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Why you should invest in a customer loyalty program

July 1, 2021 / Reading Time: 4 minutes /
Joe Marshall

Thanks to the pandemic, eCommerce is now the go to for shoppers and it’s set to stay that way. However, as I discussed in ‘Customer loyalty after lockdown’, brand loyalty is now taking a back seat as shoppers favour those who compete on price and speed. 

So how can you increase customer loyalty? A great way is through loyalty programs. They are designed to reward customers for repeatedly engaging with, or purchasing from, a brand.

customer loyalty

The idea is that by rewarding this ongoing customer loyalty in material ways, the program further reinforces the positive brand association and leads to yet more repeat sales – customers enrolled in a loyalty program generally spend up to 18% more than other customers (Accenture)

84% of consumers say they are more likely to stick with a brand that offers a loyalty program. (Nielsen)

66% of customers say their ability to earn rewards changes their spending behaviour. (Bain)

Customer loyalty programs are important because they lead to:

So what does a good customer loyalty program look like?

According to a recent survey by Yotpo, customers look for more from a customer loyalty program than traditional things such as free delivery and product discounts.

These include:

Obviously, most of these inclusions focus on providing the customer with an additional discount, whether through ‘free’ delivery or money off specific products. 

However, as we have shown here, the ROI from loyal customers is significantly higher than the investment required to provide these discounts.

In addition, most of the things customers are looking for are the types of activities most brands engage in on an ad-hoc basis anyway – formalising these into a specific loyalty program makes customers feel valued, and leads them to spend more than they would otherwise.

If you offer a great loyalty program then people will likely tell their friends and family, which will lead to an increase in customer referrals and more customers!

All in all, a successful loyalty program has the power to turn customers into brand advocates.

Here are 4 great examples of brand loyalty programs

H&M 

Key feature – exclusive offers and early access to sales.

H&M’s loyalty program offers shoppers a point for every £ spent. One thing we love most is the exclusive offers members receive throughout the year, particularly on their ‘member’s offers’ which gives 30% off a select range of items. They also have several offers with 3rd party partners such as lastminute.com.  

 

Virgin Atlantic

Key feature – multiple ways to earn points.

Virgin Atlantic’s Flying Club allows you to earn Virgin Points to spend on rewards such as upgrades, flights and Virgin Partners. They even let you gift your points to someone else, which could make someone very happy! What’s really great is the different ways in which you can earn points, giving people the choice. From purchasing flights to earning points through purchases with brands. If you have a Virgin Atlantic Reward Card it allows you to earn points on every £1 you spend.

Rat & Boa

Key feature – allow members to have their say in the brand.

Rat & Boa have built strong customer loyalty and brand advocacy through their ‘Friends with Benefits’ program. They offer a tiered program based on how many points you have. The standout for me is how members can help shape their offering. They really do want feedback to not only help improve their designs but also help to inform  new collections. For example, they sent out a survey asking about swimwear, which has now informed their first collection of swimwear. Another huge plus is the early access to sale, which usually sells out pretty quickly. 

Boots

Key feature – customised offers based on past spending habits.

In Boots, Advantage Card members get 4 points for every £1 you spend. Throughout the year you get sent offers such as double points. However, what is great is the tailored offers based on your spending habits. These tailored offers will likely help to increase customer retention and in turn increase their sales. 

 

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