Essential Takeaways from the Best Loyalty Programs

by Bistriti Poddar |

Essential Takeaways from the Best Loyalty Programs

We are in times when almost every brand is in a competition for customer loyalty, trust and engagement. Brands agree that for a thriving and sustainable business, a loyal customer base is essential. Repeat customers alone can increase sales by 47%, and customers who belong to loyalty programs typically spend 12-18% more than non-members. The best loyalty programs drive revenues, higher cart value, CLV, referrals, improve brand perception, retention and loyalty. However, only having a loyalty program is not enough, having a well thought out strategy that is compelling, frictionless, exclusive, engaging and mutually beneficial is important. According to Jupiter Research, more than 75% of customers today have at least one loyalty card, and the number of people with two or more is estimated to be one-third of the shopping population.

“Loyalty programs can be very effective, but in today’s day and age, your loyalty program should be more personalized and less points-per-dollar oriented. That is very transactional and loyalty is built on building relationships. Access to special perks, events, content, services, products, and more can be customized to your business and your customers’ wants” – Carol Roth, Host of The Roth Effect

Here are some of the best loyalty programs and what makes them successful:

  • Starbucks Loyalty Program – One of the best loyalty programs, Starbucks Rewards was mentioned eight times in its Q4 2018 Earnings call. When you purchase at Starbucks, you get ‘Star Points’ that you can redeem for rewards. Besides, you can pay through the app, skip the line, get notifications about special offers and seasonal drinks. It has also taken personalization to the next level by collecting information about customer’s preferred drink orders, lifetime value, frequently visited locations, and seasonal favorites to offer more relevant perks. They also switched from points program to a gamified approach in 2016.
  • Amazon Prime – One of the best in the game, they offer rewards for Amazon shoppers to encourage customers to return for repeat purchases. Talking about perks, customers get faster shipping benefits, exclusive access to movies and TV, Kindle books, and superior Amazon experience. As of September 2020, Amazon Prime members in the US were estimated to be 126 million in the US, who have a 93% retention rate after the first year and 98% after two years.
  • Sephora Beauty Insider – Based on an effective points system, customers get exclusive gifts. Loyalty program reward members can earn a point on every dollar spent and then rack up those points to get exclusive curated sets, access to beauty classes and seasonal promotions. They have 3 tiers namely White, Black and Gold and benefits include access to exclusive events, offers on preferred brands, birthday surprise, and a brand gift on every 200 points.

What are some takeaways from some of the best loyalty programs out there?

  • Make your loyalty programs attainable and simple. If your customers find it difficult to earn and burn points, they will most likely lose interest and churn. Also, if the rules keep fluctuating, customers will drop off.
  • Your loyalty program should always be on brand and correspond to the overall brand ethos. At the same time, test out the digital features that help customers rack up their points and eventually redeem them.
  • Best loyalty programs are always connected to the CLV. As a brand that wants to increase CLV, you must understand the preferences of your customers. Many marketers leverage predictive analysis to better comprehend customer behavior and purchase habits.
  • Introduce relevant and exclusive rewards. Starbucks does it best. They give members access to exclusive features like a reward every 125 stars, a personalized gold card and monthly double star days. Tailor made rewards matter a lot to loyal customers.
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