Types and benefits of attractive loyalty programs

It is estimated that the cost of acquiring a new customer is as much as 7 times higher than that of keeping an already acquired one. For this reason, salespeople and marketers go to great lengths to ensure that a company’s customer, once acquired, becomes a returning customer – regularly making purchases, recommending the brand further, and taking an interest in its news. One of the ways to make your current customers return is by using loyalty programs.

Loyalty Programs – – table of contents:

1. Loyalty programs – what do they consist of?
2. How does a loyalty program support business?
3. Loyalty program – types and examples
4. Loyalty programs – summary

A loyalty program, tailored to the needs and nature of the organization, can help accomplish this extremely difficult but rewarding task. Below we explain exactly what this tool is about, and show how it can support the company’s achievement of its business and marketing goals.

Loyalty programs – what do they consist of?

A loyalty program is a marketing and sales tool that takes the form of a long-term incentive scheme to reward customers for their actions – primarily purchasing, but not only (it all depends on what strategy the company adopts).

With the help of an offered treat (in the form of, for example, a discount or rebate), granted after performing the desired action several times, the customer is more likely to return and convert again. Importantly, you can implement this element of the marketing effort just as effectively in the B2C (business-to-customer) industry as in the B2B (business-to-business) industry, though of course provided you tailor to the product or service and the customer.

How do loyalty programs support business?

A fine-tuned loyalty program is your way of showing that you value your customers, which helps build a relationship with them and protects them from moving on to competitors who have not implemented such an element. Encouraged by small incentives, customers return to you regularly, some even becoming brand ambassadors of sorts.

What’s more, buyers are the key source of information on consumer behavior for you – the data obtained from them allows you to perfectly match your offer to the target group and better optimize your advertising activities. As a result, your business can grow and strengthen its position in the market. Thus, among the major benefits of the loyalty program we can mention:

1. Higher sales due to returning customers due to the use of “incentives” (increased frequency of purchases and higher average shopping cart value).
2. Lower customer service costs – when customers include returning customers familiar with the brand, website or company policies, you can expect a lower workload for customer service staff.
3. Reaching new groups of customers – the described tool can distinguish the brand from the competition and thus arouse interest among previously unfamiliar customers. Thus, it will ensure an increase in brand awareness among consumers.

Loyalty programs – types and examples

Loyalty programs will always vary depending on what product or service a company offers. And while many companies choose to introduce proprietary solutions for their customers, some classics can be found most often, such as:

• Point-based – in this type, customers collect points for performed actions (not only purchases but also, for example, for writing an opinion or signing up for a newsletter), which they can later exchange for various benefits (free products, material prizes, discounts, etc.). Popular especially among online stores where this program involves giving points to the account of customers for each order they make. A certain number of points can in turn provide program participants with some extra benefits such as the cheaper purchase of another order.
• Discounts – a typical example, in this case, would be stamps collected for each visit to, for example, a beautician (e.g., a 25% discount on the 5th visit, and 50% on the 10th visit),
• Level – here, the number of transactions made or the length of use of the entity’s services, for example, is important. The higher the achieved values, the more opportunities (e.g., additional benefits) the customer has. This type of program exists, for example, for customers of Booking.com, a well-known platform for booking accommodation, or in chains of the most popular hotels,
• Charitable – it is increasingly common to see brands ensuring that a portion of the profit is donated with each purchase to a charity, usually related to the company’s (and by extension, customers’) values.

Loyalty programs – summary

Tailored to the offer and the needs of the target group, a loyalty program is a simple yet still effective tool exploited by companies in various industries. In times of dynamic competition in the market, it provides a way to encourage the customer to return to the store or use the offered service again.

Consider whether, in the case of your business, there would be an opportunity to implement such an element into your marketing strategy and what form it could take. With such a decision, you will undoubtedly see an increase in the number of returning customers in the long term, which will translate not only into more sales but also better recognition of your brand.

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