The only guide you’ll need to build a customer loyalty program
Posted: Thu Dec 05, 2024 6:49 am
Can you think of a few brands that you would consider yourself loyal to? Maybe it’s your neighborhood coffee shop or a big box store that sells in bulk. Now ask yourself why? What is it about these brands that makes you return to them every time?
If loyalty programs made your list of reasons why, it wasn’t accidental.
Businesses across the globe have recognized the importance of fostering a relationship with their customers through customer loyalty programs.
But what exactly are customer loyalty programs, and why are they so essential?
In this guide, we’ll take a walk through the world of customer loyalty programs. We’ll explore their benefits, examine successful examples from various industries, and give tips on how to create your own program to strengthen the bond with your customers.
What is customer loyalty?
Let’s start with the basics; what is customer loyalty and how do we measure it?
Customer loyalty develops from the relationship you create and nurture between your brand and a satisfied customer. Their willingness to engage with your brand and repeat purchases helps you measure customer loyalty.
Every interaction influences a customer’s loyalty – it’s something that brands need to continuously work on.
How do I measure customer loyalty?
It’s one thing to guess or assume customers are loyal, but to facebook database make improvements and strategically plan how to communicate with customers, we need measurable goals and metrics.
Some key metrics brands should keep track of are:
Customer retention rate: Measures how many customers you keep vs. lose over time
Customer lifetime value: The total revenue a business can expect from a customer throughout their relationship.
Customer satisfaction score: measures how satisfied customers are with a brand
Engagement rate: average number of social media interactions per customer
Repeat purchase rate: the percentage of customers who purchases multiple times from a brand
Referral rate: percentage of customers who were referred to a brand by an existing customer
What is a customer loyalty program?
A customer loyalty program is an initiative brands offer to reward customers who make repeat purchases, send referrals, and engage with them.
Depending on the brand and industry, there are many ways you can reward customers for their loyalty. Free products, exclusive offers, member status, and cashback points are some of the more popular ways brands thank their loyal customers.
84%
of customers are likely to stick with a brand that has a loyalty program
15-25%
increase in revenue for brands with top performing loyalty programs
Some brands or small businesses might argue that loyalty programs are too expensive to invest in but offering customers a reward can go a long way toward keeping them satisfied and loyal. Not to mention that acquiring new customers costs much more than retaining your loyal shoppers – anywhere between 5-25x more.
But how do brands choose what kind of loyalty program to offer – and what are the options?
Well, you can get as creative as you like to stand out or go with a tried-and-true loyalty system. Let’s cover nine types of loyalty programs that have helped brands improve satisfaction and yield great results.
9 types of loyalty programs with examples
// Paid loyalty programs
Paid loyalty programs have grown in popularity over the last few years. Essentially, customers pay a fee to get perks and higher-value products and offers with their loyalty status.
Pros: It’s guaranteed revenue. Customers will have to pay a fee to participate in this loyalty program and get access to its great benefits
Cons: Competitors might offer free programs, so it’s important to measure the value you offer and ensure it’s worth the monthly fee.
Example: Barnes and Noble
The book-selling moguls have a very popular loyalty program in place. First, they offer a free loyalty program, where customers collect stamps ($10 = 1 stamp, 10 stamps = $5 reward). But they also offer a paid program – customers pay a yearly fee and get a long list of perks including free shipping, 10% discount on their web shop, one free eBook a month and much more.
If loyalty programs made your list of reasons why, it wasn’t accidental.
Businesses across the globe have recognized the importance of fostering a relationship with their customers through customer loyalty programs.
But what exactly are customer loyalty programs, and why are they so essential?
In this guide, we’ll take a walk through the world of customer loyalty programs. We’ll explore their benefits, examine successful examples from various industries, and give tips on how to create your own program to strengthen the bond with your customers.
What is customer loyalty?
Let’s start with the basics; what is customer loyalty and how do we measure it?
Customer loyalty develops from the relationship you create and nurture between your brand and a satisfied customer. Their willingness to engage with your brand and repeat purchases helps you measure customer loyalty.
Every interaction influences a customer’s loyalty – it’s something that brands need to continuously work on.
How do I measure customer loyalty?
It’s one thing to guess or assume customers are loyal, but to facebook database make improvements and strategically plan how to communicate with customers, we need measurable goals and metrics.
Some key metrics brands should keep track of are:
Customer retention rate: Measures how many customers you keep vs. lose over time
Customer lifetime value: The total revenue a business can expect from a customer throughout their relationship.
Customer satisfaction score: measures how satisfied customers are with a brand
Engagement rate: average number of social media interactions per customer
Repeat purchase rate: the percentage of customers who purchases multiple times from a brand
Referral rate: percentage of customers who were referred to a brand by an existing customer
What is a customer loyalty program?
A customer loyalty program is an initiative brands offer to reward customers who make repeat purchases, send referrals, and engage with them.
Depending on the brand and industry, there are many ways you can reward customers for their loyalty. Free products, exclusive offers, member status, and cashback points are some of the more popular ways brands thank their loyal customers.
84%
of customers are likely to stick with a brand that has a loyalty program
15-25%
increase in revenue for brands with top performing loyalty programs
Some brands or small businesses might argue that loyalty programs are too expensive to invest in but offering customers a reward can go a long way toward keeping them satisfied and loyal. Not to mention that acquiring new customers costs much more than retaining your loyal shoppers – anywhere between 5-25x more.
But how do brands choose what kind of loyalty program to offer – and what are the options?
Well, you can get as creative as you like to stand out or go with a tried-and-true loyalty system. Let’s cover nine types of loyalty programs that have helped brands improve satisfaction and yield great results.
9 types of loyalty programs with examples
// Paid loyalty programs
Paid loyalty programs have grown in popularity over the last few years. Essentially, customers pay a fee to get perks and higher-value products and offers with their loyalty status.
Pros: It’s guaranteed revenue. Customers will have to pay a fee to participate in this loyalty program and get access to its great benefits
Cons: Competitors might offer free programs, so it’s important to measure the value you offer and ensure it’s worth the monthly fee.
Example: Barnes and Noble
The book-selling moguls have a very popular loyalty program in place. First, they offer a free loyalty program, where customers collect stamps ($10 = 1 stamp, 10 stamps = $5 reward). But they also offer a paid program – customers pay a yearly fee and get a long list of perks including free shipping, 10% discount on their web shop, one free eBook a month and much more.