A loyalty program is offered by a business to attract new customers and retain existing ones. The structure of these initiatives varies based on the type of business and customers. Retailers’ loyalty programs, for instance, usually include discounts, rewards, or other incentives to encourage repeat purchases. Usually, the more frequently the customer shops with the brand and the more money they spend, the greater the reward.
For companies that sell to businesses rather than individual consumers, a loyalty program can similarly help encourage repeat purchases. But it can also take the form of a community that creates brand advocates and encourages engagement. In that case, instant rewards or points-to-rewards are used instead of discounts.
The kind of incentives offered in a loyalty program can vary. Some examples include:
Customers typically join the program by registering their personal details. Depending on the type of program, they may receive a membership number, a portal login, or a rewards card, which is used to identify their purchases or actions.
READ MORE: How to Set Up a Loyalty Rewards Program
There are numerous business advantages that come with implementing a loyalty rewards program. Some of the most common include:
Although some companies use a rewards program that offers discounts, research shows that might not be the most effective option. Aberdeen and Blackhawk Network found that reward-based promotions ꟷ which offer incentives in the form of gift cards or merchandise ꟷ are more beneficial for businesses than incentivizing customers with discounts.
Companies using reward-based programs see a 54% return on their marketing investment, compared with 49.7% for those using discount-based promotions. The report also reveals other annual performance improvements when using reward-based promotions, including average profit margins, annual revenues, customer lifetime values, and cross-selling and upselling values.
Regardless of whether you offer rewards or discounts as part of your loyalty program, you can build it with several different structures. The most common is points-to-rewards, which lets customers collect points for certain activities or purchases and then, once they reach a pre-set threshold, redeem them for rewards. This type of program can also incorporate a tiered structure with different levels for customers based on their activity or overall spend.
Points-to-rewards programs are very popular, but they can be a little complicated to set up. Start with these steps:
Rybbon’s points-to-rewards solution, PointsJoy, can help simplify the setup and management of these types of loyalty programs. AutoRewards allow you to trigger the automatic delivery of a reward once a customer hits the pre-set points threshold. The Reward Gallery embeds a shopping-cart-like experience for members to redeem points when they want. Rybbon has robust reporting and tracking capabilities to give you 100% visibility into your loyalty rewards program.