Reward points programs are among the most popular loyalty programs due to their ease of earning and redeeming points. Before delving into the nitty-gritty of loyalty points, you must have a complete understanding of customer loyalty programs and why it is essential for your business.
What Is A Customer Loyalty Program?
A customer loyalty program is a marketing strategy that acknowledges and rewards customers who repeatedly buy or engage with a brand. A customer loyalty program aims to reward reoccurring engagement and enhance customer loyalty to ensure the growth and success of the business.
Why is it important?
Customer loyalty programs are crucial for every business to attract and keep customers who help drive sales happy. Customers who are happy and satisfied are likely to tell their friends and family about your business, thereby creating referral traffic. Similarly, customers introduced to a brand via word-of-mouth marketing are more likely to have more trust and confidence in a product.
Loyalty programs can make your customers, brand advocates of your business motivated to sell your brand to a broader audience. An effective customer loyalty program helps in higher customer retention. Customers are likely to remain loyal to your brand if they find value in your customer loyalty program. According to recent loyalty research, 49% of consumers in the poll agreed that they spend more after joining a loyalty program.
Vital Customer Loyalty Statistics You Must Note
- 75% of consumers will favor a brand if there is a loyalty program that rewards members.
- 54% of customers would consider switching loyalty if they are not getting enough engagement with your brand.
- Existing customers are behind 65% of a company’s business.
- The chances of selling to a new customer are just between 5% and 20%, whereas that chance rises to 60% -70% for existing customers.
- 93% of your customers would likely come back for another purchase with your brand if their previous experience were excellent.
Types of Reward Programs
- Point-based loyalty
- Tiered loyalty
- Paid loyalty
- Value loyalty
If you are not sure of the type of loyalty program to use for your business, you can conduct a poll to ask your customers what they want. However, one customer program that remains quite effective for many companies is the reward points system.
Reward Point Programs
A customer reward point program is a system whereby you create your form of currency that customers can build and spend at your company. This customer loyalty model allows customers to accumulate points through sales or any other activity or actions they take in your store.
Customers earn points on every purchase they make. These points are then redeemed for a reward to encourage them to make further purchases. Many businesses in several industries ranging from retail, banking, aviation, hospitality use the reward point systems as their customer loyalty programs.
For example, many airlines use the reward point program through its frequent flier mile. The airline’s customers can earn loyalty points for every mile and then use these points to book their next flight at a discount.
Advantages of Reward Point Programs
Loyalty point programs offer several benefits for your business in your bid to keep your customers happy.
Loyalty Points are Pretty Flexible
Reward points are very flexible to run. You can choose to allocate points to a variety of behaviors you want to record. Whether you are offering a service or product, a loyalty points program easily integrates with most business models.
For instance, if you run a service-based enterprise, you can award points for every month of the subscription and then reward a bonus amount of points once customers reach a particular milestone. The idea is to keep your customers loyal to your brand rather than going for your competitors.
You Can Decide the Value of the Points You Want to Assign
This is one of the critical aspects of the loyalty points program you must carefully consider before implementing it for your business. Customers could quickly get irritated if they realize your loyalty points come with meager value. Such situations can quickly put off customers, thereby putting your program in serious jeopardy.
How to Create a Reward Point Program That Works
The first step to creating an effective reward point program is giving your customers what they want. Think about your business, figure out why your customers love your service, then leverage it to create an effective loyalty points system.
Ensure you choose an enticing reward that would keep your customers coming for more. Reward programs modified to your customer’s needs and expectations are 58% more likely to attract shoppers to fulfill their checkout.
Here are some ways your customers can earn points from your business.
- Assign loyalty points to your customers for registering for your reward program on their first purchase.
- Choose specific and special occasions where you can allocate bonus points to your customers on their birthday or anniversary of their first order.
- Offer bonus points to your customers as a reward for sharing their purchases on social media or other forums.
- Create a multi-level reward structure. Multi-level loyalty points are pretty stimulating. The first level should be relatively easy to achieve, while the last group could be challenging but very rewarding.
The first level should appeal to your customers who desire a reward they could easily redeem within 2-3 visits. Your mid-level loyalty points should aim at your loyal customers willing to strive to earn points and earn rewards for tangible items or services. The last level should be more challenging to reach but highly rewarding.
Use this loyalty program to reward your high-end customers and big spenders. Ensure the loyalty points you are offering at this level are of high value or something inventive and unique to the customer.
- Make the redemption process easy: Ensure you create a seamless redemption process for your customers. You can allow your customers to use only points to purchase an item or combine points with other forms of payment if they do not have total points to buy an item.
Do Reward Point Programs Work?
Yes, they do if handled correctly. Reward points can help increase purchases and improve your customer retention rate and ultimately enhance your profit margins.
You do not have to break the bank or drastically cut down on your profit margins to run a successful loyalty point program. Make it simple, transparent, and straightforward, and see your revenues soar within a short time.