The use of tokens and rewards as an effective marketing method isn’t a new strategy to encourage customer loyalty. However, modern loyalty programs are innovating new ways for small to midsize enterprises (SMEs) to inspire customer loyalty. In this article, we evaluate five loyalty programs for your business needs.
In this article
Australia’s loyalty program market is expected to grow by 12.2% in 2022. It is experiencing innovation and out-the-box thinking to build brand loyalty across various industries. The growing use of loyalty programs has seen a surge in recent years as more Australians are interested in signing up for them if businesses offer the type of programs they want.
What do customers want from a loyalty program? SMEs need to carefully consider their type of loyalty program that offers achievable customer incentives and rewards while keeping customers satisfied. How can your organisation get started with a meaningful customer loyalty program?
What is a loyalty program?
A loyalty program is a system designed to reward customers who make frequent purchases. SMEs utilise this tactic to prompt repeat customers to keep buying from their businesses, build relationships, and create brand loyalty.
Getting started with customer loyalty programs
How can your business implement a loyalty program that delivers quality to returning customers and stands out to new customers? A thorough understanding of your market is required for a loyalty program to make a meaningful impact. SMEs must consider the different loyalty programs to stay competitive and have clear business objectives for the right one to succeed.
When creating a meaningful loyalty program for your business and customers, first outline your business practices and expectations when evaluating your market. Consider the following questions to ask yourself when starting.
Is a loyalty program right for my business?
Loyalty programs are all about repeat business. Therefore, your business needs to offer products or services that consumers purchase regularly. The right goods and services are essential to encourage repeatable sales through a meaningful loyalty program.
What is my motivation for a loyalty program?
A loyalty program can benefit your business in many ways, such as by gaining new customers, increasing your returning customers’ spending, or guiding them to higher-margin products. Companies identifying with one or several benefits can align their goals before designing a loyalty program.
Would my customers benefit from a loyalty program?
Not all customers are the same, and a meaningful loyalty program targets customers with appropriate services and rewards. SMEs must analyse their customer base and group them accordingly in their loyalty program. These groups can range from customers that cost your company more money than they are worth to customers that are frequent purchasers, and the price isn’t an issue for them.
What loyalty strategy should I use?
A clear vision and purpose define a successful loyalty program. Adapt and choose the components of your loyalty program to your goals and customer groups. Your strategy could be anything from offering a discount rate to all customers to tiered rewards and personalised offers, and other customer incentives.
A few options are available when searching for the right loyalty program for your business. They all offer different rewards and work differently, too. Consider your business goals and customer analysis when considering what type of loyalty program suits you. Let’s look at five loyalty programs, and what they do.
1. Point-based loyalty programs
Points programs are the most widely adopted type of loyalty program. This common loyalty program allows customers to accumulate points that they can redeem for rewards. Customers can earn points from purchases or in various ways, such as sharing on social media, leaving reviews, or just having a birthday.
2. Tiered loyalty programs
Tiered programs offer loyalty benefits depending on the rank of the customer membership. Unlike general points programs, tiered memberships are based on certain qualifiers such as engagement or purchase history. Each tier consists of varying rewards, services or benefits. The basis of tiered programs increases the reward as the customer progresses through the tiers.
3. Subscription loyalty programs
Subscription programs also known as paid or premium, give customers immediate and ongoing benefits for an upfront fee that can be recurring or a one-off. They usually have proof-of-value to get signups and keep existing members active by offering personalised features. Subscriptions or paid memberships are geared towards engaging your most valuable customers.
4. Value-based loyalty programs
Value-based or mission-driven programs aim to go beyond other loyalty programs by connecting with customers on a deeper level. It involves giving customers a sense that they are making a difference. This loyalty program usually donates a percentage of purchases to a charity or welfare organisation. Value-based programs don’t offer their customers any rewards but intend to give them a feel-good factor in which they contributed to a cause.
5. Coalition loyalty programs
Coalition or shared programs unite with multiple, unrelated organisations to offer customers a broader range of incentives. Customers can earn points across brands and redeem them with another participating brand. A single organisation creates a coalition program to promote loyalty and spending by offering a more comprehensive range of products and brands.
The point of loyalty programs
Once applied, the right loyalty program provides numerous two-way benefits for your customers and your business. To recap, loyalty programs can help your business:
- Gain new customers
- Increase returning customer spending
- Retain existing customers
- Guide customers towards higher-margin products
- Encourage repeat business
- Build strong customer relationships
- Increase customer satisfaction
- Stand out from the competitors
- Boost revenue
