5 Tips for creating a successful loyalty programme
A great loyalty programme may be the factor marking the difference among brands competing in the same market. Here are 5 key tips to creating a successful one.
What is a loyalty programme?
A loyalty programme is a marketing strategy that encourages customers to keep buying a company's products and services, by encouraging consumers to be loyal to the brand, who are usually incentivised by receiving extra rewards and benefits.
This is a well-known rule scripted in the history of business: give something in advance to receive something more back later. Indeed, providing consumers with a loyalty programme where rewards are expected has always been a factor marking the difference among brands - even now it still represents a great strategy in the digital era.
Here are some interesting stats to understand how a loyalty programme can be important for a businesses marketing strategy:
- 90% of companies have tried and still offer specific loyalty programmes;
- 84% of consumers prefer to shop at brands providing loyalty programmes;
- 66% of consumers claim that getting rewards actually change the way they shop.
Why rewards are key for customers
Rewards are key to a successful customer loyalty programme, and this is a fact. But what’s exactly a reward? According to the Cambridge Dictionary, a reward is something given from one party to another in exchange for good work and behaviour.
How does this apply to loyalty programmes provided by companies? It’s easy: programmes including rewards are important for brands because they encourage a long-lasting loyalty of customers and foster a shared sense of community and connection that goes beyond the simple shopping activity, as loyal clients are rewarded with specific benefits based on several factors to consider.
Therefore, rewards produce positive reactions from the customer's point of view:
- Improve a sense of belonging to brands that “feel like home”;
- Increase the general satisfaction with the products and the will to buy more;
- Generate a reflex for which, for specific needs, that brand and its products easily and quickly seem to be the perfect solution;
- Boost the possibilities to mention and suggest the brand’s products to other people;
- Give the overall feeling of being part of the brand’s game as a key lever.
Types of loyalty programmes based on rewards
The main goal of loyalty programmes is to motivate customers to repeat purchases in order to build a long-lasting trust and loyalty, supported by benefits that foster the interest and involvement of consumers along with the needs of the company.
But they are not all the same. In fact, it is possible to distinguish four main reward-based types of loyalty programmes with specific features:
- Points-based loyalty programmes are the most common and popular ones providing clients with cards to collect points for shopping or branding on social media, which are exchanged for benefits like discounts, cashback, freebies, etc.;
- Tiered loyalty programmes are membership-like connections between brands and customers based on individual ranks, each one related to specific rewards, which is possible to scale-up by making bigger purchases - obviously, the highest ranks are linked to more exclusive and rich rewards;
- Paid loyalty programmes are connections between brands and customers based on the payment of a participation fee, which can be recurring or one-time and provides immediate rewards and benefits to users who applied for it - this type of programme is usually quite effective because it’s very engaging and veiled with an intriguing exclusivity aura;
- Value-based loyalty programmes are based on a deeper connection between brands and customers which involves social values and the goodwill of donating funds for charity or environmental activism - this way, companies can be active brands for the most serious social issues and make their customers part of the game to help who needs; usually, this type of loyalty programme connects with one of the previous in order to combine the satisfaction of being a good customer with the one of being a good citizen, too.
Tips to create a successful loyalty programme
So, how’s possible to create a successful loyalty programme? Are there any aspects that must be included, no matter what’s the programme about?
The answer is yes: there are indeed five main tips to create a successful loyalty programme which companies must consider. Let’s take a look at them all.
Tip 1: must give reciprocal value
First of all, a loyalty programme must give a reciprocal value between brands and customers. In this case, for brands creating value means empowering the attractiveness of the company and its products generating profits, acknowledgement and good quality relationships with consumers; instead, value can mean several things for customers:
- Value as the possibility to purchase more and better while gaining rewards;
- Value as the possibility to get to exclusive or personalised products and services;
- Value as the possibility to contribute to important social issues while shopping.
Tip 2: must be simple and clear
Given that value is the first and most important step, it’s key to consider that a loyalty programme must be simple and clear to understand and join.
Consumers love when their shopping journey is made easy and simple, and so does what concerns loyalty programmes: the imagery, the interface, the communication model, everything must be simple and extremely clear to easily catch customers' attention and especially keep in their minds.
Tip 3: must be convenient
Loyalty programmes must be convenient and that’s a fact, otherwise, people wouldn’t apply to them. But what does it mean?
Convenience is one of the factors that mark the difference from competitors. In fact, given that a programme should be simple, clear and valuable, it must be convenient for customers to live a frictionless shopping experience where rewards and benefits are easy to ransom, without long, complicated and tedious processes.
Tip 4: must be exciting and engaging
Excitement and engagement play a key role in what concerns customer loyalty programmes. In fact, nowadays consumer behaviour has evolved and they are changing their habits in terms of shopping experience.
A good example could be connected products: especially in the fashion industry, thanks to digital connectivity brands can interact with consumers on a deeper level developing new exciting and engaging activities through entertainment, extra content, gamification and personalised special offers and suggestions. Allowing consumers access to exclusive premium content or even to meta-port their purchases into the metaverse.
Tip 5: must be repeatable
Last but not least, the whole experience included in a loyalty programme must be repeatable, but keeping the same level of interest and intensity in time. The reason is clear: the mere fact of making a process repeatable pushes consumers to engage more frequently, which also means increasing the possibilities to sell and generate value through profits and customer relationships.
Therefore, a quick reminder list to create a successful loyalty programme:
- First, conceive how rewarding system works in the loyalty programme;
- Make the loyalty programme is valuable for the brand and customers;
- Make the loyalty programme simple and clear;
- Make the loyalty programme convenient;
- Make the loyalty programme exciting and engaging;
- Make the loyalty programme repeatable.