Have you ever decided to shop somewhere because of a loyalty program? Maybe you get your coffee at Starbucks for that free Venti, or maybe you shop at a certain grocery store for extra discounts. But are you really loyal or do you collect those points everywhere? There's more to a loyalty program than that. For example, look at Knix. People keep shopping there not just because they collect points, but because they start to connect to the brand and receive the perks of a "Passionate Badass".
Loyalty programs have become standard practice for customer retention. They reward your customers and clients for repeated shopping. However, most businesses now offer some kind of loyalty program, and the majority don’t actively think about their memberships until it appears in an online cart, or they stumble upon the card in their wallet. Creating real retention requires a loyalty program that stands out and builds a strong bond. That demands a program that incentivizes customers to return, acknowledges their contribution to your business, and fosters a communal connection. Considering human-to-human marketing, effective retention programs build real human connections to foster true loyalty. This guide will give you the basics for creating an acknowledgement program that builds true customer loyalty and retention.
Tiered Reward systems
Most loyalty programs provide an eventual discount after several purchases. These are rewarding, but they don’t fully acknowledge those who have shown continuous loyalty to your business. This same basic system also doesn’t actively incentivize them to support your business. These discounts are more an occasional nicety for your customer rather than an incentive for their continued support.
A tiered loyalty system changes all of that. These place any customer or client into a certain tier depending on the amount they spend annually. The more they spend, the higher the tier they enter with better rewards and perks. This both correspondingly acknowledges how much each customer has contributed to your business, while also incentivizing them to climb up the tiers. That recognition simply works. Tiered loyalty systems have an average 80% more return and members spend more than non-tiered loyalty programs.
What Makes a Good Tiered Loyalty System?
There are best practices for an effective tiered loyalty program. Most loyalty programs keep to three tier levels; otherwise, they risk becoming convoluted. Be sure to also personalize the tier titles to your brand and emphasize a sense of community. Highlight the character and personality of your business through your branding. This helps the loyalty program foster the human bond to your business. Your customers aren’t eager to just be members of “non-descript loyalty program tier 2”, they want to become dedicated “champions” or “heroes” in your community.
The first tier is a basic level that all customers join, and the next two require certain purchase amounts within a year. Tier membership is made annual to keep customers invested in maintaining their status and rewards. The purchase gates will depend on your business. Use records to help get a sense for reasonable levels and ensure the highest tier is attainable for most of your devoted clientele. Restricting it to the top 1% will only frustrate the majority, and make your program appear non-appreciative and worse, elitist.
The rewards and perks themselves should be enticing and considerable enough that your customers feel recognition. As with other loyalty programs, provide points for every purchase and certain actions like signing up to your newsletter. These points should be redeemable for fixed dollar amounts. While a percentage discount such as 30% may prove more beneficial for customers spending more than $100, psychologically customers view a $30 discount as having more value.
A birthday discount, exclusive discounts, and early access to products or promotions are perfect perks for all tier levels. The amount offered can increase with each tier level, e.g. a birthday discount that is 10% at tier 1, 15% at tier 2, and 20% at tier 3. Provide other perks in the higher tiers as well. For example, the middle tier could enjoy reduced shipping costs, while the highest have none. The highest tier could also be entered into giveaways or gain access to special events that help foster community and the human connection to your business.
Setting Up a Loyalty Program
You don’t need to rebuild your entire online store to create a proper retention system. Thankfully, there are a myriad of loyalty website plugins available to add to your online store to start creating a tailored loyalty program. Here are some of our key picks:
Another loyalty method beyond rewards and perks, is actively acknowledging your customers’ and clients’ support. Thank them in personalized emails for large orders, or entering and staying in the middle or highest tier. You can record a personalized video and send through services like BombBomb. Send the birthday discount in a congratulatory email. All of these can be automated as part of a loyalty program, but if crafted sincerely, they help establish a personalized connection, further strengthening customer retention.
These communications can also be opportunities to reach out for feedback from your customers with a survey. Ask them directly what they appreciate or would like to see from your business and a loyalty program. You'll acknowledge their desires while also get valuable insights about what they want. There is no need to guess.
Lastly, provide a referral program to reward devoted customers and clients who help your business’ community grow. Referral programs have customers send a discount to a non-existing customer. If that new customer uses the discount, the referee gets the same discount for themselves. This motivates your dedicated community to grow organically and acknowledges the valuable contribution made by current members. The more they sell, the more they feel as part of the community and appreciated. Remember these are all touchpoints for your brand to be seen.
A Communal System
The heart of a successful loyalty program is creating a dedicated community with a personalized connection to your business. Tiered rewards, personalized acknowledgements, and referral programs all provide recognition that helps build true loyalty. It’s a personalized, human system.
The most comprehensive loyalty system won't just be online or in-store. Both retail environments will work together to truly bolster community and loyalty. If you need guidance implementing a new or revising your old loyalty program, the strategic consultants at Creative Solutions can help. Our website design and UX teams can help ensure you're providing a sleek and optimized loyalty experience for fostering and connecting with your community.