Loyalty Programs: The Good and the Bad

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Loyalty marketing and customer loyalty programs have been around for decades, technically since Betty Crocker launched one in 1929 when they offered coupons printed on product packages.

These coupons were called ‘box tops’ and customers could redeem them for rewards or offers with their next purchase. Betty Crocker’s box tops took off 90 years ago.

But since then, loyalty programs have evolved significantly. With the internet becoming readily accessible to almost all ages and categories along with the inclusion of mobile phones, loyalty programs have had to keep up.

But not all loyalty programs are the same. Some have lagged and some have even failed, while others have taken a brand’s customers to new highs, creating loyal consumers and users.

What are Loyalty Programs? How Do They Work?

A customer loyalty program is a program created by companies and brands to encourage their customers to be loyal to them and continuously use their services and products.

No business wants a customer to come in and shop once, never to return.

Every business wants, not only a steady flow of customers, but a steady flow of repeat customers. That is, people who come in, browse and buy, and come back for more.

Read: Best Loyalty Programs: A List for Inspiration

Loyalty programs are a way to entice customers to not only keep coming back, but also want to come back and connect with the brand in exchange for rewards.

In other words, it is a marketing strategy that offers rewards to loyal customers for their loyalty and constant engagement.

What Do the Stats Say?

According to data from Small Biz Trends, around 67% of retail revenues come from returning customers, which means it is less costly to retain old customers than it is to acquire new ones. Moreover, a 5% improvement in customer retention can increase a company’s profitability by 75%, says Small Biz Trends.

Establishing Loyalty with Customers

There are many loyalty program ideas and examples out there. Not to mention, businesses have been experimenting with customer loyalty programs for years and decades.

However, the problem that seems to dominate the scene among brands is that some brands don’t take the time to consider the loyalty programs they are offering to customers, making their so-called loyalty programs unrewarding.

Imagine being a woman a getting offers for a top men’s shoe brand or being a man and getting offers from Sephora or La Vie en Rose! Not relevant and chances are you won’t be using these programs.

While such loyalty programs – Sephora and others – could be rewarding to the right consumers, they are irrelevant to a customer pool that is “everyone.” Surveys also confirm that roughly 70% of consumers find loyalty programs and promotions they receive to be irrelevant.

The result? People leave these brands and go to their competitors or to other service providers in exchange for better benefits.

Loyalty Program Essentials

An important aspect of a loyalty program is the benefit that a customer will get in exchange for buying from you or using your products.

Let’s say you are a bookseller with an online shop. If you offer standard book prices without an incentive to buy, people, even avid-readers, will take time to make a purchase, if they ever do.

If you have a loyalty program in place but that’s very difficult to understand or where points are hard to earn, people will still shy away from your shop as well.

There is no point in spending $50 to earn 5 points with the first reward being at 100 points and would give you a $10 gift. As a customer, you would literally have to spend a fortune – or $1000 – to get a $10 gift.

Would you go through the hassle? I’m a bookworm and I don’t bother!

Loyalty Programs: Old vs New

As mentioned, brands have been reworking their loyalty programs for years; however, many are stuck in the ‘irrelevant’ category of loyalty programs. That’s when a program becomes obsolete.

People may still use the program but the moment they have already consumed all their points they would not be as engaged or excited as they would with newer, advanced, game-like loyalty programs.

Old programs merely involved collecting points when you buy products. You only get a reward when you pay a large sum.

I have to spend around $600 to get a $20 voucher from my bank. As a result, customers don’t focus too much on earning points and using them, thereby reducing their engagement and brand or product use.

On the other hand, introducing gaming elements into loyalty programs keep customers engaged. Why? Because just like games, customers also earn points but for taking different actions on the site and stay hooked and eager to know what’s next.

For example, if you are an e-commerce business, you can include a set of actions that would earn your customers points that they can later use as a discount or accumulate for bigger rewards.

Asking them to create an account will earn them 50 points, while adding an item to their shopping cart with earn them 20 points, and so on.

The interface comes with a separate tab within the website which shows customers how close they are to levelling up for better rewards, if they can earn badges or titles, when they can get discounts, how much their points translate to when checking out, and so on.

In addition, this type of loyalty program gives a ton of personalization to customers, encourages them to continuously use your website and brand, and become loyal return customers.

The Top Takeaways

In other words, benefit is the primary offering your customers will consider before joining your loyalty program.

A program with constantly growing rewards and benefits will not only attract new customers but keep current ones excited to buy from you.

By creating a well-established and enticing loyalty program, you are making customers your brand ambassadors.

They will want to tell others about you and market your brand simply because they enjoy engaging with it and feel like they are a part of it and it is a part of them.

If you have a business or are planning to start a business that can benefit from Gameball’s gamified loyalty program features.

Get in touch with Gameball for a seamless and rewarding process. 

“There is a big difference between a satisfied customer and a loyal customer.”

Shep Hyken’s quote
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