Nowadays, savvy retailers are increasingly turning to loyalty schemes as a powerful tool to build stronger customer relationships, drive repeat business, and gain valuable insights into online consumer behaviour. Over 83 percent of consumers say loyalty programs influence their purchase decisions and 84 percent of consumers prefer brands with loyalty programs.
In this article, we’ll explore loyalty programs and the different ways they work and share some of the most popular programs used by major brands. By the end, you’ll know how loyalty programs can benefit both stores and shoppers.
What is a retail loyalty scheme?
A retail loyalty scheme, also known as a customer loyalty program, is a strategic marketing initiative that rewards customers for their ongoing engagement with a brand.
This engagement can take various forms, such as making purchases, subscribing to email lists, or following social media pages. Rewards typically involve earning points redeemable for discounts, exclusive products, or other benefits. Loyalty programs are usually delivered through membership cards, dedicated mobile apps, or online accounts.
Benefits of loyalty schemes for retailers
Implementing a well-designed loyalty scheme offers a multitude of advantages for retailers, including:
Enhanced customer retention
Loyalty programs incentivise repeat purchases, encouraging customers to stick with a brand over competitors.
Increased customer lifetime value
By rewarding loyal customers, retailers can cultivate a sense of brand loyalty, leading to higher spending over time.
Valuable customer data
Loyalty programs allow retailers to gather valuable data on customer preferences, purchasing habits, and demographics. This data can be used to personalise marketing campaigns, tailor product offerings, and refine the overall customer experience.
Types of retail loyalty schemes
There are several popular types of retail loyalty programs, each catering to specific business goals and customer preferences:
Points-based loyalty programs
Customers earn points for every purchase they make, which can be redeemed for rewards like discounts, free products, or exclusive experiences. A prime example is the Boots Advantage Card, where points can be redeemed for money off future purchases or charitable donations.
Tiered loyalty programs
These programs offer increasing benefits based on a customer’s spending or engagement level. For instance, a retailer might have a basic tier offering standard discounts, while higher tiers might unlock exclusive product launches, personalised offers, or priority customer service. John Lewis offers a tiered loyalty program with its My John Lewis card, with exclusive benefits like double points days and invitations to members-only events for higher tiers.
Subscription-based programs
Subscription-based programs require customers to pay a recurring membership fee to access exclusive benefits. A prominent example is Amazon Prime, which offers perks like free one- or two-day delivery, access to streaming services, and exclusive discounts for a monthly or annual subscription fee.
Best examples of retail loyalty programs
Let’s explore some of the most successful customer loyalty programs in the retail industry and the reasons behind their success:
Amazon Prime
This subscription-based program offers a wide array of benefits, including free and fast delivery options, access to exclusive deals, and streaming services like Prime Video and Amazon Music. Prime’s convenience and value proposition have significantly boosted customer loyalty and contributed to Amazon’s dominant market position.
IKEA Family
More than just a loyalty program, it offers a holistic membership experience. Members enjoy discounts on in-store purchases, extended return windows (90 days compared to the standard 365 days), complimentary coffee or tea in-store, and access to workshops and events. This program fosters a sense of community and provides practical benefits that resonate with IKEA’s target audience.
LEGO Insiders
LEGO’s loyalty program caters to its passionate fanbase. Members get early access to new LEGO sets, earn points for purchases and set registration, and enjoy exclusive discounts. It fosters a sense of exclusivity and rewards dedicated fans, strengthening their connection with the brand.
The North Face XPLR Pass
This subscription-based program caters to adventure enthusiasts. Members gain access to exclusive events and sporting activities, discounts on The North Face products, and early access to new collections. The XPLR Pass aligns perfectly with The North Face’s brand identity and target audience, creating a sense of adventure and exclusivity.
How to improve your customer loyalty program
For a loyalty program to be successful, it needs to be carefully planned and continuously optimised. A few key strategies to keep in mind are:
Personalisation
Go beyond generic rewards and tailor offers based on customer preferences and purchase history. Analyse past purchases and browsing behaviour to recommend relevant products, reward loyalty with exclusive discounts on frequently bought items, and offer birthday treats or anniversary vouchers.
Easy to use
A user-friendly program is essential for high participation rates. Ensure a seamless signup process that can be completed in minutes, either in-store or online. The reward redemption process should be equally straightforward. Offer multiple redemption options through the mobile app, online account, or even in-store.
Track and analyse data
Loyalty programs generate a wealth of valuable customer data. Utilise these analytics to effectively gain insights into customer behaviour, spending habits, and preferences. Track key metrics such as program participation rates, redemption trends, and customer lifetime value. Consider utilising Trust’s Management Intelligence and Analytics solutions to gain deeper customer insights and optimise your program.
Conclusion
By understanding the different program types, implementing best practices, and continuously refining your strategy, you can create a loyalty program that resonates with your target audience and delivers tangible benefits for your business.
Building a successful customer retention program requires dedication and ongoing optimisation. Trust Payments offers a comprehensive suite of retail solutions, including our industry-leading Loyalty product. Our solutions help retailers develop targeted loyalty programs, personalise the customer experience, win back customers and drive business growth.
Take your customer loyalty strategy to the next level. Get in touch so can help you create a loyalty program that fosters lasting customer relationships and fuels your retail success.
