The 8 Best Customer Loyalty Programs
Quick Summary The research is in: companies are studying it, and Forbes is quoting it. Accenture has reported that over 90% of US companies use customer loyalty programs and offer incentives to maintain customer retention.
Overall, in the US, customers can choose from over 3.3 billion customer rewards programs offered to them. In general, 84% of customers tend to claim customer rewards with a brand they've been loyal to. Moreover, 52% of US customers tend to join incentives programs of a brand they often make purchases from, while 60% of US customers tend to recommend a brand in which they feel a sense of loyalty.
So, customer loyalty programs can not only increase your revenue and customer loyalty by building trust between your brand and your customers but also support your word-of-mouth marketing and build a stronger community around your company's brand.
Types of Loyalty Programs
Here's a quick rundown of the most popular types of loyalty programs that companies offer.
Point-based programs are the most popular and offer customers rewards such as free products, cash, and unique gifts & perks. Customers can accumulate points by spending on a brand, following the brand's page and sharing relevant posts on social media, posting product reviews, or even registering their birthday with the brand.
Tiered programs are membership-based. Customers receive rewards based on their tier level. This tier level is achieved by purchasing and engaging with a brand or company. See the tier program offered by Sephora — listed below — for a truly fantastic example.
Under a paid program, customers pay a fee for immediate benefits from a company they trust. In general, customers are more likely to spend with a company that they've already paid to be a member of. So, if you can draw the audience and give them something worth their while, this type of program can help you establish a long-term relationship with your customers. The most prominent example of a paid loyalty program is Amazon Prime.
A value program aims to enrich a customer's heart more than their wallet. It can allow your customers to use their rewards to donate to charities and organizations that they hold dearly. Companies often pair this with one of the above-listed programs listed so that their customers can have the best of both worlds.
Incentives Offered with Customer Loyalty Program
The possible incentives you can offer with your customer loyalty program are nearly endless. You should aim to make your incentives as unique as your brand. Free shipping, free products, birthday gifts, cashback, and early access are jumping-off points.
Remember to choose perks that fit your company and your customer desires best and then expand from there. Give your customers something that only you can offer so that they'll be hard-pressed to go elsewhere.
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Some of the Best Customer Loyalty Programs Out There
So, the research is out there, and the customers are waiting for you to draw them in. But, with all the directions in which to take a loyalty program, how do you decide what is best for your company?
Most of us are familiar with some form of the saying, "It's all been done before." With so many options out there it's difficult to know what kind of program will actually garner you the prime amount of customer retention that your company needs to thrive. When it comes to making these choices for your company, it's wise to learn from the best. Here are some of the best customer loyalty programs out there:
1. Sephora Beauty Insider Membership
To call Sephora's three-tiered point rewards program popular would be an understatement. Sephora offers members rewards on every dollar they spend; these rewards can be spent however the customer wants. It even offers exclusive deals on limited edition products and in-store beauty tutorials. In fact, Sephora's point rewards program is so popular that its members account for as much as 80% of Sephora's annual sales. With 25 million members, Sephora is absolutely a company to look at when searching for ways to incentivize your customers to keep coming back.
2. Starbucks Rewards
When it comes to convenience, the Starbucks rewards app is ahead of the pack. Not only does it offer consumers a one-stop-shop to pay for their orders and collect and redeem points but it also collects a treasure trove of information for Starbucks on customer habits and preferences. In order for a customer to earn and redeem loyalty points, they must use the Starbucks app, streamlining data collection for Starbucks while also helping them to calculate a buyer's potential customer lifetime value. Starbucks even ups the ante by offering customers more rewards — as "stars" — based on the way that they spend their money.
3. DSW VIP
Who doesn't love the VIP treatment! DSW solidifies its place amongst the best point rewards programs for its dedication to personalization. Its VIP program not only keeps regular contact with consumers about the status of their loyalty points and deals that they're eligible for but also offers a thorough personalization quiz. This makes it easier for DSW customers to connect to the products they want. DSW also excels at creating responsible consumers by offering points for actions such as shoe donations. Additionally, DSW offers points to VIP members for leaving reviews on products, thus encouraging other potential buyers to join the DSW customer family.
4. Amazon Prime
Cost: US$119/year (plus tax) or US$12.99/month (plus tax)
Amazon is the king of e-commerce stores, and the rewards it bestows upon its subjects are bountiful! Yes, there's a fee to join, but Amazon's loyal customers get access to countless hours of entertainment through its streaming service, free shipping on millions of products, and access to Prime Day deals. At the end of January 2020, Amazon reported that it had over 150 million Prime members around the world. Amazon Prime members spend more than twice as much as regular Amazon shoppers do. The diligent revisioning over many years has made Amazon's loyalty program a societal staple amongst the world's culture.
5. The North Face XPLR Pass
The North Face's XPLR Pass isn't your average "spend $1, get 1 point" scheme. The North Face appeals directly to its customer base by offering unique extras like gear testing, discounts to related services like AllTrails Pro, and access to unreleased gear that only The North Face athletes usually get to test out before they're released. The members are also rewarded for things like being responsible consumers — like 10 points for bringing a reusable bag to stores — and getting out and using the gear they purchased — like 5 points for using the mobile app to check into national parks and national monuments. The North Face point rewards program stands out because it can tap into its customer's specific wants and needs.
6. REI Co-op
Cost: US$20 for lifetime membership
Remaining loyal to a brand isn't just about liking the products they sell; for many customers, it is about feeling like they are part of the company. REI's Co-op membership is unique in that it offers actual dividends to its members. It's simple: the more a member spends, the more significant a share they receive from the company's annual profits. These dividends can be added up over years and then used to purchase more products from REI. What's more, the Co-op members are entitled to shop at heavily discounted garage sales. This allows REI to offload returned merchandise.
7. Kohl's Rewards — featuring Kohl's Cash
Few companies — outside of the world of Disney — can employ the boldness of offering their own form of currency; Kohl's is one such company. The Kohl's Rewards program offers customers a 5% reward on every purchase they make. These rewards are then converted into Kohl's Cash every month. Customers can then spent this currency freely without the worry of brand exclusions. Kohl's customers have 30 days to spend their Kohl's Cash; this keeps them coming back each month to make more purchases.
8. Gap Good Rewards
It's one thing to convert a consumer from a single purchaser into a loyal customer, but it's something entirely different to convert a single-brand consumer into a customer that's loyal to your company across multiple brands. Yet, that's just what Gap Inc. has done with its Gap Good Rewards program. In 2020, Gap Inc. expanded its rewards program across its major brands. Now, when one of Gap's 9.5 million existing rewards program members goes to redeem their earned rewards, they have the option to spend it across multiple brands — all owned by Gap Inc.
Where to go from here
When you're ready to add a loyalty program to your business, carefully consider what your loyal customers will want and what's best for achieving customer retention.
If you're a Shopify store looking to increase your Shopify customer loyalty, you can easily download Yotpo in the Shopify app store to create a fantastic loyalty rewards program. Partnering with a Shopify Plus Partner to share your company developments is also a key component to standing out in the DTC eCommerce market.
Whatever you choose, remember that rewards programs offer benefits to both customers and businesses alike.