Setting up a loyalty reward programme: what to consider

Customer loyalty programmes, also known as rewards programmes, are simply a way to engage with your customers and motivate them to continue buying. They help with customer retention and increase customer satisfaction and loyalty.

• An excuse to re-engage less active customers.
• A way to encourage customers to enter personal data/ create an account.
• A way to create brand trust and loyalty.
• A reason to be in communication with your customers that they will see as beneficial to them.

• 81% of consumers agree that holding a loyalty program membership to a brand influences their likelihood of making a purchase from that brand.
• 78% of consumers are likely to shop with a brand whose loyalty program they belong to versus one of their competitors even if the competitor is more convenient.
• 83% of consumers belong to between one and six loyalty programmes.

This study also found that there was a trend with younger generations being more likely to engage in loyalty reward programmes benefits. Generally, younger generations are actually more prone to being loyal to a brand they like, so earning their loyalty through reward programmes could be a potential gold mine.

As you can see from just those few statistics, the existence of a loyalty programme influences the likelihood of your customers choosing to spend with you. It also shows that loyalty schemes are becoming more and more commonplace, so maybe it isn’t a question of whether you should have a loyalty programme but rather, what type is right for you?

Points based.

As simple as it sounds, customers can accrue points from their spending and then redeem those points against a purchase. This method is a classic for a reason!

When surveyed, 83% of consumers said the most important rewards programmes to them were the ones that gave them points, cash-back or coupons.

Cash back.

Extremely similar to a points-based programme, cashback loyalty schemes reward the customer with monetary amount of ‘cash’ to spend with your business.

- This type of scheme has the benefit of giving a tangible ‘cash’ value, so they feel like they are earning money.

Tiered
Tiered based systems range from those who offer ‘badges’ or other symbolic status’s to customer who have a higher spend, to those who offer different or enhanced benefits to high spenders and all the way to subscription and/ or paid loyalty schemes that put them in higher tiers.

- 74% of consumers agree that they would engage more with brands that offered different tiers in their loyalty programs based on how much they spend per year.

Paid loyalty
To understand this type of loyalty scheme, think Amazon Prime membership, these are subscription-based schemes in exchange for good or services (i.e. free or expedited shipping), which comes with other additional membership benefits.

Another form this takes is that they pay to join a loyalty scheme that affords them ongoing enhanced perks and benefits, such as exclusive promotional offers, freebies and so on.

- 78% of consumers said they would pay for a premium loyalty program.

Value based loyalty programmes.

Also known as ‘mission based’ loyalty schemes, this type of scheme encourages signing up, rounding up purchases, or redeeming points to help a business’s chosen charitable organisation.

‘Punch-card’ based programmes.

This is another classic and harks back to the days where you’d get a stamp for a purchase and after a certain number of purchases, you get an item free. This type of scheme is available virtually in an app from huge coffee chains like Costa, so it’s not impossible to translate into the modern world.

Gaming based/ ‘gamification’ schemes.

Think of ‘spin to win’ type simple games, which offer discounts or freebies, either on the website or sent after purchase in an email as a way to thank the customer.

Community programmes.

Creating a community amongst your customers involves enabling ways for them to interact with one another, either in help forums, clubs, social media groups or on exclusive platforms if you have the capacity. If you are a café/bar/restaurant etc you can foster an in-person community by holding book-clubs, themed nights and so on.

These can help create an element of exclusivity, as well as engender brand trust, as you will be seen as part of that community/ it’s originator.

Refer-a-friend.

Since word-of-mouth is still one of the most effective ways to create trust and loyalty to your business, refer-a-friend schemes provide an extra incentive for your customers to tell those in their network about you. These incentives can easily be tied into other schemes you have, such as points, a freebie, exclusive products and so on.

Coalition/ collaborative programmes.

This is where your business partners with another and membership with your loyalty programme translates to perks with your partner business and vice-versa.

A mix of all of the above.

It’s quite easy to combine these different options to create a loyalty scheme that’s right for your customers, so it’s important to know your audience. For example, tiered programmes that use points or cash-back and provide higher rewards to bigger spenders, or, a combination of free points-based system and subscriptions for access to higher discounts and perks.

To use an earlier example, the costa app will often randomly drop extra ‘free gifts’ for customers on the app, as well as offering the opportunity to enter exclusive prize draws.

We’re very excited to have recently launched our own rewards programme using a points-based system! So, we thought it was important to pass on what we learned in the process to our customers.

With our programme, there’s no need to sign up, simply create a customer account as normal (or sign in if you are an existing customer!), everything you purchase will be worth points, where you will earn 1 point for every pound you spend.

Create and account and enjoy the perks today.