From specialty retailers to big name brands, these successful loyalty programs are driving engagement, retention and profits.
In today’s retail landscape, customer loyalty programs are considered a key ingredient to the customer/brand relationship. But your brand and your program don’t have to be household names to win the loyalty game. In fact, many lesser known customer loyalty programs have just as much staying power when it comes to engaging customers and increasing sales.
Likewise, loyal customers of big name brands are often privy to clandestine loyalty programs, or an exclusive tier within a wider-sweeping program. While these loyalty programs might not be top of mind for the majority of consumers, they deliver plenty of value to keep the retailers’ customers happy — and coming back for the long term.
Rewards, Relationships and the Race for Customer Loyalty and Profits
Competition among retail loyalty programs is hotter than ever, and it’s easy to understand why. Seventy-seven percent of consumers say loyalty programs make them more likely to continue doing business with a brand. What’s more, consumers spend 37 percent more with brands when they are part of their loyalty program.1
But retailers who aren’t affiliated with a big name brand or a hefty marketing budget needn’t worry about being left behind. In spite of increased competition, these six successful loyalty programs fly under-the-radar — yet have thrived by building relationships, creating a sense of exclusivity, and delighting shoppers with personalized benefits and other perks tailored to their interests.
This free loyalty program targets people who love their home and love to shop at IKEA®. Unlike traditional loyalty programs that focus on earning and redeeming points, IKEA Family members enjoy special perks just for belonging — like free beverages while they shop, extra time for kids in the stores’ play area, exclusive monthly product discounts, price protection and an extended price adjustment policy. By understanding their customers — and the types of benefits that appeal to them — IKEA creates engagement, drives sales and earns its place among the best customer loyalty programs.
Successful loyalty programs must be transparent and easy to understand, says the CEO of this online and brick-and-mortar retailer specializing in outdoor recreational apparel and gear. A playful video embraces the retailer’s culture while explaining how the loyalty program works in a creative and easy-to-understand format. Member benefits include up to 10 percent cash back on purchases and the ability to earn rewards even when you redeem rewards. Top spenders who fall into the High Altitude group enjoy perks like free shipping, early access to promotions and an annual Madness Gift. Moosejaw strives to make customer engagement as fun as the outdoor activities its customers embrace.
Loyalty Marketing Takeaway
Staying true to your brand message and culture can help your business attract loyal followers who want to interact with your company because they feel a genuine emotional connection. Look for creative ways to reward loyal followers for taking specific actions. Offer exclusive rewards that can’t be replicated by your competition. Above all, keep your loyalty program simple, transparent and easy to understand.
Higher Spend Leads to Increased Benefits
Research shows that more than one third of shoppers would pay for enhanced loyalty programs that offer more than basic perks and points. Look no further than Amazon Prime for an example of a successful fee-based loyalty program where customers are happy to fork over membership fees when they feel they’re getting more value in return for what they spend upfront.
Tier-based as well as fee-based loyalty programs like the ones below enable brands to customize the experience and provide more value to members.
This retailer offers a free program with tiered benefits that include complimentary monogramming and hemming, free shipping, a free semi-annual gift, product discounts and other perks. Tier status is determined by annual spend. The program is transparent and easy to understand — and, most importantly, benefits are relevant since they’re tailored to customer interests.
After less-than-stellar results from its initial loyalty program, this sportswear retailer decided to rebrand its program to make it more appealing — and easier to understand. Using an app to generate excitement and communicate more easily with members, Lids launched the free Access Pass program that includes basic perks and discounts. For $5 per year, members can join Access Pass Premium for additional savings and benefits. Loyalty program benefits are communicated clearly in one location, making the program benefits easy to understand and differentiate.
Loyalty Marketing Takeaway
Tiers based on spending levels, along with fee-based loyalty programs, can be an enticing tactic to encourage more spending. By providing enough value and the right mix of benefits, shoppers will be motivated to return to your site more frequently and interact with your brand.
Clandestine Programs Deliver Exclusivity to Most Loyal Customers
The examples above show how lesser known retailers have leveled the customer loyalty playing field. But sometimes, even the big name brands want to take a different approach by creating a “secret” loyalty program that caters to specific customers, or addresses a business challenge. Below we share examples of successful clandestine loyalty programs from brands who have figured out that rewarding their most loyal customers lets them reap the rewards in the form of increased engagement and profits.
This popular pet supplies retailer used data from its loyalty program, Pals Rewards, to identify best shoppers. The data also provided access to information about members’ pets, shopping frequency and purchase history. Top Dogs, a clandestine tier within the Pals program, was created to recognize these shoppers for their loyalty and provide them with more customized benefits. Ultimately, the successful program was layered into the Pals loyalty program.
A desire to enhance the relationship between local store operators and most loyal customers led Chick-fil-A® to create a secret VIP program known as A-List. Membership was initially by invitation only and loyal customers were privy to benefits like free food and an in-person greeting from the store manager. This VIP program is now open to all members of Chick-fil-A’s standard loyalty program, although it’s not heavily advertised, adding to the feeling of exclusivity.
Loyalty Marketing Takeaway
Successful clandestine or sub-programs that target loyal customers make them feel special and part of an exclusive club. The programs also provide a way for retailers to test more personalized rewards that not only align with the brand’s core values but also their customers’ individual tastes.
5 Ingredients of the Most Successful Loyalty Programs
Retail brands of any size and budget can use customer loyalty program best practices to increase engagement, retention and sales. The five tactics below can help your business enhance customer relationships by providing the right mix of value and benefits.
1. Understand your brand culture, message and mission so you can align your loyalty program benefits with your values. For example, offer member benefits that are unique to your brand’s personality and can’t be easily duplicated by a competitor. Be sure to convey your program benefits consistently in customer communications.
2. Know what your customers want from your loyalty program. Dig into the details of your customer data and consider scoring customers based on spending habits. Conduct surveys to gain more customer insights.
3. Examine shopper behaviors to see how they influence purchase decisions. For example, by understanding how age and life stage impact loyalty, you can tailor your programs to better align with the factors that create more value for your customers.
4. Create the optimal mix of benefits that appeal to your customers. Whether it’s points, tiers, partner rewards, customized benefits or a combination of all of these, look at transactional data and feedback to create a program that delivers the most value.
5. Keep it simple by making your loyalty program easy and intuitive for shoppers to join and interact with. For example, regularly communicate the benefits of your program across all channels and platforms. If your program includes multiple tiers or a fee-based membership, make it so easy to follow that it’s a no-brainer for the customer.
The Most Effective Loyalty Programs Focus on Value to the Customer
Savvy retailers know that loyal customers spend more money with their preferred brands — and those shoppers are more likely to share their positive experiences with friends and family. By using the examples and best practices above as a guide, brands of all shapes, sizes and budgets can create successful loyalty programs that engage customers, create brand advocates and ultimately grow their bottom lines.
Are you ready to take your loyalty program to the next level? CCG has focused on helping our clients build stronger, more profitable customer relationships for more than 40 years. See an overview of our retail marketing services and solutions, including loyalty program development, refinement and management, Statistical Loyalty Program Optimization™ and retention program development. To see how we can specifically help your organization meet its customer retention goals, contact one of our retail marketing consultants for a complimentary review: Request a Consultation
1 “More Than One-Third Of Shoppers Would Pay for Enhanced Loyalty Programs,” by Marie Griffin, Retail Touchpoints, posted May 21, 2018, https://retailtouchpoints.com/topics/loyalty/more-than-one-third-of-shoppers-would-pay-for-enhanced-loyalty-programs, accessed July 30, 2018