Every decent consumer brand seems to have its own customer loyalty program today. Whether it's earning points every time they buy a cup of coffee or enjoying exclusive benefits like sports or concert tickets, if customers feel they're getting something out of their relationship beyond simply what they purchase, they're more likely to keep coming back again and again.
But with so many schemes around, how can you make yours stand out? Here are a few things you need to know and some great examples to help inspire you.
Keeping existing customers happy is essential to any business. That's because it can cost five times as much to attract a new customer than it does to retain one. What's more, existing customers are up to 50% more likely to try out new product offerings, and will spend an average of 31% more than new customers.
Get it right and you'll also have something much more valuable than a customer - you'll have a brand advocate. These loyal customers can spread the word of your business to family and friends and bring in ever more new business without you having to market directly to them.
Learn more: Do Customers Love Your Brand? 3 Methods for Measuring Customer Loyalty
While there are many ways to manage a customer loyalty scheme, most tend to fall into one of a few key categories. Here are five you need to know about, as well as some great examples of companies that have got them right.
Probably the most common type of loyalty program, points schemes will be familiar to the majority of customers. These are simple to understand and manage, as customers earn a set number of points for every dollar they spend, which eventually can be exchanged for discounts or other benefits.
One good example of this in practice is clothing retailer The North Face. Its scheme offers ten points for every $1 customers spend online and in retail stores, and five points for every $1 they spend in other outlets, which can be used for future purposes. This is managed through a mobile app that lets users check their point balance, redeem rewards and more.
Crucially, the rewards on offer are tailored to the customer rather than just offering simple discounts, which helps increase the average order value and encourages them to stick with the brand rather than shopping around.
Tiered rewards schemes also operate on the principle that the more you spend, the more rewards you earn. The difference is there are clearly-defined levels to reach, each offering more advantages over the one below.
These spending-based programs can be a bit more complex to understand compared with basic points programs, but they're a great way to boost brand engagement. They also add an element of gamification as consumers work towards achieving a higher status.
One example of this is ride-sharing app Uber. It offers four levels, from Blue (no points) up to Diamond (7,500 points to unlock). As users progress up the levels, they gain access to more valuable rewards, from flexible ride cancellations at level two to special access to the highest-rated drivers and free delivery of food orders at the highest tier. This gives customers something to aim for and a reason to keep choosing the app over its competitors.