How Customer Loyalty Programs work: Benefits, types, examples
Getting customers is becoming harder for businesses. They need to spend more money on marketing and advertising to get new customers. But what if they could keep the customers they already have?
That’s where customer loyalty programs come in. By rewarding customers, they can keep them coming back.
According to research, a whopping 70% of customers do not return, which amounts to a loss. But one can reduce this figure drastically by deploying customer loyalty programs.
In another customer trends report by Zendesk, about 72% of customers globally feel loyalty to at least one brand. That is a tremendous figure, and businesses must tap into it to boost their customer retention by deploying loyalty programs.
How do loyalty programs work, are they beneficial, and in what way can companies ensure they're getting the most out of them? We will find out in this article.
How customer loyalty programs work
Customer loyalty programs work by rewarding customers for their business. These rewards can take many forms, such as discounts, freebies, exclusive deals, and more.
Businesses need to ensure they’re offering rewards that their customers want to get the most out of customer loyalty programs. They also need to make sure their loyalty program is easy to use and that it’s well-publicized.
When done right, customer loyalty programs can be a powerful tool for businesses. They can help companies boost their bottom line by increasing customer retention and spending.
Benefits of customer loyalty programs
Loyalty programs can be very beneficial to businesses and customers in several ways. As we all know, customers are the lifeblood of any business, so it is critical to keep them satisfied. There are many benefits of customer loyalty programs, including:
Customer retention goes beyond the roof with loyalty programs
Customer retention is the most crucial benefit of customer loyalty programs. You can increase your business’s overall profitability by keeping your best customers coming back. Not only will customer loyalty programs keep your customers returning, but they can also encourage them to spend more.
Customer loyalty programs can improve customer satisfaction
Happy customers are more likely to continue doing business with you and to recommend your company to others. Customer loyalty programs can help you build a better relationship with your existing customers by showing them that you appreciate their patronage.
Customer loyalty programs can generate valuable customer data
Customer loyalty programs can help you collect valuable data about your customers’ preferences and spending habits. You can use this data to improve your marketing and sales strategies to boost revenue.
You can use customer loyalty programs to cross-sell and upsell
By understanding your customers’ preferences, you can offer them products and services they’re more likely to like. That can help you boost your sales and improve your bottom line.
Examples of customer loyalty programs
There are various examples of loyalty programs out there. I’ll explain three common examples to you.
Amazon Prime is a customer loyalty program that offers members free shipping, exclusive deals, and more. Customers will sign up for an account and pay an annual amount to join.
Once they’re a member, they’ll have access to free shipping, exclusive deals, and more. They’ll also be able to stream movies and TV shows and borrow books from the Kindle lending library.
Amazon Prime is a subscription service from Amazon. It gives members exclusive shopping and entertainment services, discounts, and more.
Starbucks Rewards is a popular customer loyalty program that offers discounts and freebies to its members. Joining the platform will require customers to sign up for an account and provide their contact information.
Once they’re a member, they’ll earn “stars” for every purchase. Consumers can redeem these stars for discounts, freebies, and exclusive deals.
Esca Menu Cashback
Esca Menu cashback is a form of customer loyalty program that offers cashback in the form of BTC and USDC to users. The program caters to both consumers and merchants.
Consumers can place orders for items on escamenu.com and get instant cashback upon every successful transaction. On the other hand, business owners can integrate Esca technology into their operations as a loyalty incentive to their customers.
Esca Menu also offers a unique Point of Sale (POS) device that generates cashback for users upon transactions.
Types of customer loyalty programs
There are various types of customer loyalty programs. The popular ones are points-based, tier-based, and cash-back.
Points-based programs: These are the most common type of customer loyalty schemes. Under this program, customers earn points for every purchase they make. You can redeem these points for discounts, freebies, and exclusive deals. Telecom giants like MTN currently adopt this method in their airtime and data offers. When you purchase airtime, it rewards you with several points you can use to buy more data plans on the network.
Tier-based programs: These are similar to point-based programs. But, instead of points, customers earn "tiers.". These tiers offer numerous benefits as exclusive deals and early access to new products.
Cash-back programs: Cashback schemes offer a different type of reward. Under this program, customers earn a percentage of their purchase back in cash. You can use this cash to offset future purchases depending on the type of cashback. A great example of this type is the Esca Menu cashback system which customers earn cashback in foreign currencies for making purchases via Esca’s online and offline channels.
Conclusion on how customer loyalty programs work
Customer loyalty programs are a popular way for businesses to reward their best customers. By offering discounts, freebies, and exclusive deals, companies can encourage their customers to return.
There are many benefits of customer loyalty programs. These include increased customer retention, improved customer satisfaction, and valuable customer data.
It is paramount for businesses to understand their customers' preferences before choosing a type of loyalty program to offer to benefit from customer loyalty programs. They should also make it seamless for customers to use the programs to achieve their objectives.