Loyalty schemes have been used by businesses for many years. They use various ways to entice customers to come back to their brand and stay loyal. However, how can you tell if a particular loyalty program will work for your business? Here are 6 types of loyalty programs, and how to decide which is best for your brand.
If your company is looking to start a loyalty program, then here are some examples of those that work and those that are not so enticing. If you need help setting up a loyalty program, companies like TCC Global can help.
1 The Points Program
This type of rewards program has been used for hundreds of years. It makes the customer purchase something then get a reward they can use later.
Usually, a customer has to make several purchases before they earn enough to redeem them. This can make them unappealing and means it takes a long time to make an impact.
While these programs are still used by some companies, customers are starting to demand more upfront before they make a purchase.
2 Tiered or Milestone Loyalty Programs
These types of loyalty programs are a good way to get more engagement from your customers. Rather than everyone being on a points program and getting the same perks, this one gives you more benefits the higher you go.
As many people will know, reaching the next level of a game or quiz is enough incentive to keep going, and the same applies to these programs.
You need to make each tier worth getting by increasing the levels of rewards.
3 Cash Back Programs
In some ways, cash-back programs are like points programs. You get either points or virtual cash that you can build up until you have enough to buy something.
Some companies will let you use part cash-back and part payment for goods, however, some will not.
The downside is that there is usually a qualifying amount you need to spend before you get the cashback.
4 Coalition Loyalty Programs
These types of programs are run by more than one company. While this can be a benefit for the companies involved, it will often mean that customers won’t become loyal to the brands themselves.
Customers may favour one brand over the others, but they don’t usually become loyal to all of them.
5 Premium Loyalty Programs
Customers are now looking to what they can get from retailers as opposed to being grateful for the bonuses. This means that programs such as the Premium ones are becoming more popular.
Paying a fee to become a member builds a sense of community that can help build brand loyalty.
A survey by McKinsey showed that 59% of customers will choose a brand over another if they are part of a paid loyalty scheme.
6 Hybrid Loyalty Programs
Some companies decide to offer more than one loyalty program element within the same scheme.
This means having a points system, with levels giving you more benefits when you reach them.
This type of system can work well but needs to be simple to use and understand what the rewards are.
Loyalty schemes will always be a part of the retail business. However, they will need to evolve and meet the changing needs of the customers to stay successful.
