How do you make your customers stick around you? Look nowhere else than loyalty programs. It is one of the best ways to encourage customers to keep buying from you. Existing customers are 50% more likely to buy from you again and spend 31% more than new buyers.
These statistics clearly indicate why you should implement loyalty programs. There are different types of loyalty programs. Which one you choose completely depends on your business goals and kind. This guide will dive into the most common types of loyalty programs to help you find the right one. Let’s get started!
Points-based Loyalty Programs
This is the most common and widely used loyalty program. It works on one simple theory- spend more to get more rewards. So, whenever a customer purchases anything, they are given specific points based on the amount of their purchase. These points are then converted into rewards- discounts, special offers, and much more. With the temptation of getting rewards, customers tend to buy more.
Nowadays, brands offer points for non-transactional behaviour, such as downloading your brand’s mobile app, dropping a review of products, social media sharing, etc.
Tiered Loyalty Programs
A tiered program is similar to points-based loyalty programs, but the only difference is that a tiered program offers different levels of rewards for customers to go through. When customers join this program, they get joining rewards. As and when customers make purchases, they go through different tiers and earn points.
Customers are eligible for rewards depending upon the tier they belong to. Higher levels give high rewards.
Paid programs are where customers pay to get access to special rewards and offers. They are also called subscription or premium programs as they are meant to deliver exclusive rewards. Customers usually have to pay an annual or monthly fee to become VIP members of the program and enjoy elite discounts.
However, ensure that your paid loyalty program is such that it offers rewards worthy enough against the money paid by the customers. Amazon Prime is the best example of a paid loyalty program. Once you become a prime member, you get access to free shipping, fast delivery, exclusive sale offers, etc.
Cashback Loyalty Programs
This one is easy to understand! Brands offer a certain amount of cash ‘back’ based on the value of the purchase to customers. Most retail outlets opt for this type of loyalty program as it is easy to maintain and helps establish a solid base of loyal customers. Customers are also happy and satisfied with this program as they can instantly see the amount of value they have received back.
This type also ensures reduced churn rates and increased purchase amounts, eventually helping companies to increase their sales.
Hybrid Loyalty Programs
You can merge two or more loyalty programs with a hybrid loyalty program. You can offer more rewards and offers than what customers get through one loyalty program. Most brands combine point-based and tier programs to ensure easy evaluation of points for customers, urging them to buy more and move ahead to the next tier.
Nonetheless, if you’re combining two or more loyalty programs, you need to be careful to avoid complications. Sometimes, it can be pretty challenging for brands to focus and deliver as per the functionalities of each program. Study all programs thoroughly and then combine as merging two programs amplifies both pros and cons. OptCulture’s loyalty programs will give you the results and ensure customer satisfaction.
While these are the most common ones, others such as value-based programs, gamification, partnered programs, and many more are gaining traction. Choose the one that provides the best value to your customers and helps achieve business goals. Ultimately, customer retention will increase your business’s bottom line and improve brand identity.