How to Improve Customer Loyalty Program Benefits (and Add Value)
With an ever-increasing amount of ecommerce options available to customers, brand loyalty is difficult for businesses to earn. Customer loyalty programs are an effective strategy, yet too many brands target customers who are already loyal to them.
The aim should be to build loyalty among the indifferent and therefore expand your pool of repeat customers and brand advocates. Unfortunately, some rewards programs make membership a burden with enrollment fees, so-so benefits, and endless sales-y emails that push customers away. If you were a member of such a program, would you become more loyal or less?
Successful customer loyalty programs add value beyond what’s otherwise available, reflect customers' priorities, and improve the overall customer experience. With the right perks in place, brand loyalty programs can foster positive experiences and increase customer lifetime value.
Beef Up Your Rewards Program Discounts
Make sure your discounts are substantial enough to prevent customers from looking elsewhere. After all, discounts are the main reason many people join loyalty programs in the first place.
Seventy-eight percent of customers cited discounts as a primary reason for joining a loyalty program, according to research from Bolt (PDF). Discounts give shoppers a reason to sign up, supporting customer retention. But the discount has to be worth it for customers to truly value a loyalty program.
Discounts of 10% or more can be eye-catching for shoppers. While that may seem high, you don’t have to sustain your most generous discounts all year. Temporarily raising discounts for members only can create urgency while suggesting exclusivity. For example, you could offer members 20% off purchases in April to celebrate the arrival of Spring. After all, even short-term discounts affect purchasing decisions.
Business owners can add even more value for customers by offering free or at least heavily discounted shipping, too. Bolt (PDF) found 60% of customers see free shipping as another primary loyalty program benefit.
Here’s a good example: besides a points reward system, Abercrombie & Fitch offers generous time-limited discounts to members to celebrate milestones or important events. Note the personalized approach which helps build loyalty, plus the image in the example below uses a champagne flute and bottle to hint at exclusivity.
Abercrombie & Fitch also makes use of special members-only sales.
By using the term “last day” and pointing out that this is an offer for members, urgency and exclusivity are combined to drive sales with an attractive limited-time discount.
Drop the Enrollment Fee and Tier Up
Make a bold move and drop enrollment fees for your loyalty program; they’re a disincentive to signing up. Instead of fees, leverage your loyalty program to raise revenue more effectively by introducing tiered memberships based on dollars spent.
Bolt found that 70% of shoppers listed sign-up fees as their top reason for not joining a loyalty program. Dropping your fee removes that potential barrier to entry. Replacing it with better rewards for customers who spend more directly encourages loyalty. If they see a genuine reward, customers are more likely to spread the good news of your brand via word-of-mouth.
One loyalty program succeeding with no fee is AnthroPerks by Anthropologie. Their CTA/sign-up link makes it immediately clear that signing up is free. This addresses the cost concerns of new customers immediately:
Another example of an effective loyalty program is from Sephora Beauty Insider, which offers a tiered membership that rewards spending with more benefits. The first tier is free to join, with advancement through the other tiers based on customer spending.
Tier names like “Insider” and “VIB” suggest increasing levels of prestige and exclusivity. The highest level — Rouge — arguably conveys glamor and mystique. The key is that the rewards scale with the desired customer behavior: higher spending. These rewards mirror the difference in status between the different membership levels. Customers get incentives to buy more, building loyalty.
Partner with Complementary Brands
Offer customers discounts and perks from companies that work well with your products. These partnership-based rewards programs expand the range of incentives you can provide to better address shoppers’ specific needs.
MarketingCharts and Clarus Commerce found “surprise rewards” motivate 35% of customers to join, and “exclusive deals” motivate 34% of customers. When you partner with a complementary brand, you can offer special and exclusive customer rewards on unique items not typically found in your product line.
Implementing effective partnerships begins with looking at your customer data. Establish where else they shop and what their interests are. Reach out to brands that align with those tendencies and can offer value to your best customers. Highlight the value of receiving referrals from your customer base. Point out the value of such a reciprocal arrangement for their own rewards program. Partnerships can also be a starting point for social media collaboration.
Priceline Pharmacy’s Sister Club added partner perks in addition to their core offerings. These perks focus on health, making them complementary to their pharmacy services. For example, fresh food supports good health, so Priceline Pharmacy partnered with HelloFresh to offer customers a comprehensive approach to a healthy lifestyle.
Support Causes Your Customers Value
Let your customers feel good about reaching for their credit card to shop with you. The feel-good factor encourages repeat purchases and engagement with your loyalty program and supports CSR (corporate social responsibility) efforts.
Ipsos found that in 2013, 50% of US consumers shopped with brands reflecting their values. This figure hit 66% by November 2021. As a result, you’re more likely to create repeat customers if your mission and brand values align with theirs.
Here are a few ideas for adding value to your loyalty program by connecting it with giving. Scale your support for causes based on purchases, and use customer accounts to track individual contributions. You can gamify this with graphics like dials or bars that fill as existing customers make progress toward a goal. Such graphics can feature in customer portals or email marketing.
You may find that advocacy and supporting worthy causes promote customer engagement on social media, particularly among current customers. A customer relationship that generates brand advocates can be a cost-effective way to reduce churn. These added benefits of customer loyalty can be most valuable for small businesses.
Solstice Sunglasses sells sunglasses via ecommerce. To support the fight against cancer, the business created a special sunglasses cleaning kit. They then partnered with the Breast Cancer Research Foundation in October and donated $1 to the foundation per unit sold.
Another example is Brilliant Earth, which sells rings that are created using mined products. However, the company reassures customers by supporting sustainable practices. Brilliant Earth also donates to hunger relief, education, and anti-deforestation efforts.
Broaden Product Offerings for Loyal Customers
Offer new products that customers will need to buy again or a range of products for different needs. Potential future purchases help customers see the benefit of joining your customer loyalty program. After all, why would customers sign up for discounts when they’ll never need to buy from you again?
Bolt’s research confirms that customers are thinking in these terms. Fifty-one percent of shoppers are likely to only join a loyalty program if they plan to shop with the company on a regular basis.
MANSCAPED initially only offered men’s body hair grooming devices. But one customer can only use so many electric trimmers. The company broadened its product range to include replenishable items for existing customers, like cologne and soaps.
Product Protection Is the Next Step in Driving Customer Loyalty
All the steps above are good for building a stronger customer loyalty program. However, a great customer experience (CX) will also drive more people to your loyalty rewards program later in the customer lifecycle.
Modern product protection offers great CX compared to the alternatives. Traditional claims processes can take days or weeks to resolve. On the other hand, more than 95% of claims through Extend are processed within minutes. Plus, loyalty is built through repeat purchases.
Hilton Blieden, CFO and Head of Operations at NewAir, testifies to the value of product protection as a loyalty and revenue driver: "Extend helps us increase customer loyalty and engagement while driving additional revenue to our business during the replacement process."
To learn how Extend can help you build customer loyalty and increase revenue, book a demo.