The only guide you’ll need to build a customer loyalty program

Can you think of a few brands that you would consider yourself loyal to? Maybe it’s your neighborhood coffee shop or a big box store that sells in bulk. Now ask yourself why? What is it about these brands that makes you return to them every time? 

If loyalty programs made your list of reasons why, it wasn’t accidental. 

Businesses across the globe have recognized the importance of fostering a relationship with their customers through customer loyalty programs. 

But what exactly are customer loyalty programs, and why are they so essential? 

In this guide, we’ll take a walk through the world of customer loyalty programs. We’ll explore their benefits, examine successful examples from various industries, and give tips on how to create your own program to strengthen the bond with your customers. 

Let’s start with the basics; what is customer loyalty and how do we measure it? 

Every interaction influences a customer’s loyalty – it’s something that brands need to continuously work on.

It’s one thing to guess or assume customers are loyal, but to make improvements and strategically plan how to communicate with customers, we need measurable goals and metrics.  

Some key metrics brands should keep track of are:  

A customer loyalty program is an initiative brands offer to reward customers who make repeat purchases, send referrals, and engage with them.  

Depending on the brand and industry, there are many ways you can reward customers for their loyalty. Free products, exclusive offers, member status, and cashback points are some of the more popular ways brands thank their loyal customers.  

Some brands or small businesses might argue that loyalty programs are too expensive to invest in but offering customers a reward can go a long way toward keeping them satisfied and loyal. Not to mention that acquiring new customers costs much more than retaining your loyal shoppers – anywhere between 5-25x more. 

But how do brands choose what kind of loyalty program to offer – and what are the options?  

Well, you can get as creative as you like to stand out or go with a tried-and-true loyalty system. Let’s cover nine types of loyalty programs that have helped brands improve satisfaction and yield great results. 

Paid loyalty programs have grown in popularity over the last few years. Essentially, customers pay a fee to get perks and higher-value products and offers with their loyalty status.

A points-based loyalty program allows customers to collect points with every purchase, and they can redeem their points for discounts, free products, or other perks. 

Cashback loyalty programs allow customers to get a percentage of their purchase back in cash, or in a cash equivalent like store credit. The more you spend, the more you can save on a future purchase, encouraging loyalty to a brand.

A tiered program ranks customers based on their loyalty. The more engagement or purchases a customer makes, the higher their status with your brand. Customers can access different perks based on their status.  

A referral loyalty program encourages your customers to invite new customers to try your products and services. The existing customer gets some sort of reward for their referral, and you’ve gained a new user.

Gamified loyalty programs add a fun element to your loyalty program and encourage greater engagement than other types of programs. Brands can create a game, unlock new levels with purchases, complete quizzes, and much more with a gamified approach to a loyalty program. 

Value-based programs don’t directly impact the customers, but rather the brand donates a percentage of the purchase or pledges to contribute in some way to a social or economic issue.

A partnership loyalty program involves two businesses partnering up and providing each other’s customers with shared benefits. This could be cross-industry partnerships, like between a retailer and an airline. Customers spend with one brand and can reap rewards from another – and vice versa.

Loyalty program members generate about 12-18% more revenue growth per year than non-members.  

Probably the most obvious benefit of a loyalty program is the high number of repeat purchases. Encouraging customers to keep spending with your brand to earn points and get rewards is a great way to keep them loyal – helping your brand boost its revenue year after year. 

84% of customers say they are more likely to stick with a brand if they offer a loyalty program. 

If your loyalty program is well planned and beneficial to your customers, you significantly lower the risk of your customers churning. You’re offering them rewards unique to your brand, plus if they churn, they lose all the points they’ve earned – it’s a good incentive to stay. 

80% of customers would rather do business with brands that offer personalized experiences.  

A loyalty program gives your brand a great opportunity to personalize interactions with customers, sending them relevant promotional messages that are tailored to their spending habits, and rewards that apply to their favorite products. Customers are less likely to engage with your loyalty program if the rewards are for products or services that don’t interest them. 

60% of consumers that are part of a loyalty program believe their relationship with the brand goes beyond a transactional one.

Through a strong loyalty program, along with personalized experiences and offers, brands can form much deeper relationships with customers, proving that they understand their needs and are ready to reward their loyalty to your brand.  

Your first- and zero-party data hold a lot of potential in helping you personalize your interactions with customers and tailor their loyalty program to their interests.  

Using a customer data platform can help you collect and organize customer data. When you collect data from various sources and remove data silos, you can view the full image of who your customer is and how they want to interact with your brand. 

A customer data platform enables you to unify the data about a customer gathered from various interactions.

Show them you know more than just their first name through personalized campaigns and messaging. Personalized customer experiences increase revenue and loyalty. The best way to start is by optimizing how you use customer data so that you can invest in creating loyal relationships. 

Automating loyalty messages can take a huge strain off your employees and will offer customers better overall experiences with your brand.  

Take advantage of an omnichannel customer engagement solution that tracks the behavior and engagement of every customer. It is essential to analyze their behavior and send relevant information through their favorite channels about their loyalty program, encouraging them to stay up to date and engaged. Some popular use cases that can be automated for a loyalty program are:  

Simply having a loyalty program is not enough. When 90% of businesses have loyalty programs but 71% of customers say it has no effect on their loyalty, something’s got to give. The trick is to understand how to increase customer engagement in loyalty programs to make them more valuable. 

You can optimize your loyalty program by segmenting your audience. Take what you already know about your customers and make sure they get messages about rewards and promotions that are relevant to them and their status within the program. 

By segmenting your audience, you can send personalized loyalty offers.

Petpetgo is a top pet supply e-commerce company that used our solutions to segment customers based on purchase behavior and preferences. Customers received promotional offers based on loyalty status and preferences which doubled Petpetgo’s purchasing frequency. 

Getting feedback from your customers about your loyalty program can go a long way toward helping you optimize the entire program to ensure both your business and customers are satisfied. 

To help your feedback surveys get the best visibility, send customers messages on channels like Viber or WhatsApp where they can provide you with their thoughts directly in the conversation – no need to switch apps or windows. 

You can use channels like WhatsApp to gather feedback from loyal customers. 

Customers can have a lot of questions about your loyalty program – which could end up slowing down your customer service and adding more work to your live agents if you have a call center. 

Consider launching a simple chatbot that focuses on your loyalty program, where customers can interact with your brand, get answers to their questions 24/7, browse prizes and rewards all within one chat app.

A lost customer doesn’t need to be lost forever. It is your job to engage and re-engage your customers to nourish loyal relationships. You already know them well. You understand their habits, favorite communication channels, and their purchasing history. Use this to your advantage to reduce your overall churn. 

Push notifications are a great way to re-engage. After a few weeks of inactivity on your app, send a relevant notification via their favorite channel to entice them to revisit your offers. This notification could be anything, like a ‘we miss you’ message to a 10% voucher just for them.

With a well-crafted customer loyalty program in place, you’ll not only retain more customers and drive increased revenue, but you’ll also create a loyal community of brand advocates who will champion your business far and wide.  

But even a well-planned program can fail if the messaging and conversations with customers miss the mark. Keeping all your interactions conversational, using always-on chatbots, automated marketing messages and reminders, and easy access to customer support all play a major role in keeping loyalty up.  

All in all, designing the right kind of loyalty program, paired with a well-crafted communication strategy will help your brand reach higher levels of loyalty, which means consistent revenue growth and lower churn over.