Best-in-Class Loyalty Programs: Features Worth Emulating

The battle for customers is hotter than ever, and for retail marketers to succeed, it’s crucial to stand out from the competition, differentiate your brand — and adapt to evolving technologies and customer behaviors. That includes taking a hard look at your loyalty program to ensure it’s doing all it can to increase customer engagement and sales.

New research from Accenture Strategy found that nearly 70 percent of U.S. consumers are spending more with brands they love, and the traditional “low price, great service” formula is no longer the primary force it once was at driving loyalty.

best-in-class loyalty program features

With pressure mounting on retail marketers to create customer loyalty programs that place their brands at the top of the pack, the key question is: What are the best-in-class loyalty program features that drive loyalty, engagement and sales? It’s one of the most common questions we’re asked by our retail marketing clients. The answer, however, isn’t as simple as you might think.

Although there are elements of several of the most successful loyalty programs that stand out, there isn’t a single customer loyalty program that hits it on all cylinders. And there’s no single loyalty program that outlines exactly how it should be done for every retailer. So we’ve highlighted features of several best-in-class loyalty programs below that offer distinct opportunities for you to consider.

Create a Compelling Customer Rewards Structure

According to Accenture, more than 50 percent of U.S. consumers express loyalty by recommending brands and companies they love to family and friends. And one of the most effective ways to get customers to stick with a brand — and entice them to keep coming back —is to create a compelling rewards structure.

ULTA’s Ultamate Rewards program, which boasts 24.5 million active members, gets this right. Members earn one point for every dollar spent on products and services, and can redeem points on more than 20,000 products. More points earned equals more dollars off a future purchase. In addition to perks like free birthday gifts and the ability to earn up to 5x points on specific purchases, members can reach platinum level when they spend $450 in a calendar year and unlock even more perks.

Focus on Customer Engagement — Even When They’re Not Buying

While its program has been around for a while, Walgreen’s Balance Rewards maintains a leading role in the loyalty rewards world by continually adapting its program with new features and perks that appeal to customers. At its core, Walgreens still follows the traditional points per dollar-spent structure. However, it’s making waves for what members can earn points on: In addition to offering points for prescriptions and specific products, the rewards program also lets members earn points for wellness activities like walking, running and cycling.

Offer Unique Ways for Customers to Earn and Burn Their Loyalty Rewards

Providing members with distinct ways to amass and use loyalty rewards points can not only help your program stand out from a crowded playing field, but can also drive growth and retention.

The North Face VIPeak Rewards Program is an example of thinking outside the box when it comes to points redemption. Members can opt to use their points towards unique travel experiences like a mountain climbing adventure in Nepal. The recently revamped rewards program also lets members earn points for participating in The North Face events, checking in at designated locations and even downloading The North Face App.

Create a Customer Loyalty Program That Offers Variety

Another retailer earning kudos for creating exciting ways to redeem points is DSW. In addition to points earned for every dollar spent, members enjoy free shipping, special birthday offers and double points days. Members who reach Premier Level status enjoy early access to offers and events, a Shoephoria concierge service, free return shipping and even points earned on outside purchases.

Create a Personalized Experience

Sephora’s Beauty Insider is a standout for creating a feeling of exclusivity for members at a mass merchandising level. The loyalty program not only leverages member preferences to personalize the member’s experience through product recommendations and beauty tips, but also uses that information to create curated product sets for rewards. Members can select a free birthday gift and enjoy access to beauty classes. Members who earn “VIB” status after spending $350 earn handpicked gifts and a free makeover. And at VIB Rouge status, with a threshold of $1,000, members unlock the door to exclusive events, and additional merchandise tailored to their preferences.

Make Your Loyalty Program So Easy, Customers Don’t Know They’re Using it

There’s no denying that Starbucks Rewards has done a lot of things right. And one of the most appealing aspects is how easy the program is to use. The mobile app is user friendly and completely manages all the rewards program benefits like monitoring rewards status, access to new products, mobile ordering and even payments.

Members can even earn stars (points) by purchasing products from Starbucks’ namesake stores, including Teavana and Evolution Fresh, or by purchasing prepackaged coffee from a grocery store. Members who earn at least 300 stars in one year automatically qualify for the gold level, which brings even more rewards, like free drinks and access to double star days.

Create Tiers to Reward Higher Spending Customers

As you and your retail marketing team work to create blueprints for highly valued tiers in your loyalty program, ask yourself this: “How does our loyalty program support our brand?” Sophisticated, targeted tiers should not simply provide a specific reward when a spending threshold is met, but instead should deliver benefits and features that allow you to deliver a unique loyalty program and help maintain your brand’s individual attributes.

Meaningful Tiers Set Your Customer Loyalty Program Apart

Creating compelling benefits for each specific type of spender differentiates you from your competitors and adds value in a way that no other program can. Best Buy is one example of a company that has used this concept to differentiate itself amidst the challenge of selling one of the most commoditized products in the marketplace today — electronics.

Best Buy has been using My Best Buy Rewards to separate itself from the pack. Customer perks like price-matching help differentiate the retailer from online competitors like Amazon, while also offering help and expertise from a live person.

In addition to earning points on every purchase, members receive free service set-up from the Geek Squad, access to special sales and offers, and two-day shipping on purchases of at least $35. Members who spend more than $1,500 per year are elevated to Elite status and enjoy free shipping without a minimum purchase and an additional half point per dollar spent. Spend $3,500 in one year and you join the ranks of the Elite Plus, earning all the above plus an additional quarter-point per dollar spent.

Loyalty Program Tiers Should Fit Your Customers to a “T”

Designing unique, compelling benefits for program tiers is a challenge, but not an impossible one. Understanding your customers, your brand proposition and your competitors is just the beginning. Remember to take a step back and push yourself out of your comfort zone as you take a unique approach to loyalty program tiers that will make customers not only jump at the chance to join your loyalty program, but also stay engaged for the long term.

How does your loyalty program stack up to the competition? Find out now with CCG’s Interactive Loyalty Assessment Tool

Create an Inclusive Loyalty Rewards Program

Today’s shoppers want and expect to be able to pay for purchases in multiple ways. Women’s fashion retailer Talbots recognized this early on and saw engagement, membership and profits rise after restructuring their rewards program. Opt for an inclusive approach by allowing customers to use any form of payment to participate.

Create Your Own Best-in-Class Loyalty Program

As you can see, there’s more than one successful loyalty program to emulate. These best-in-class loyalty programs represent just a few examples of how you can offer your customers unique ways to not only earn and use their rewards, but also remain loyal to your brand. Maybe not every best-in-class program feature will work with your program — and that’s okay. Focus on the features that your customers will use and appreciate. With out-of-the box thinking, you can create a program that’s compelling for your customers — and difficult for your competitors to duplicate.

Need help figuring out which best-in-class loyalty program features will engage and motivate your customers? Our team of retail marketing experts help retailers in a variety of industries create and refresh their loyalty programs. Email or call us at 800.525.0313 to find out how our capabilities and services along with 30+ years of experience can help maximize your reach and ROI.