable way to measure its effectiveness.

 

Begin (or Enhance) Your Customer Loyalty Program

Customer loyalty is directly tied to your business’s bottom line, retention, and ability to grow better. So, get started today by determining which customer loyalty tactics you’re going to tap into and use the examples we reviewed above for inspiration.

(Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.)

Editor’s note: This post was originally published in October 2019 and has been updated for comprehensiveness.

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Did you know it costs five times more to acquire new customers than it does to retain current customers?

And did you know existing customers are 50% more likely to try a new product of yours as well as spend 31% more than new customers?

Whether or not you currently have a loyalty program that encourages your customers to return and conduct more business with you, the above statistics clearly show the importance and impact of a successful customer loyalty program.

In this guide, you’ll discover everything you need to know about customer loyalty.

Let’s kick things off by defining customer loyalty.

One of the main reasons to promote customer loyalty is because those customers can help you grow your business faster than your sales and marketing teams. There are several other reasons why customer loyalty is critical to your success.

 

Customer loyalty is something all companies should aspire to. Here are the main benefits.

Increased Share-of-Wallet

Share-of-wallet refers to the amount of money a customer spends on a certain brand compared to how much they spend on the brand’s competitors. Customers convert and spend more time and money with the brands to which they’re loyal. That’ll mean more share-of-wallet for you.

Better Word-of-Mouth Referrals

Customers convert and spend more time and money with the brands to which they’re loyal. These customers also tell their friends and colleagues about those brands, too which drives referral traffic and word-of-mouth marketing.

Increased Trust

Customer loyalty also fosters a strong sense of trust between your brand and customers — when customers choose to frequently return to your company, the value they’re getting out of the relationship outweighs the potential benefits they’d get from one of your competitors.

Since we know it costs more to acquire a new customer than to retain an existing customer, the prospect of mobilizing and activating your loyal customers to recruit new ones — simply by evangelizing a brand — should excite marketers, salespeople, and customer success managers alike.

But how do you do it? How do you turn happy, satisfied customers into loyal brand evangelists? How do you use positive Yelp reviews, glowing tweets, and Instagram mentions to propel your brand’s growth?

Well, we have a few ideas.

1. Be as generous as your customers.

From the outside looking in, customer loyalty programs can appear to be nothing more than a scheme to get customers to spend even more money. (Let’s face it; we can all be cynics sometimes.)

That’s why truly generous loyalty programs stand out among the rest.

If your loyalty program requires customers to spend a lot of money only to be rewarded with meager discounts and samples, you’re doing it wrong. Instead, walk the walk and show customers how much you value them by offering perks that are so good, it would be foolish not to become a member.

2. Show your gratitude.

You might think that, by offering a loyalty program, you’re expressing your gratitude for their business and loyalty. Think again. Your customers are routinely bombarded by businesses — your competitors included. Your competitors likely offer a loyalty program, too.

What sets you apart in a way that keeps customers loyal? Expressing your gratitude through handwritten notes or direct, one-to-one messages. Include thank you notes in your product deliveries or purchase confirmation emails, or send special cards around the holidays.

3. Provide benefits to your customers with every purchase.

Build loyalty by providing customers with awesome benefits related to your business and product or service with every purchase. The best part of this approach is that it may not necessitate creating a customer loyalty program — though that’s certainly still an option. If your company is pioneering a new product or service, a loyalty program may not be necessary.

This minimalist approach works best for companies that sell unique products or services.

That doesn’t necessarily mean that you offer the lowest price, or the best quality, or the most convenience. It means that you offer the only product in a certain category. Customers will be loyal because there are few other options as spectacular as you, and you’ve communicated that value from your first interaction.

4. Scratch the program completely.

Considering how many businesses offer loyalty programs, one innovative idea to make yourself stand out is to nix the idea of employing a “program” altogether. Instead, build loyalty by providing customers with awesome benefits related to your business and product or service with every purchase.

This minimalist approach works best for companies that sell unique products or services. That doesn’t necessarily mean that you offer the lowest price, or the best quality, or the most convenience; instead, I’m talking about redefining a category.

If your company is pioneering a new product or service, a loyalty program may not be necessary. Customers will be loyal because there are few other options as spectacular as you, and you’ve communicated that value from your first interaction.

5. Build a useful community for your customers.

Customers will always trust their peers more than they trust your business. Between social media, customer review sites, forums, and more, the slightest slip can be recorded and uploaded for the world to see. But, you can turn this into a positive by managing a community that encourages customer-to-customer interactions.

One way to do this is with self-service support resources. If you have a knowledge base, you can add a community forum. A community forum encourages customers to communicate with one another on various topics, like troubleshooting the product or retelling service experiences. Even if they leave negative feedback, at least it’s left on your domain where you can respond to it and deal with it accordingly.

A community forum can benefit your business in other ways, too — for example on the HubSpot Ideas Forum, customers can pitch ideas and upvote each other’s posts. If the idea is good, the product team will consider it for an upcoming sprint. If the idea can already be done with the product, the support team will reach out with a solution. This lets our team provide both proactive and reactive customer service through one resource.

As online communities progress, you may formalize them to keep things organized. Having a consistent system in place ensures fairness and keeps customers satisfied over time.

This is where customer loyalty programs come in handy.

6. Communicate effectively with your customers.

Building and maintaining customers’ trust requires continuous communication. When a customer knows that your business is transparent and honest, they have trust that will have a positive experience in their interactions. This should still be the case especially when it comes to customer service and has a problem to be resolved.

Good communication means your customers should know what is going on with your business. If there is a new product, a major change, company update, shortage, change in hours, or anything that a customer should be aware of so they aren’t surprised, it should be clearly communicated. This is a part of good customer service that is essential for making customers want to continue doing business with you.

7. Improve upon your customer loyalty program.

While earlier we suggested forgoing the customer loyalty program, it’s still an essential cornerstone of any customer loyalty-building endeavor. It’s one of the best ways to build customer loyalty, especially if the brand keeps adding perks that make it impossible to walk away.

Companies provide customer loyalty programs to their most frequent customers to encourage loyalty and long-term business by offering free merchandise, rewards, coupons, or even advanced released products. Continue improving upon yours by offering more perks and rewards as time goes on.

8. Continuously evolve your business over time.

The market and the desires of your audience and customers are going to continuously change over time. Doing research and staying up-to-date in your industry reassures customers that you will always be innovative and offer the best options for meeting their needs. This doesn’t just apply to new technologies, though.

Evolving should include the branding, culture, marketing, and your product itself. Customers develop trust over knowing that companies won’t be stagnant. Being aware of how to continuously improve your business ensures you’re always getting better. Loyalty to your business and your products comes with customers knowing they’re always getting the best.

So, how do you ensure your customer loyalty program is beneficial for your business and your customers? Check out these types of loyalty programs.

How do loyalty programs work?

Gaining and retaining customers is the primary goal for businesses. A lot of marketing focuses on gaining customers but retaining them is often a whole different ball game. Loyalty programs work by giving customers an incentive to continue doing business with you. The incentives can be a variety of things, but they should offer a strong benefit to keep them coming back.

1. Point-Based Loyalty Program

This is arguably the most common loyalty program methodology in existence. Frequent customers earn points that translate into rewards such as a discount code, freebie, or another type of special offer. Where many companies falter in this method, however, is making the relationship between points and tangible rewards complex and confusing.

“Fourteen points equals one dollar, and twenty dollars earn 50% off your next purchase in April!”

That’s not rewarding. That’s a headache. If you opt for a points-based loyalty program, keep the conversions simple and intuitive. Although a points system is perhaps the most common form of loyalty program, it isn’t necessarily applicable to every type of business. It works best for businesses that encourage frequent, short-term purchases, like Dunkin’ Donuts.

2. Tiered Loyalty Program

Finding a balance between attainable and desirable rewards is a challenge for most companies designing loyalty programs. One way to combat this is to implement a tiered system that rewards initial loyalty and encourages more purchases.

Present small rewards as a base offering for being a part of the program, and then encourage repeat customers by increasing the value of the rewards as they move up the loyalty ladder. This solves the potential issue of members forgetting about their points (and never redeeming them) because the time between purchase and gratification is too long.

The biggest difference between the points system and the tiered system is that customers extract short-term versus long-term value from the loyalty program. You may find tiered programs work better for high commitment, higher price-point businesses like airlines, hospitality businesses, or insurance companies.

3. Paid (VIP) Loyalty Program

Loyalty programs are meant to break down barriers between customers and your business … so are we seriously telling you to charge them a fee? In some circumstances, a one-time (or annual) fee that lets customers bypass common purchase barriers is quite beneficial for both business and customer. If you identify factors that may cause your customers to leave, you can customize a fee-based loyalty program to address those specific obstacles.

For example, have you ever abandoned your online shopping cart after tax and shipping were calculated? This is a frequent issue for online businesses. To combat it, you might offer a loyalty program like Amazon Prime — by signing up and paying an upfront fee, customers automatically get free two-day shipping on orders (plus other awesome benefits like free books and movies).

4. Value-Based Loyalty Program

Truly understanding your customer requires you to identify the values and desires of your target audience — in doing so, you can encourage customer loyalty by targeting those characteristics. While any company can offer promotional coupons and discount codes, some businesses may find greater success in resonating with their target audience by offering value in ways unrelated to money — this can build a unique connection with customers, fostering trust and loyalty.

5. Coalition (Partnership) Loyalty Program

Strategic partnerships for customer loyalty (also known as coalition programs) can be an effective way to retain customers and grow your company.

Which company would be a good fit for a partnership? The answer depends on your customers’ everyday lives, needs, and purchase processes.

For example, if you’re a dog food company, you might partner with a veterinary office or pet grooming facility to offer co-branded deals that are mutually beneficial for your company and your customer.

When you provide your customers with relevant value that goes beyond what your company alone can offer them, you’re showing them that you understand and care about their challenges and goals (even those you can’t solve alone). Plus, it helps you grow your network to reach your partners’ customers, too.

6. Game-Based Loyalty Program

Who doesn’t love a good game? Turn your loyalty program into a game to encourage repeat customers and — depending on the type of game you choose — solidify your brand’s image. With any contest or sweepstakes, though, you run the risk of having customers feel like your company is jerking them around to win business. To mitigate this risk, ensure your customers don’t feel like you’re duping them out of their rewards.

The odds should be no lower than 25%, and the purchase requirements to play should be attainable. Also, make sure your company’s legal department is fully informed and onboard before you make your contest public. When executed properly, this type of program could work for almost any type of company and makes the process of making a purchase engaging and exciting.

Now that you have some ideas for your new customer loyalty program, or how to enhance the program you already offer, you’ll also need to ensure you have a reliable way to measure its effectiveness.

As with any initiative you implement, you should have some way to measure success. Customer loyalty programs should increase customer delight, happiness, and retention — and there are ways to measure these things (aside from rainbows, sunshine, and smiles).

Different companies and programs call for unique analytics, but here are a few of the most common metrics companies watch when rolling out loyalty programs.

1. Customer Retention Rate

Customer retention is an indication of how long customers stay with you. With a successful loyalty program, this number should increase over time, as the number of loyalty program members grows. According to The Loyalty Effect, a 5% increase in customer retention can lead to a 25% to 100% increase in profit for your company.

Run an A/B test against program members and non-program customers to determine the overall effectiveness of your loyalty initiative.

2. Negative Churn

Customer churn is the rate at which customers leave your company. Negative churn, therefore, is a measurement of customers who do the opposite: either they upgrade or purchase additional services.

These help to offset the natural churn that goes on in most businesses. Depending on the nature of your business and loyalty program, especially if you opt for a tiered loyalty program, this is an important metric to track.

3. Net Promoter Score®

NPS® is a customer satisfaction metric that measures, on a scale of 1-10, the degree to which people would recommend your company to others.

NPS is calculated by subtracting the percentage of detractors (customers who would not recommend your product) from the percentage of promoters (customers who would recommend you).

The fewer detractors, the better. Improving your net promoter score is one way to establish benchmarks, measure customer loyalty over time, and calculate the effects of your loyalty program.

4. Customer Effort Score

Customer Effort Score (CES) asks customers, “How much effort did you personally have to put forth to solve a problem with the company?”

Some companies prefer this metric over NPS because it measures actual experience rather than the emotional delight of the customer.

In this way, customer service impacts both customer acquisition and customer retention. If your loyalty program addresses customer service issues, like expedited requests, personal contacts, or free shipping, this may be one way to measure success.

Now, here are some examples to offer inspiration while you build your own customer loyalty program.

5. Purchase Habits

How long do customers take to make another purchase from you? How many customers are returning products after purchasing them from you? These purchase habits let you know whether customers are loyal to your brand — or whether they’re leaving you for your competitors.

It’s important to understand what, if anything, is causing a return or delaying a repeat purchase. That’s why it’s important to consistently carry out customer satisfaction surveys at least once every quarter or whenever appropriate. You could send one to a customer after they tried out your product, for example, or right after they returned it.

6. Referral Traffic

Referral traffic refers to any traffic that comes to your website from places other than search engines (such as Google). Social media sites, news websites, and other online properties would all count as referral traffic. Traffic from display ads doesn’t count. What matters is how many of your customers are linking to your site or talking about you on their social media profiles. You can measure referral traffic using a tool such as Google Analytics.

7. Social Media Mentions

What are people saying about you on social media? Is it positive? Or are they spreading bad word? While this isn’t so much of a quantitative measurement as others on this list, it’s still an excellent way to track customer loyalty. You can track social media mentions using a tool such as HubSpot.

Tracking mentions is an important part of a social listening strategy and one of the best ways to see whether customers are loyal. You can also find out what they’re saying about you in comparison to your competitors.

1. It costs 5x as much to attract a new customer as to keep an existing one. (Source: seohosting.com)

2. 68% leave brands because they are upset with the treatment they’ve received. (Source: U.S. Small Business Administration)

3. On average, loyal customers are worth up to 10 times as much as their first purchase. (Source: White House Office of Consumer Affairs)

4. 48% of customers who had a negative experience told 10 or more others. (Source: Harvard Business Review)

5. 64% of customers cited shared values as the primary reason for a strong brand relationship. (Source: Corporate Executive Board)

6. On Twitter, over 80% of customer service related tweets are negative or critical of the brand in question, a large majority of customers expect a reply in less than an hour (unfortunately, most companies are failing to deliver). (Source: Touch)

7. 78% of customers have bailed on an intended transaction because of a poor experience. (Source: American Express)

8. It takes 12 positive experiences to make up for one unresolved negative experience. (Source: Ruby Newell-Legner, “Understanding Customers“)

9. 68% quit because of the attitude of indifference toward the customer by the owner, manager or some employee. (Source: Michael LeBoeuf, “How to Win Customers and Keep them for Life“)

10. It’s 6-7 times more expensive to acquire a new customer than it is to keep a current one. (Source: White House Office of Consumer Affairs)

11. 3 in 5 Americans (59%) would try a new brand or company for a better service experience. (Source: American ExpressTweet this Stat!

12. 70% of buying experiences are based on how the customer feels they are being treated. (Source: McKinseyTweet this Stat!

13. Customer’s do not want to hear (Source: American Express):

  • We’re unable to answer your question. Please call xxx-xxx-xxx to speak to a representative from x team.
  • We’re sorry, but we’re experiencing unusually heavy call volumes. You can hold or try back at another time.

14. Employees only ask for the customer’s name 21% of the time. (Source: ContactPoint)

15. Customers who engage with companies over social media spend 20 -40% more money with those companies than other customers. (Source: Bain & Company)

16. 89% of consumers began doing business with a competitor following a poor customer experience. (Source: RightNow)

17. 73% of firms trust recommendations from friends and family, while only 19% trust direct mail. (Source: Forrester Research)

18. 50% of consumers give a brand only one week to respond to a question before they stop doing business with them. (Source: RightNow)

19. U.S. consumers prefer to resolve their customer service issues using (Source: American Express):

  • Telephone (90%)
  • Face to face (75%)
  • Company website or email (67%)
  • Online chat (47%)
  • Text message (22%)
  • Social networking site (22%)

20. Consumers are 2x more likely to share their bad customer service experiences than they are their positive. (Source: American Express)

21. Top two reasons for customer loss (Source: RightNow):

  • Customers feel poorly treated
  • Failure to solve a problem in a timely manner

22. A 5% increase in customer retention can lead to a 25% to 100% increase in profits for your company (whether it be through upsells, repurchases, or even referrals.) (Source: Fred Reichheld, author of the Loyalty Effect)

 

1. Offer Discounts

With the latest analytics technology, retailers can provide customers with discounts on products they purchase regularly, as well as products that complement prior purchases. Whether it’s for college students, veterans, or senior citizens, offering an exclusive discount is a great way to recognize (and retain) key segments of your customer base.

Discounts can also get people to buy from you during typically slow times. For example, a movie theater that offers $5 tickets on Tuesdays or a restaurant that gives a 10% discount to college students on Monday nights. Knowing that they can get a better deal on a certain day will help you create a loyal customer base.

2. Reward Customers

Rewards can either be something a customer works toward or a pleasant surprise. Who wouldn’t love a “Buy 10 bagels, get the 11th free” punch card? This gives the customer something to aspire to and increases the chances of them coming back.

As for the unexpected, you can offer free shipping through your eCommerce store for orders over a certain amount or deliver a free gift with a purchase.

No matter what, you should make it easy for your customers to redeem their points. Make it so that their profile in your POS includes up-to-date information about their available rewards and customer status.

Also, make sure to include an expiration date so that your customers are encouraged to make a purchase before the deadline. Nothing will turn away a loyal customer faster than telling them that their reward has expired.

3. Promote Your Rewards Program

It’s one thing to create a rewards program, but you can hardly expect customers to sign up if they don’t know about it. Encouraging sales associates to talk up the program, advertising incentives with in-store displays, sending out email announcements, and more — there are any number of ways to get the word out.

4. Encourage Referrals

A “Refer a Friend” program is an effective way to reward your current customers while also gaining new ones.

This can be something like “Give $10 and Get $10” or you can offer reward points for every friend a current customer recommends to your company. You can also utilize social media. If someone “likes” a post from one of your loyal customers, you can send them a unique link to a special promotion that’s just for them.

Referral programs give you an opportunity to get creative, since there are unlimited ways to share the love. If you refer a friend to the Casper mattress, you’ll receive a $75 Amazon gift card. And as an incentive for the friend to purchase, they receive 10% off their mattress. It’s a win-win-win for everyone!

5. Create a Point System

With today’s loyalty systems, retailers can offer various types of reward points on purchases, status level, and other customer features.

Starbucks excels at this with their mobile app. For every dollar you spend, they reward you with two stars under their Gold Level tier. Customers earn different rewards at different intervals — 25, 50, 150, 200, and 400 starts. There are also opportunities to collect bonus stars if you make a certain purchase several days in a row.

Some retailers also make it possible for customers to receive points with partner companies. An example of this would be an airline reward program where a customer earns points from preferred dining, car rentals, and other purchases at specific establishments.

Using your company’s CRM system as a foundation, a qualified solutions provider can help you build a loyalty management system tailored to your unique requirements.

Case Study: Building a Unique Loyalty Rewards Program on Microsoft Dynamics >>

6. Partner with Another Company

As we just mentioned, partnering with another relevant brand is a great way to boost your exposure and offer your existing customers more options.

For example, if you’re a veterinary office, you may partner with the local pet food store. This will get your office’s name in front of the pet food store’s customers and vice versa.

This can also work for the charitable side of your business. By letting your customers know that a portion of their purchase goes toward a certain charity, you’re showing your commitment to your community and giving the charity more exposure.

7. Set Up a Subscription Service

A subscription-based program not only retains a customer for a certain amount of time, it also offers incentives for the customer that they may not receive anywhere else.

For example, pet products supplier Chewy.com offers a discount when you sign up for autoshipping. You can choose how frequently you want your furry friend’s items delivered to your home and cancel at any time.

8. Ask for Feedback

Letting your customers know that you value their feedback shows that you’re committed to consistently improving to better serve them.

There are many ways to request feedback, but it’s most effective when done immediately following an interaction with a customer.

For example, after reaching out to Warby Parker, they send an email asking how your chat with the customer service representative was. It’s important to make any feedback request quick, simple, and painless for a customer to complete so that they’ll be more likely to share their thoughts.

Certain CRM systems include customer voice capabilities, so retailers can capture the voice of the customer — that is, gain firsthand perspective into what the customer experience is like and how consumers talk about a particular product or brand.

9. Ask for Reviews

Reviews are golden because they are authentic testimonials from real people. Someone who is unsure of whether or not they should buy from you will check reviews to see other people’s experiences with your company, and decide from there if they want to buy from you.

Collecting reviews is a great way to help these shoppers turn into long-term customers. It’s also an opportunity to turn your happy customers into brand advocates. You can request Google or social media reviews through email and maybe even offer an incentive for completed reviews.

Don’t forget: If a customer shares a review, you should respond to it whether it’s good or bad. This shows that you’re paying attention to what people are saying about you, and you can use the feedback as a way to improve.

10. Respond to Feedback & Reviews

Asking customers for input is only the beginning. You should always respond any time a customer writes a review or offers feedback, regardless of whether it’s positive or negative. Doing so not only shows that you’re paying attention to what people are saying about you, but also demonstrates that you value customers’ thoughts and opinions. Try creating different scripts for different situations so that your responses are polite, professional, and consistent with your brand’s tone and voice.

11. Pay Attention to Social Sentiment

Another way to determine how customers think and feel about your brand is to analyze social sentiment. As its name implies, social sentiment refers to public perception of your brand as expressed via social media.

Social sentiment can be a strong indicator of which way your customers are leaning, especially amongst younger audiences — Millennials and Gen Z spend more time online than previous generations and, as such, are more likely to be influenced by social media. Social sentiment — and social media in general — can be a powerful tool for staying on top of the latest trends, gaining insight into what your customers really think, and ensure long-term customer loyalty.

12. Show Gratitude

A simple “Thank you” goes a long way! Many shops on Amazon and Etsy deliver heartfelt notes of gratitude after every purchase. This is a way to reach across the impersonal eCommerce barrier and remind them that there’s a grateful human on the other side.

Handwritten notes delivered along with a purchase are an incredibly thoughtful way to show your thanks, but it’s understandable that this isn’t always feasible. Instead, your customer loyalty plan can include a monthly goal for how many notes you’d like to write or you can use an alternative strategy like printed packaging inserts.

Chewy.com has lifelong customers because they take customer appreciation seriously. They’re known for sending holiday cards, housewarming gifts, and even commissioned painting of customers’ pets!

13. Use a CRM for Loyalty Management

Many of the strategies listed here can be easily and successfully executed with a customer relationship management (CRM) system.

A CRM system enables you to collect and store important customer data, such as major milestones, purchase habits, transaction histories, customer service records, and more, all within a single, consolidated location. Retailers can also utilize analytics to build unlimited rules and models to create rewards programs that benefit specific customer segments, while also driving loyalty and revenue. This gives you the chance to better understand your customers, so you can personalize their experiences and increase the chances of them remaining loyal to your brand.

14. Personalize Sales & Marketing

With so many advertisements vying for customers’ attention, personalization has become one of the most effective ways to get them to notice — and to enhance the customer experience. As we’ve mentioned, CRM systems make it easy to house all relevant customer data in centralized repository, but did you know that you can also use a CRM to build out detailed profiles for individual customers?

By providing a truly 360-degree view of the customer, a CRM system gives you all the information you could possibly need to tailor marketing campaigns, product recommendations, promotional offers, and more to an individual customer’s needs and interests. In doing so, you can ensure that you’re delivering the three Rs: the right product in the right place at the right time.

15. Create Loyalty Tiers

You can encourage more purchases and offer more rewards by setting up a tiered customer loyalty program.

The Hilton Honors Reward Program has four loyalty tiers, with each offering greater benefits than the one before. Customers earn points with every stay and a certain amount of points moves them up the loyalty ladder. All tiers include membership discounts, while the higher tiers include exclusive offers like 48-hour room guarantees and executive lounge access.

16. Engage Your Customers

The numbers don’t lie: Engaged customers are loyal customers. Companies with strong omnichannel customer engagement strategies retain an average 89% of their customers, compared to those with weak omnichannel strategies, which only retain 33%.

24 Strategies to Build & Maintain Customer Loyalty [Plus Examples!

Though there are seemingly innumerable ways to boost customer engagement, some tried-and-true methods include:

  • Building a customer community where your customers can connect, share their opinions, discuss the latest trends, and more
  • Creating marketing content that is as exciting, entertaining, and informative as it is promotional
  • Experimenting with different mediums — videos, infographics, social media content, and so on — and seeing what your customers respond to
  • Developing a brand voice that feels authentic and approachable
  • Hosting events, such as webinars, customer engagement summits, and local meetups, where customers can engage with your employees — and with each other — face-to-face

17. Maintain a Human Connection

Even in the digital age, one-on-one interactions are much appreciated. Online chats and email correspondence are appropriate for a lot of situations, but nothing beats a human touch.

24 Strategies to Build & Maintain Customer Loyalty [Plus Examples!

A whopping 79% of consumers say that interacting with a human is an important part of their experience. This tells us that, while digital avenues are still valued, having an actual person available by phone is a comfort no consumer wants to be without.

18. Make Yourself Available

As we just mentioned, there are plenty of avenues customers can take to get in contact with you, so it’s important to make sure someone is always on the other side to represent your brand.

Whether a customer sends you a message on Facebook, an email, a comment on Instagram, or a note via your online chatbot, someone should be there to respond ASAP. To streamline communications, you should have scripts prepared and a process in place to handle any type of interaction, whether it’s a simple question or a complicated problem.

You can even leverage your CRM system to support this availability. By providing you with a 360-degree of the customer, your CRM system enables you to see which channels your customers frequent, which social media platforms they like to use, how they prefer to communicate, and more, so you’re ready and available whenever and wherever they need.

19. Prioritize Emotional Relationships

In today’s cutthroat competitive business landscape, customer satisfaction is no longer the competitive differentiator it once was. The modern customer doesn’t just want their basic needs to be met — they want to feel seen, heard, and valued. This requires retailers to prioritize emotional relationships over transactional ones and to appeal to different “emotional motivators,” such as a desire to feel a sense of belonging, a desire to stand out from the crowd, and so on.

Establishing emotional connections is a powerful way to enhance the customer experience and, by extension, secure customer loyalty. In fact, by implementing an emotional connection-based strategy, one retailer was able to reduce its customer attrition rate from 37% to 33% and increase customer advocacy from 24% to 30%. For retailers interested in taking a more emotional approach, using your CRM system to unlock hidden insights about emotional motivators from customer data is a great place to start.

20. Speak Your Customer’s Language

“Speaking your customer’s language” can mean two different things, both of which are important to keep in mind.

The first is literally speaking the customer’s native language: 75% of consumers say that they’re more likely to purchase goods and services if the corresponding product information is in their native language. The same goes for customer service. Offering multilingual services — especially if your company has a global presence — is a great way to make the customer experience easier to navigate and to demonstrate that you value your customers.

24 Strategies to Build & Maintain Customer Loyalty [Plus Examples!

The second refers to using a more conversational tone when interacting with customers. Now, we aren’t suggesting that you start studying up on the latest slang, but rather that you use language that’s friendly, easy to understand, and relatable; you should incorporate this language into everything from your customer service scripts to your marketing materials. Start by listening to your customers: Pay close attention to how they talk about different products and the pain points they experience to get a sense of their tone, diction, and phrasing. Avoid complicated industry jargon wherever possible and always be mindful of readability.

21. Be Honest

Mistakes are just a part of life. Just think of the numerous data breaches that some of the biggest brands have had to deal with in recent years. What we learned from this is that honesty is always the best policy.

If a company didn’t address a small mistake with an order or something more extreme like a data breach, how would the customer feel once they noticed the issue? It’s likely that they’d lose any and all sense of trust with the company, and probably tell their friends and family about the negative experience.

No matter the issue, be honest with your customers. Dancing around a problem or ignoring it completely doesn’t put anyone at ease. A simple email that acknowledges the error and addresses how it will be fixed may be all your customers need to remain loyal.

22. Be Flexible

Say you have a strict 30-day return policy in place, but a long-time customer requests a refund a few days outside of this window. Is it worth losing the customer if you deny the request?

Little exceptions like this are what can turn casual shoppers into life-long advocates for your brand. Plus, a customer you go the extra mile for will likely be willing to write a positive review of your company.

23. Remember Their Special Days

No one wants to feel like Molly Ringwald in “Sixteen Candles.” Sending a simple “Happy Birthday” email or postcard to acknowledge their special day keeps you top-of-mind and shows you care. You can take this a step further by giving them a special birthday discount or a free product to help them celebrate.

CRM systems make it easy to keep track of major customer milestones, such as birthdays, wedding anniversaries, college graduations, and more, so you can proactively create and queue up marketing messages for every event.

24. Offer Wish Lists

Giving customers the ability to keep track of their favorite items or create wish lists is another feature that most successful loyalty programs offer. This helps the customer keep track of items they want to purchase while also creating an easy-to-reference list for friends and family members who are gift shopping. It also supports personalized marketing: Since wish list data is typically stored within a CRM system, you can access that information and use it to strategically deliver in-stock notifications, price reduction alerts, and more.

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