4 Things the World’s Most Successful Loyalty Programs Have in Common

by Grace Miller |

4 Things the World’s Most Successful Loyalty Programs Have in Common

eSuccessful businesses dedicate their time not only to figuring out how to attract new customers but also to retaining the ones they already have. Studies have shown that gaining a new customer is actually 5 to 25 times more expensive than keeping an existing one, which means that marketing dollars are often better spent nurturing your relationships with people who have already purchased from you.

According to Neilson, improving customer retention rates by just five percent has shown the potential to grow profits up to 95%, and 80% of a company’s future revenue comes from just 20% of its existing customers. Customer Loyalty programs ideas are one of the best ways to make sure that you are rewarding your customers routinely and keeping them interested in your brand and products.

However, according to a study by Capgemini, a high percentage of loyalty programs are failing. 53% of consumers stated that they abandoned at least one loyalty program within the last year. That means that loyalty program  companies are putting money and energy into strategies that aren’t hitting the mark. The key reasons for this are:

  • A lack of reward relevance, flexibility, and value (44%)
  • A lack of a seamless multi-channel experience (33%)
  • Customer service issues (17%)

Companies need to make changes to their programs in order to improve these numbers and leverage the full power of loyalty marketing. Let’s take a look at four things that the world’s most successful loyalty and reward programs names have in common. 

Keys to the Most Successful Loyalty Programs

Outstanding Rewards

One of the biggest problems with loyalty programs is that customers don’t care enough about the perks and rewards that are offered. Many programs will offer chances to earn a prize, such as a product or points toward a trip. Research shows 57%  of customers sign up for a program to save money, so bear this in mind when choosing your reward structure.

Discounts on products, cash back, and other money-savers will compel more customers to take part in your program. To differentiate yourself completely, ensure that monetary rewards enhance your brand experience too. You can use unique rewards like custom products, exclusives and merchandise to motivate your customers to engage and interact with your brand.

Successful Loyalty Programs

Emotional Connection

Customers also remain in loyalty programs because they feel a sense of connection to a brand. According to a report published by Forrester, emotion — and an emotional connection to a brand — is a stronger driver of loyalty than factors like “ease” and “effectiveness.”

Customers are looking for a full experience rather than just a company they are purchasing from. A 2017 study found that the top five reasons customers gave for feeling a connection with a brand were all related to “caring”:

  • Cares about me
  • Cares about the world
  • Understands me
  • Has an audience of people like me (my tribe)
  • Makes me feel special

Furthermore, 89 percent of Americans are willing to switch brands in order to support a cause, and 76 percent of consumers would think more highly of a company that helps them support a cause they care about.

A great example is TOMS Passport Rewards. Members have the option to redeem points toward a charitable cause or initiative. Currently, members can redeem points for a $25 donation to help TOMS support U.S.-based after-school groups and community development programs. TOMS has found a way to make their company appeal to customers because, when they sign up, they are taking part in a bigger cause.

Digital Optimization

Another important way to connect with customers is to make sure that your program is easy to navigate on mobile. Many companies run into trouble when users have a bad experience with their mobile app or when their website isn’t fully responsive. Mobile was responsible for 64 percent of sales during Black Friday 2017. That means that in order for customers to get excited about using a program, they have to be able to easily use it on mobile.

Apart from being mobile-friendly, the program needs to be interactive. Fill it with standout features and make it fun to use. In our experience at Annex Cloud, engaging omni-channel customer loyalty programs can make a major impact on retention numbers.

It’s also helpful to have integrations with mobile-specific features like Messenger and WhatsApp. The more seamless a user experience is, the more popular the app will be, and if they can easily share info with friends and communicate back and forth with your brand, they will be more likely to use it. Page speed optimization is also essential. Every second of delay can result in a seven percent reduction in conversions. Make sure that your site is running without any glitches and that pages load quickly and don’t keep customers waiting.

Successful Loyalty Programs - Digital Optimization

Thinking Beyond Transactions

Basing a program merely on transaction doesn’t create a feeling of connectivity among customers. You don’t want them to feel like you are simply just selling to them. It’s important to reward activities other than purchases to keep them engaged and also to further promote your brand. Activities such as writing product reviews, following your social channels, sharing your pages, completing quizzes, watching your product videos and downloading your apps are all great examples of things customers could be rewarded for.

Check out Bebe’s customer loyalty program. They do a great job of making sure the customer gets rewards for various activities, like referring friends, hashtagging photos on Instagram and Twitter, and even just visiting their website.

Loyal customers are the most engaged, highest-spending, and the most frequent buyers in your database. So, clearly, loyalty programs are a great way to make customers come back for more. But where do you start? Below are some examples of successful loyalty programs examples for you to gain some inspiration.

The Feel-Good Factor

2020 saw a global awakening. For the first time in many years, the world as a whole was facing a crisis, and the effects it has on the psyche of the individual was universal in nature. Rewards can be meaningful even if they do not offer direct benefit to the customers. Various brand across the world partnered with charities or stood for a cause and the customers were more than willing to join programs that supported charitable causes. It gave the customers a sense of satisfaction in doing a little bit towards building a better community.

Examples of Successful Loyalty Programs

1. UO Rewards by Urban Outfitters

Urban Outfitters is a multinational lifestyle retailer. As an Urban Outfitters UO program member, you stand a chance to earn points and rewards by either shopping online with them or making purchases at their stores. Even when you share their posts on social media using their hashtags, read the company’s blog, you can earn points and rewards. Program perks include access to exclusive offers, tickets to events, and signed merchandise from various artists. Also, you can keep earning points to advance to Silver Tier and Gold Tier for even more perks.

Urban Outfitters Rewards

2. e.l.f.’s Beauty Squad – A Free Membership Program:

e.l.f. Beauty Squad lets you earn and unlock e.l.f. reward points on purchases. Program members can also earn points by referring friends, and engaging with their brand on social media. More often than not, customers tend to join the program because they receive an enrollment gift. The program also rewards them with early access to sales and new products, redeemable products, free beauty sets, and various discounts. There are three levels with additional benefits within each level: EXTRA, EPIC, and ICON.

elf reward programs

3. American Airlines’ AAdvantage:

Customer centricity is at the front and center of all their communications with loyal members. When you fly on American Airlines or with any of its partner airlines, you earn miles when you fly. You can redeem them for award flights, upgrades, car rentals, hotel stays, vacations, Admirals Club airport lounge access, and much more. You earn them based on how much you spend on tickets, not how far you fly. Also, if you’re a frequent flyer, the rewards program shows how far you are from your destination of becoming a gold member.

American Airlines

Best Loyalty Programs in the World

Starbucks and Sephora have one of the best loyalty programs in the world. They have successfully tapped into their worldwide reach through strong brand loyalty and frequently returning customers. Their loyalty reward programs go beyond points, they also heavily focus on delivering customer experience. Here’s what’s you can learn from them:

1. Starbucks Loyalty Program:

One of the best loyalty programs in the world, the Starbucks loyalty program has taken the personalized experience to the next level. When you purchase something at Starbucks, you get ‘Star Points’ which you can redeem for rewards. The more stars you earn, the more rewards you get. Plus, you can also pay via your mobile app and get notifications of special offers and seasonal drinks.

Starbucks Loyalty Program

2. Sephora Beauty Insider:

There are three tiers in the program; White, Black, & Gold, and benefits include private sales, exclusive events, offers on favorite brands, birthday surprises, and a gift of your choice on every 200 points.

Sephora Loyalty Programs

Loyalty programs are a fantastic way to engage customers and spread the word about your brand at the same time. Follow these four tips from the most successful loyalty programs to make sure that you are getting the most out of yours. Browse through the Case Studies to learn how Annex Cloud helps its customers make a major impact with their program, expand brand reach and achieve marketing and business targets. You can also get in touch with a product specialist or schedule a demo to learn about the best-suited loyalty strategies for your business.

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