How to implement an innovative customer loyalty program to maximize retention
Loyalty programs are fast becoming the backbone of the retail marketing toolkit, aimed to increase revenue and maximize retention. Studies suggest that about 84% of customers like to stick to a brand offering a loyalty or reward program while 66% of those say that an innovative reward scheme influences their purchase behavior. (Source)
Having a general loyalty program is not enough. Standing out in this world of choice requires more than just offering a good loyalty program. An innovative loyalty program implemented carefully while considering customers’ decision-making process has the ability to turn even a fickle fan into a loyal follower. So how do you implement a loyalty program effectively?
For starters, it is important to understand the motivations that drive purchase decisions. Generally, bigger rewards inspire higher loyalty but that doesn’t necessarily guarantee loyal behaviors. Therefore, it is important to deploy a marketing strategy that delivers the most customer value. One way of doing so is by introducing tiered levels of rewards. This will encourage customers to spend more in order to unlock higher tiers. It also serves as an excellent acquisition and retention strategy. Tiers of rewards help in ongoing relationship nurturing by rewarding existing customers while attracting new ones. Rewarding specific milestones based on specific interests, joining, and the frequency of visits and interaction with the brand also encourage customers to unlock the rewards faster and hold higher tiered status.
Another loyalty program attribute recognized to maximize retention is using the power of personalization. The data analytics will help gain a deeper understanding of customer persona and identify loyalty strategies to align with their values and interests. In the current era millennials are the biggest consumers, and personalization can help with their changing aspirations and moods. By leveraging insightful content to drive personalized experiences, brands can resonate with the current customers and attract prospective new ones.
Customers expect special treatment when they join a loyalty program. It is important to think beyond points or tiers and make them feel like a VIP in exchange for their loyalty. Exclusive perks and one-of-a-kind rewards or experiences make them feel valued and appreciated. Brands can achieve this by holding special events, offering elite add-ons or perks such as complimentary lounge access, member-only access to luxury sales, exclusive entry to concerts and more. Perks like these are more likely to turn them into lifelong brand advocates and help set your brand ahead of the competition.
A loyalty program is not just about rewards, but even more about customer engagement, acquisition, and retention. Brands should innovate their system of rewarding with unique experiences and personalized incentives in exchange for each member’s individual loyalty to achieve maximum growth.