Loyalty programs are a popular tactic used by retailers to keep hold of their most valuable customers, rewarding them for making frequent purchases.
When these schemes work well, they can increase profits while keeping customers happy, but what makes a successful loyalty program?
The best loyalty programs have a number of clear goals:
- Firstly, they help a retailer to identify the most loyal and valuable customers – those that sign up for and use the schemes regularly.
- The schemes then reward loyal customers with incentives such as discounts and exclusive offers, to encourage repeat purchases.
- They also collect data on customers and their shopping behaviour. This can be used to improve their shopping experience by personalizing everything from exclusive offer emails to in-store discounts.
To appeal to customers, loyalty schemes need to be simple to understand and offer clear rewards.
Nectar is one of the UK’s most famous loyalty programs. It’s simple to understand and easy to use. You get points for every purchase, and these are converted into vouchers to use across a wide range of retailers.
The rewards are obvious, the card encourages people to keep shopping at retailers who are part of the program, and the retailers gather useful data.
Also, by using shopper’s purchase history, Nectar can recommend special offers for relevant products. So, if you regularly buy french fries you might get a coupon for Tomato Ketchup.
It’s also good to go beyond offering financial rewards, For example, ASOS offers its A Listers early access to sales and exclusive events alongside vouchers and discounts.
Hilton Honors is another great example of a successful loyalty scheme. Members of the scheme see instant benefits with lowest price guarantees, free wifi and they can start collecting points to earn a free night away.
In addition, Hilton Honors app dramatically improves the customer experience allowing members to check in, select their room and unlock the door all from their own smartphone.
Online shoppers are only actively involved in half of the loyalty programs they join, so a good loyalty program needs to work hard to keep customers engaged.
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Graham Charlton is Editor in Chief at SaleCycle. He's been covering ecommerce and digital marketing for more than a decade, having previously written reports and articles for Econsultancy. ClickZ, Search Engine Watch and more.