“Acquiring a new customer can be five to 25 times more expensive than holding on to an existing one.”
– Harvard Business Review
In the ever-competitive retail landscape, retaining existing customers is just as important as acquiring new ones. One highly effective way of doing this is by implementing effective loyalty programs. For many brands, a well-designed loyalty program is no longer an exclusivity that they can offer to select customers, but rather a strategic asset that fosters better customer relationships, brings in repetitive customers, and helps them earn long-term revenue. For this, brands rely heavily on retail loyalty software.
In this blog, we will help you choose the right customer loyalty solution for your brand. But first, let’s look at the different types of retail customer loyalty solutions and the benefits that each of them entails.
Why do Retailers Need Customer Loyalty Solutions for Their Brand?
In a recent study published by Deloitte, it was noted that 70% of the surveyed consumers were inclined to spend more with brands that have loyalty programs. Retail loyalty programs are smart strategies that businesses employ to build stronger connections with their customers and entice them to keep purchasing their products/services.
Customer loyalty solutions are a cost-effective method for retaining existing customers, going beyond simply encouraging a repeat purchase and fostering lifetime loyalty among consumers. With the help of the right retail loyalty software, retailers can utilise and analyse their customer data to craft more effective and personalised rewards programs.
One of the classic and most widely known examples of successful customer loyalty programs is Starbucks. With their Starbucks Rewards program, they have mastered the art of not just retaining customers but building a loyal consumer base that trusts in their quality. Their personalised discounts, seasonal rewards, and embedded wallets not only enhance customer experience but encourage more frequent purchases.
(Also Read: 5 Effective Restaurant Loyalty Program Ideas with Examples)
Key Benefits of Customer Loyalty Programs
Loyalty programs are successful only when the brand and the customers both feel they are getting something from the prolonged relationship. Customers give you sales, while you give them incentives like discounts and freebies to affirm they are benefiting from the purchase.
This brings us to the pressing concern, which is the benefits of customer loyalty programs for brands. Take a look –
- Improved Customer Retention: According to Zendesk’s 2021 Customer Experience Trends Report, around 75% of customers base their purchasing decisions based on their experience. Customer loyalty solutions aid businesses in crafting reward programs that enhance overall CX and improve customer retention
- Enhanced Customer Lifetime Value: Since loyalty programs increase repeat purchases, this in turn enhances the CLV, which is a crucial metric for analysing the total revenue a business can expect from a customer over the entire course of their relationship.
- Better Customer Engagement: Through regular communication about the rewards and offers with the customers, brands increase their chances of remaining on top of their customers’ minds. This helps in building a stronger relationship that relies on ongoing engagement and mutual growth.
- Customer Data and Insights: Analysing customer data and insights to understand their behaviour and shopping patterns helps retailers in personalising their rewards and loyalty programs. This results in increased engagement and customer loyalty.
- Boost in Sales and Revenue: Customer retention solutions like “Early bird offers”, “Special discounts”, “Reward points on purchase”, “Pay with rewards”, etc. encourage customers to buy more frequently and in large quantities. This helps in increasing the sales and revenue for businesses.
Implementing customer retention solutions not only signifies a prominent shift in a brand’s marketing strategy, it also offers businesses the opportunity to tailor their promotional strategies to target specific customer segments.
The Most Popular Types of Customer Loyalty Programs
Customer loyalty solutions are often tailored to align with their customers’ purchase behaviour, each designed to cater to different consumer segments. Most brands utilise effective retail loyalty software to design their loyalty programs to efficiently target the right customers and increase customer retention.
Here are some of the most popular customer loyalty solutions that you can choose from –
1. Tiered Loyalty Program
To put it in simple words, a tiered loyalty program rewards customers based on their spending habits. The greater the purchase, the more the rewards. This is a very commonly adopted loyalty solution by retailers, where they provide enhanced rewards to the most valued customers.
A classic example of this type of loyalty program is Sephora’s Beauty Insider program, which lets customers earn points for every item they purchase. The greater the purchase, the more points you receive, which can be redeemed for rewards like samples, full-products, freebies, etc.
2. Paid Loyalty Programs
Paid loyalty programs are very often used by retailers like Amazon that offer rewards like faster delivery, better discounts, etc. to Prime members. Also known as a subscription-based loyalty program, this model requires you to pay a membership fee in exchange for premium benefits.
3. Points-Based Programs
Often utilised by retail stores like H&M, or credit card issuers, points-based programs allow customers to earn points for every purchase. These points can be redeemed for either rewards, discounts, or free products on later purchases.
4. Referral-based Loyalty Programs
This loyalty program model is beneficial for businesses that aim to expand their customer base, using rewards as an incentive. This is a fairly straightforward concept, where customers purchase from the brand, and refer the brand to others, and for every new customer the referrer reaps rewards.
5. Gamification
Gamification is a joyful and participatory way of offering rewards to customers, where brands run contests either online or on their app to encourage customer engagement. The idea here is to enhance customer interaction with the business and develop new routines.
6. Influencer Loyalty Programs
Influencer loyalty programs rely on word of mouth from social media influencers or promoters, to promote your brand and encourage customers to buy from you. The reward here could be a freebie, a better discount, or a coupon for future purchases.
7. Value-Based Loyalty Programs
This customer retention program is used by brands for their eco-conscious or socially responsible customers who believe in associating with brands that support a social cause.
For example, brands like Warby Parker and TOMS follow a one-for-one model, where for every product you purchase, the brand donates one pair to someone in need.
This helps brands in forming an emotional connection with their customers, making them feel they are part of something bigger than just a transaction.
How to Choose the Right Customer Loyalty Solution for Your Brand.
Choosing the right loyalty program for your brand requires a lot more than just selecting a popular loyalty model. You need to look at different elements that could impact the end results like the audience behaviour, your brand goals, and the right retail loyalty software to support your efforts. Here’s how you can choose the right customer retention program –
Understand Your Customers
Choosing the right customer loyalty solution starts with understanding your audience. As a business, you need to understand if your customers are actually driven by rewards, and if so, what kind of rewards do they prefer the most? Are they high-spending customers, or socially driven? Segment your audience and design rewards based on that.
Define Your Brand Goals
Next, you need to clearly define your brand goals so that the same is reflected in your loyalty program. For example, if your brand focuses on sustainability, you can use a value-based loyalty program that supports the environmental cause. Or if your objective is to encourage high-end purchases, you could use a tiered loyalty program.
Select the Right Retail Loyalty Software
Investing in the right retail loyalty software would always prove fruitful, as the software could act as the backbone of your entire customer retention solution. Retail loyalty software allows you to track customer interactions, collect user data, customise rewards, and seamlessly integrate with CRM and data analytics tools to offer insights into customer behaviour.
Keep Scalability in Mind
Always think of the future when planning your present. An ideal customer loyalty solution should be scalable to meet the changing needs of your business and flexible enough to grow with your brand. This flexibility would enable you to include more rewards and solutions in the future as your brand grows, even allowing you to switch to a different loyalty program type as the customer base shifts.
Yegertek’s ENGAGE-365 Solutions – Powered by Microsoft
When it comes to empowering brands to create powerful loyalty programs, Yegertek stands as more than just a technology provider. We offer an advanced customer engagement and experience management platform in the form of ENGAGE-365 with robust features of Microsoft D365. This powerful CEXP helps businesses in every aspect of their customer loyalty solution design, like data analytics, omnichannel loyalty integration, and customer engagement. Through our retail loyalty solutions, we help brands to create reward programs that resonate with their customers’ preferences and drive unparalleled growth.
Final Thoughts
In the past decade, we have seen a significant shift in customer preferences, where more and more customers have moved on from conventional discounts to loyalty schemes that are more personalised. Therefore, selecting the right retail loyalty program for your brand can prove to be a game changer both in terms of customer loyalty and brand success.
Yegertek offers robust solutions that aid brands in crafting loyalty programs that best reflect your brand goals and resonate with your customers’ preferences. Our solutions are adaptable, reliable, and innovative. We are a leading customer loyalty technology provider aiming to transform the customer engagement space globally. With retail engagement at the core of our processes, we are a one-stop-shop for customer loyalty, leveraging the Microsoft ecosystem, and the latest technology trends around Azure Machine Learning, AI, Chatbots, and Beacons for measurable business growth.
Get in touch with us today to learn more.
