Written by: Mrudul

Types of Customer Loyalty Programs

“What is a customer loyalty program? A customer loyalty program uses incentives to make the customer keep coming back to you for more purchases. The objective is to build a strong relationship with the customer and reduce customer churn. With the right kind of customer loyalty program, you will be able to increase the retention.

What is a customer loyalty program?

A customer loyalty program uses incentives to make the customer keep coming back to you for more purchases. The objective is to build a strong relationship with the customer and reduce customer churn. With the right kind of customer loyalty program, you will be able to increase the retention rate and bring in a lot of referrals for your brand.

Different types of customer loyalty program:

  • Points Program
It is one of the simplest and most common loyalty programs that are used by brands around the world. In this, customers get points based on the purchases they make. The points accrued over a point of time can be redeemed in the form of gift cards, cash or other gifts.

This type of program is extremely popular since they are free to signup and there is no barrier entry whatsoever. There was a time when most of us had fat wallets because we were a point of the points program of many brands. Today, thanks to brands like 99minds, we have digital versions which are more effective and easier to use. Since the time to profitability can be long for the points program, it will certainly not be the best option for your brand if you are looking for a loyalty program that has a lot of firepower.

  • Tiered Loyalty Programs
To make sure that customers who are more loyal to you get rewarded likewise, tiered programs are your best bet. When customers keep purchasing a lot, they get moved into higher tier levels. As they go higher in their tier levels, they will get extra perks and prizes. This will keep them motivated and stay with you for a longer time.

One of the best advantages of using a tiered program is that it offers some kind of exclusivity and the rewards keep increasing based on your activity. Some tiered loyalty programs show the percentage of the total members who are in different tiers. Based on the loyalty to the brand, this can result in increasing the competitiveness of the customers to go to the next tier.

  • Spend-based Loyalty Program
Your customers get loyalty credits for the amount of money they spend at your purchase. It is easy to understand for your customers as well as easy to maintain for the business. For businesses that are looking to increase the value of the transaction, this type of loyalty program augurs well.

In spend-based loyalty programs, businesses can recognize their high-spending customers. It gives them an opportunity to spend more time and effort for them.

  • Value-based Programs:
For customers who are higher in the social ladder, they might not necessarily be motivated by money because they might already have a lot of it. So how do you reward customers like this without rewarding them?

In this type, you need to identify the values of your brand and that of your customers. Based on this, you can provide rewards. For example, for each purchase that a customer makes, you can add 10% of the value and send the proceeds from it to a select set of charities. For customers who donate for causes, they will be more than happy to be a part of your tribe.

  • Gamified Programs
People these days are extremely busy, and more importantly, they have very low attention spans. So if you need to keep them engaged, gamification is one way to make your customer loyalty program more attractive. Turn your loyalty program into a gamified version. Right from encouraging more purchases to increasing customer loyalty, all of these experiences can be gamified.

Gamification provides a lot of addictive benefits that make ample sense to spend time on. Simple things such as progress bars and milestones makes shopping with the brand fun.

  • Cash Back Loyalty Programs
While these are like point programs, the best part about cashback loyalty programs is that you will get a cashback in the form of coupons or cash that you can use next time when you shop with the eCommerce retailer. You can safely assume that they are easy for the customers to understand as well. Customers who spend a lot of money on your products will also be ably rewarded.

When a customer purchases for $100, they might get a cashback of 2% back. While this might not sound like a huge amount, a loyal customer who makes 50+ transactions will eventually end up saving at least a hundred dollars based on their spending.

  • Coalition Loyalty Programs
Coalition-based loyalty programs are run by more than one business and are extremely appealing because of the presence of other businesses. Coalition programs promote loyalty to the program and not just to the actual partner brands. Since it doesn’t hinge on just one brand, sometimes it loses its perspective.
  • Hybrid Loyalty Programs
There are some loyalty programs that have elements from different loyalty programs. For example, it might have a combination of a cash back program with gamification and that too with different tiers. Hybrid-Loyalty programs are great if you look at it as an experiential one, and if it is run well, the loyalty program will be successful as well.
  • Community Programs
Humans are social animals. Everyone wants to feel belonged and appreciated for who they are. Community-based loyalty programs cash into this basic feeling of ours. By putting people in a community-based loyalty program, you will be able to identify your most loyal customers and offer them extra perks while the other customers also get to witness it. Brands can use such programs to offer community-based discounts and perks that are exclusive to customers who are a part of this community.

Conclusion:

If you are looking to have more people join your loyalty program, then you need to provide them one that is not only attractive, but addictive to use as well. Create a loyalty program that is easy to understand, not only in terms of how to use it, but also how to get rewards from it. Make sure they are universal, that it does its job well and will help make your brand look different.

No matter what type of loyalty program you have, you can put the best efforts to make it as successful as possible. If you are still confused about starting a loyalty program for your brand, get in touch with the folks at 99minds and we will be able to tell you how exactly such a program can help you.