A great customer loyalty program can make a big difference in your business. Building customer loyalty increases return trips, makes individual shopping trips more lucrative, and turns one-time customers into long-time happy brand evangelists. A bustling loyalty program can also make approaching customers with promotions fast and easy.
Ready to learn more? Take a look at BHN’s huge selection of customer rewards and incentives. Our gift cards and prepaid cards are some of the most effective ways to build customer loyalty—even better than discounts! We have all the tools you need to manage rebates and drive sales—even supercharge employee morale and performance! We also offer services to support any loyalty program you already have running.
What Is a customer loyalty program?
A customer loyalty program is a series of decisions made by a company to build stronger connections with people who have already spent money with them once. Rather than focusing on attracting new customers, a customer loyalty program is an organized way of deepening a brand relationship with customers.
What is customer loyalty?
Customer loyalty is the concept of a strong, long-lasting relationship between a brand and its customers. Any meaningful loyalty can only be built on positive experiences over time. When customers have a preferred, go-to brand for a specific item or service, that’s customer loyalty talking!
What are customer promotions?
A promotion is more commonly known as a “deal,” like a special sale or a buy-one, get-one arrangement that runs for a limited time. When you target a promotion specifically at existing customers, it’s a way of limiting the offer to only people who have already expressed an interest in your product.
The benefits of loyalty programs and customer promotions
The benefits of loyalty programs and customer promotions include improving sales, attracting new customers, retaining existing customers, and building a library of customer data to gauge performance and inform future promo projects.
Customer loyalty programs are proven to improve sales because they bring focused attention on customers who already know your brand and are already convinced of your product’s quality. As opposed to general marketing efforts, which include speaking to people who won’t or can’t be your customers, customer promotions are more focused and could have a better return on your investment.
Attract new customers
Paradoxically, taking great care of your existing customers can have the effect of attracting new customers. After all, word gets around. If everyone in town is obsessed with your brand, visiting often and talking about it, that kind of word-of-mouth will bring in new customers. After all, no one wants to feel left out of a club.
Word-of-mouth is one of the most effective ways to publicize your brand. There is so much noise and so much money spent on advertising, that customers are frequently not sure which company offers a good product. Trusted word-of-mouth from a good friend is the type of publicity that cuts through the noise—people know they can trust a personal recommendation from someone they know.
Retain existing customers
It is much, much cheaper and easier to turn existing customers into return customers. That’s why retaining existing customers with a customer loyalty program is such an effective way to spend part of your marketing budget. Take a customer who already knows who you are and already knows first-hand about how good your product is, and simply give them a reason to come back again and again.
Customer data and tracking
All of your marketing efforts become more effective when you can properly target and track them. Building a list of customer information like emails and favorite products give you a way to target your promotions—and take stock afterward to see if your investment paid off. This is another benefit of customer loyalty programs. People are happy to exchange their personal information for a good deal.
Types of loyalty programs and promotions
There is a huge variety of types of loyalty programs: each is as unique as the brand that runs it. Whatever your business and whatever your specific goals are, we’ve had experience running something similar in the past, whether it’s a points-based program, a tiered program, a rebate program, or something else. Here are some examples to get you started:
A points-based loyalty program is one where customers earn points on every purchase they make. Over time, those points add up and customers can redeem them for some other item or promotion.
A paid customer loyalty program is more like a private club: customers pay to join the loyalty program in order to access special deals and privileges. A member of a paid loyalty program is a brand super-fan and is really valuable to your business. But be warned: you really need to make the benefits of a program like this worth the price of admission.
A tiered customer loyalty program is one where customers themselves are separated into levels, with more prestigious or valuable perks being reserved for the highest levels. Whether customers reach the higher levels by paying for the privilege or by earning points, the function is more or less the same. The more devoted the customer, the better their rewards.
Everyone is motivated by making the world around them a better place, and value-based customer loyalty programs focus on doing good work in that vein. Value-based loyalty programs offer customers a way to pool their collective shopping efforts and turn it into rewards like charitable donations or non-profit projects. This works the best if your brand is closely identified with a region or cause—one you are certain that your customers deeply care about.
A partner customer loyalty program sees your brand teaming up with another brand to share resources, influence and your customer base. In this kind of loyalty program shopping at either brand earns points, rewards or discounts they can redeem with either brand. If you have a brand that works well with another brand—but doesn’t directly compete with it—this could be a good option for you.
Market research participation
Market research participation loyalty programs focus on getting lots of feedback from customers—feedback you can use to make your brand better. Offering perks, points or discounts in exchange for survey completion or focus-group attendance is one of the most direct ways you can learn about your customers and what they want. If you find your brand at a crossroads and you’re looking for help from customers to decide on your future direction, a market research participation program might be really helpful.
A rebate-based customer loyalty program uses rebates instead of discounts to offer customers savings. When customers make a purchase, they can then fill out a form or make a claim on a rebate. After approval by the company, the rebate is sent to customers, lowering the overall cost of the item. Rebates allow brands to offer better deals and potential savings to a smaller number of motivated customers. Plus, customer information is required for redemption, which helps brands build their customer databases.
Subscription service switchers
A promotion focused on getting subscribers to switch away from their current company is often called a “service-switcher.” This promotion offers customers of a competing service an incentive if they switch brands. This is great for long-term subscription-service customers who may not have shopped around or even thought about their ongoing subscription in a while. Energy or cable providers and telecommunications companies are some examples.
Trial and field marketing
If you have a new product that you’d like to get some feedback on, a trial promotion might be right for your brand. Offering customers an incentive to get them to try a new product or service, then answer questions afterward, is a rare opportunity to get honest feedback from prospective customers.
If you had an ongoing relationship with a customer but you haven’t seen them in a while, a win-back promotion might be just the thing you need. A win-back promotion uses your customer data list to identify once-steady customer who may have been lured away by competition. Another word for this phenomenon is “customer attrition” or even “customer churn.” Offering these customers an incentive to come back and give your brand another try is a way of bringing old customers back again.
When something goes wrong or someone makes a mistake, a customer appeasement is one way of righting wrongs and winning customers back. After all, mistakes are going to happen. What really matters is how you respond to those problems. A strong customer appeasement program can not only fix the immediate problem, but it can turn unhappy customers into long-time loyal customers who know you’ll take care of them if they’re not satisfied.
Examples of customer loyalty programs and promotions
Now that we’ve looked at the types of customer loyalty programs and promotions, let’s take a look at a few examples. These examples could work for most of the types of customer loyalty programs.
Free products or services
Offering a free product or service is a straight-forward way to generate a lot of interest and goodwill. After all, everyone is always looking for a deal, and what deal is better than free? When you offer free products or services as part of a customer loyalty program, focus on building publicity about the giveaway and capturing the customer data of everyone who is interested.
Exclusive discounts or sales
Restricting exclusive discounts or sales for the use of your customer loyalty program is one of the most common and one of the most effective ways to attract new customers and to build customer loyalty. An exclusive discount is easily understood by the broadest range of your customers, and most people will be happy to enroll in your loyalty program in order to take part.
When you release a new product, offering an early access period has a few benefits. If your new launch has been hotly anticipated, an early access period could build a lot of interest and excitement. Early access periods also have the benefit of acting as a slow launch for your product restricted to only your most loyal customers. Early access periods are a great way to gather important feedback, expert reviews, and press coverage. This gives businesses a chance to make adjustments before a wider launch to the public.
Free or expedited shipping
Absolutely essential for online retailers, offering free shipping to members of your customer loyalty program is a great way to expand your customer database and motivate your customers. The added cost of shipping is a significant added burden for online shopping, so removing it is likely to motivate customers and build a lot of loyalty. It can also win over shoppers who might have chosen to buy in brick-and-mortar physical retail locations elsewhere. After all, once customers already have free shipping with your brand, why would they shop anywhere else?
Refer a friend
Turn your most loyal customers into your biggest brand evangelists with the opportunity to get special deals or benefits after referring a friend to your customer loyalty program. Refer-a-friend programs help attract your most devoted customers and others like them. These are a great promotion for building your customer loyalty program.
Loyalty program best practices
No matter what kind of customer loyalty program you build and what kinds of promotions you find work best for you, always keep these essential best practices in mind.
Metrics to track
You can only learn what works and what doesn’t by tracking your programs. Don’t be afraid to take risks and experiment, as long as you’re able to track the results. Keep an eye on redemption rates, basket sizes, and loyalty program sign-ups. Individual promotions might be focused on other specific goals, but those three numbers will give you an overall idea of your program’s general health—and how best to optimize your program in the future.
Using expiration dates
Use expiration dates as a tool to push customers to use their perks. This gives customers an incentive to return to your brand, and it also makes it a lot easier for you to track which promotions are having an immediate and tangible effect.
Tools for managing your program
At BHN we offer a variety of tools to help you manage, build, augment, or refine your customer loyalty program. From dedicated account management teams to dashboards that help track and administrate, we have program support services for customer loyalty programs of any type, size, or ambition.