t's not easy to convert consumers into brand ambassadors. For starters, you'll need a consistent and repeatable plan for encouraging consumers to buy from you again and again. Customer loyalty programs play a big role in this. A loyalty program is a must for any business simply because it enables the business to build a lifelong connection with its customers. As a matter of fact, according to a study by Forrester Research, 80% of large organizations now have some sort of loyalty program in place.
Indeed, loyalty programs are a great way to increase customer engagement. But, what goes into the design of a successful loyalty program?
In this article, we will look at five loyalty program examples from leading brands, and how you can use one to engage your customers, boost your revenues, and reinforce your customer relationships.
Let's get started!
Gamification is one of the hottest buzzwords in loyalty programs. Gamification, a system that rewards desirable customer behaviors, has proven that it can be effective in engaging customers and repeat purchases. Starbucks has one of the most well-known loyalty programs, and it relies heavily on gamification. Nowadays, it is increasingly common for retailers to create mobile apps to handle loyalty programs. But, when Starbucks first released My Starbucks Rewards with the Starbucks app, it was a novel concept. Customers can now access the program from the app, which eliminates the need for a traditional punch card.
Also, customers must pay using the Starbucks app in order to receive their reward points. This method of centralizing consumer purchases offers a goldmine of data about customer preferences and behavior. By gamifying the loyalty program, Starbucks managed to increase its loyal customer base by 11% and reach over 16 million active customers.
If you run an online community, you’ve probably heard of the term community loyalty programs. These programs are designed to give members of your community a tangible reward for their time and engagement. Essentially — members that engage with their community through certain methods receive valuable rewards for doing so.
Sephora is one of the most famous and beloved beauty brands in the world, and it uses a community loyalty program to boost its engagement. Sephora's Beauty Insider program is one of the best examples of how a community loyalty program can improve a company's community engagement. The reason the Sephora Beauty Insider program is so great is that it gives qualifying customers membership to an exclusive online community and a slew of other benefits. In 2012, the program acquired more than 1.5 million new members. In 2013 Sephora's Beauty Insider program was voted as the best loyalty program for the second time by RetailCustomerExperience.com. Today, Sephora’s Beauty Insider program has over 25 million members worldwide and generates more than 50% of Sephora’s revenue.
Subscription (Bark Box)
If you are looking for a loyalty program in which customers will be highly engaged and motivated to continue purchasing, then you should consider launching a subscription program. It may be not a traditional rewards program with points and discounts, however, most customers don't mind since it allows them to opt-in to a subscription for something they love. This type of loyalty program is especially popular for perishable or disposable products such as coffee, shaving kits, beauty products, vitamins, and more.
A great example of a subscription-based loyalty program is BarkBox. To increase customer loyalty, BarkBox offers different monthly plans for dog owners. Members can receive a sizable discount on their plans, especially when purchasing a 12-month subscription. This is especially convenient for dog owners that want to skip a trip to a local pet store. After all, customers that commit for 6 or 12-month plans have more value compared to users purchasing a single box, due to the recurring revenue. BarkBox built a successful subscription-based company by making dogs and their owners happy with stylish and personalized products. Their subscription boxes now serve over three million dogs across the United States.
Charity (The Body Shop)
One way to improve your relationship with your customers is to take your company values into consideration. Customers are more likely to be loyal to your brand if your loyalty program is built on shared values.
By incorporating animal welfare in their program, The Body Shop has nailed this approach.
The Body Shop's loyalty program has an additional feature on top of its rewards and VIP benefits. Members can choose to donate their rewards to one of the partnered charities such as Born Free USA, an American charity for animal welfare.
This allows The Body Shop and its customers to bond over similar values and concerns, such as animal welfare end environmental awareness. This makes it easy for the customers to contribute to a cause they believe in and reinforces their desire to continue being a patron of The Body Shop. This type of loyalty program is a one-of-a-kind opportunity to engage with your clients on a more personal level, strengthening your connection with them.
Referral Program (Freshly)
Referral marketing is where you offer a reward to customers that share their love of your business with their family and friends. This approach can work well for a variety of business models. There are many examples from consumer businesses such as Uber & AirBnB, B2B businesses like Geckoboard, and service businesses like GoToMeeting, Bidsketch, and HelpScout. Successful referral programs come in many shapes and sizes but there are some factors and characteristics common to all of them.
An example of a referral-based loyalty program is Freshly, a company that delivers healthy meals. Freshly's referral program offers a $40 discount to customers that help sign up a friend, as well as to the person that was referred. This referral program successfully allows Freshly to grow and manage its huge customer base, and the company now ships over one million meals across the United States every week.
Loyalty Program Takeaways
Never forget that creating an engaging loyalty program should always be a goal in business. Finding a way to infuse a loyalty program into your business can significantly increase the time your customers spend with you. Also, remember that the best loyalty programs are customer-centric. They should take customer behavior and values into consideration. An effective loyalty program can boost customer engagement, increase revenues, and bolster your repeat purchase rate.
We hope that you found this article informative and useful in designing your own loyalty program!
Polina Kulikova is a digital marketeer at Growave, and she is passionate about creating content for e-commerce businesses to help them succeed. Growave is the all-in-one marketing platform for small and medium-sized Shopify stores. Growave helps to drive conversions, boost sales, and build brand loyalty. Some of Growave's features are Reviews, Loyalty and Rewards, Wishlist, Social Login, Instagram and UGC.