What Is a Loyalty Program?

A loyalty program has become very common these days as part of the marketing strategies. It means to encourage customers to return to the store and make purchase frequently. It involves some incentives for new products, discounts, or even free merchandise. Usually, this program requires customers to register their personal information and given a membership card or a unique ID as an identifier when making a purchase. A loyalty program means to give rewards for customers for their loyalty while at the same time they can provide spending data from a brand’s customers. Loyalty programs can give valuable information to companies as they can evaluate the purchases to identify whether certain coupons are effective than others.

How a Loyalty Program Works

A loyalty program or what’s often called a rewards program provides two important functions: rewarding consumers and provide companies with consumer information. Rewards programs are often integrated into customers’ daily routine, reflecting true brand loyalty. Often, companies provide a unique mobile experience to connect customers with the brand’s products or services. If customers feel comfortable with the app, they will trust the company for delivering an excellent experience. As a result, it builds loyalty to the brand. In modern loyalty programs, there are some most common loyalty programs, such as:

• Points to be redeemed for products and service from the brand
• Points to be redeemed for products and service from third parties
• Cashback that is accumulated to buy products from the brand
• A membership reward such as member-only sales and extra discounts.

Loyalty programs have been widely used as part of the marketing strategies around the world and proved to generate sales. Some of best loyalty programs are Uber’s Uber Rewards, Spikeball’s SpikePoints, SweetLegs Rewards, Nordstrom’s Nordy Club, Click and Grow Rewards, Chipotle Rewards, MyChelle’s Clean Beauty Club, MudLOVE’s Wishing Well Rewards, Amazon Prime, Swarm Perks, Sephora Beauty INSIDE & VIB, among others.   According to statistics, loyalty programs provide benefits for companies even though it is not a guarantee to major success. They require time and capital to create and implement. However, successful loyalty programs are often the rewards that consumers want and from this, companies can learn which rewards that require market research.

How to Make Loyalty Programs Work?

To ensure whether or not loyalty programs work for you, there are several questions you need to answer:

• Will a program be beneficial for your business?
• What competitive advantage you gain from a loyalty program?
• Will the rewards program create value for your customers?
• Will the rewards program increase customers’ loyalty?
• How much impact does it have on revenue?
• Will the revenue be greater than the cost you spent on the programs?

By asking these questions will help you to decide whether or not you need loyalty programs in your business. You need to ensure whether the loyalty program is effective enough for your business in a way that it can generate greater revenue than the capital you have spent for the programs.