Most companies have adopted some sort of loyalty program. In practice, however, rewards programs are often misinterpreted, too ad hoc by focusing on short-term incentives, and don’t form part of an overall broader marketing strategy. 

 

The result? Frustrated customers, disillusioned CEOs, and decreased company performances with disappointing sales and rising costs.

 

If you would like to build a loyalty program that is truly successful and sustainable, we’ve put together the ultimate guide for you.  We’ll have you walk away with the tools to:

 

Improve customer retention, keep your customers, improve your customers‘ lifetime value, and boost your revenue.

 

Optimize marketing efforts, it costs 5-times more to attract a new customer than it does to retain an existing customer. 

 

Increase the amount of money each customer spends with you. What more would you want? 

 

Gather critical customer data that will enable you to implement loyalty marketing strategies with a strong return on investment (ROI). 

 

The secret? Well, keep reading and you’ll find out just what the recipe for success is (HINT: a reward program requires a larger loyalty marketing strategy.

 

This guide will take a closer look at what loyalty marketing entails. You’ll discover eight proven, yet simple, loyalty marketing tactics and we’ll have you walk away with a clear plan of action on how to implement and maintain a profitable and rewarding loyalty program for your business. 

What is Loyalty Marketing?

Loyalty marketing is an intentional and customer-orientated marketing strategy to grow and retain loyal customers through incentives. Incentives can be in the form of rewards, discounts, or exclusive access to some of your products or service offerings.

 

Loyal customers can portray different characteristics, but usually order with some frequency, are generally satisfied, or at the bare minimum prefer convenience and are not inclined to switch to another provider.

 

While loyalty marketing starts off with points and rewards, these incentives only scratch the surface for what a robust customer loyalty marketing strategy can deliver.

 

Let’s dive a little deeper and look at proven loyalty marketing tactics that make all the difference in developing a profitable and long-term loyalty program. 

 

 

8 Proven Yet Simple Loyalty Marketing Tactics

So, where do you start? If you’ve been keen to jump on the loyalty bandwagon or have seen no considerable impact from your current program, don’t worry.

 

We’ve compiled eight proven, yet simple, loyalty marketing tactics to ensure you have the tools to build a truly successful and sustainable loyalty program.

 

– Define your objectives – Outline your goals and vision.

 

– Define what a loyal customer means to your business – Who is your loyal customer, according to you?

 

– Identify your loyal customers – Aggregate your customer data to identify your loyal customers.  

 

– Prepare your teams and social platforms for excellent customer service – Crucial and often overlooked. Make use of chatbots, segmented customer service, and personalized emails to offer a holistic customer service experience.

 

– Decide on the rewards or perks you want to offerDefine what rewards are affordable and impactful enough for your business. 

 

– Plan your communication methods – Identify your channels & frequency of communication. 

 

– Implement a good analytics provider for actionable insights – Ensure you measure, accumulate, and have access to reliable and valuable customer data to enable powerful & effective strategies.

 

– Consider launching a loyalty program – Try to limit manual work by developing a loyalty marketing program.

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Get started right away and discover the full extent of these proven marketing tactics to develop and grow your own loyalty strategy.

Brand Loyalty

Competition in an open market is almost always healthy. It encourages you to build innovative solutions to customer needs and serve them with a higher value than your competitors. 

On the negative side, it sways away your customers since they have a wide range of options to choose from. In such cases, the only thing that retains them is loyalty.

Loyalty, in the context of a business, can take two forms. Customer loyalty and Brand Loyalty. While loyalty program can help you build both kinds of loyalties, it is important that you understand the difference between the two so that you can better focus your strategies.

Customer loyalty is when you get a customer spending with you because of the incentives you provide to loyal customers whereas brand loyalty revolves around the perception a brand can create. Customers stick around because they like and respect the brand and not because of prices and rewards.

Customer loyalty may be advantageous in the short term when you really want to get the sales numbers going.

Brand loyalty = Evangelism

brand loyalty vs customer loyalty

Learn about how to build brand loyalty in this guide.

How to Build Customer Loyalty

Engaging existing customers and gearing up your sales funnel for repeat business form the basis of building a sustainable loyalty marketing strategy. 

 

But how do you build customer loyalty, in a practical sense? We’ve compiled four easy ways to build customer loyalty and gear your ecommerce business towards customer retention. 

 

– Be open to criticism – Engage your customers and ask for help.

 

– Build a point-based system – Very effective and most visible customer loyalty program. Physical reward items such as the punch card are essential to use in combination with digital incentives

 

– Create a charitable incentive – Build community awareness & your brand at the same time.

 

– Enter into a collaboration with other businesses – Combine forces with those companies that are naturally affiliated with your brand, product, or service.

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Learn more! Check out our helpful article with how to build customer loyalty and its effects on your business.

What You Can Learn from the “Big 5” Loyalty Programs

Especially, when it comes to loyalty programs, there is no need to reinvent the wheel. Companies such as Amazon, Starbucks, and Nordstrom showcase best practices that you can adopt and use to create your own loyalty program.

 

So, what are some of their key lessons for your business?

Keep things simple & logicalDon’t overcomplicate and ensure an upward line in your reward offerings; the more you spend, the more you earn.

 

Offer flexibility: Flexibility incentivizes your customers to return. 

 

Introduce payment options: Offering payment options will increase the likelihood of customers’ using the loyalty program during the shopping experience.  

 

Integrate with other relevant services: Provide a full brand experience over and above the loyalty rewards feature.

 

Promote online interaction: Allow customers to earn points through online interaction.

 

Offer personalized rewardsRecord valuable customer data and offer personalized perks. 

Take a peek at the full list and review of the Big 5 Loyalty Programs.

How to Measure Customer Loyalty

To achieve customer loyalty requires access to critical and valuable customer data. Like anything in marketing, you need to be able to measure this in order to evaluate progress, success, or failure for that matter.

 

In order to measure customer loyalty, you’ll need to create or purchase a Customer Relationship Management (CRM) system. Whether it’s custom-made, a ready-to-go-system, or a simple excel sheet, make sure you record and track at least the following indicators:

 

– Customer data: contact info & log each conversation 

 

– Purchases: who, what, when, especially when through a promotion 

 

– Product Needs: if you sell products that customers run out of, link to them just before their product runs out 

 

Once you’ve put a CRM system in place you can use the following metrics to measure customer loyalty: 

 

– Net Promoter Score: Percentage of customers rating their likelihood to recommend a company, a product, or a service to a friend or colleague.

 

– Repurchase ratio: How many of your existing customers purchase from you again.

 

– Upselling Ratio: Divide the number of customers who bought multiple products by the number of customers with a single product.

 

– Customer Loyalty Index: Quick survey method with three questions to measure customer loyalty.

We’ve covered the 4 metrics you can use to measure customer loyalty in more detail.

B2B Loyalty Program

For a successful loyalty program, your rewards need to be valuable to your customers. You also need to design your loyalty program to set your business apart from your competition.

We’ve put together the best loyalty program rewards and practices that any B2B business can seamlessly use to achieve this. 

B2B Loyalty Program Best Practices:

– Create a buyer persona – This will provide your customers with an experience tailored to them. 

– Measure the crucial metrics – Your Repeat Customer Rate, Net Promotor Score, and Customer Lifetime Value are crucial to measure. 

– Be loyal to your customers – Treat your customers fairly and kindly. 

– Tailor your content to existing customers – Existing customers cost less than new customers and are easier to sell too. 

– Don’t sound too “salesy” – Your clients need to get the impression that your loyalty program will help their business, so sound approachable. 

– Be clear about your objectives – Understand what defines loyalty to your brand so you can accurately direct your loyalty program. 

– Make getting help easy – Be available for your customers to contact and make your contact details accessible.

The Best B2B Rewards:

– Tiered Incentives – You will encourage participants to earn more points for premium rewards. 

– Referral rewards Reward your customers for generating referrals. 

– Educational content  These rewards are valuable to customers and will help their businesses. 

– Co-marketing campaigns – Create a program or activity with your customers. This reward will increase brand awareness and your reputation. 

– Discounts for large orders  Offer your customers discounts on their next bulk order. 

– Freebies – Give away surplus stock as a freebie for customer loyalty. 

– Exclusive services – Offer exclusive services that clients would have to pay for, for free.

– Points per $ spent – Reward your customers with a certain amount of points after they spend a specific amount. 

– Anniversary incentives – Incentivize your customers for doing business with your company for a certain amount of time. 

– VIP experiences – Offer industry-related talks and events as a loyalty reward. 

B2B loyalty Program Rewards

Understand how to create a B2B loyalty program that accelerates your bottom line in this detailed guide

How to Choose the Right Loyalty Software 

Choosing the right customer loyalty program software is no easy task. To get you started off on the right foot, we’ve highlighted four indicators that will help you evaluate & rate potential loyalty software programs for your business.

 

User reviews – User reviews are critical and will give you a good sense of the legitimacy, familiarity, and trust surrounding a software program before making a purchase.

 

Demo & trial availability Demos and trials give you the opportunity to familiarize yourself with the full extent of the software. Make sure you take your time and have a good sense of what your options are before you commit to a full-on purchase.

 

Price range – Don’t commit to something you cannot afford and pick something that meets your business needs.


Product features & functionality – Pick something that ties in easily with your existing business operations.

 

The more you can integrate things under one umbrella, the easier. And focus on combining user-friendliness with the ability to rely on support, when necessary.

We’ve rated the top customer loyalty platforms. This includes a full review of all features, pros, cons, and pricing

Why You Should Have a Loyalty Program

If you’re still on the fence about customer loyalty as a strategic tool to retain customers and boost sales, let’s fall back on core data, namely statistics.

 

With the advancements in technology, statistics from successful loyalty programs offer crucial, and more importantly, measurable impact. We’ve compiled all of these statistics (41 in total) into 10 reasons why you should have a loyalty program. 

 

– Boost customer spend – Simply put, loyal customers spend more money, ranging from 39 percent to 140 percent more than normal customers.

 

– Increase customer spend frequency – Loyal customers tend to stick to one brand with an increased purchasing frequency of up to 90 percent.

 

– Encourage word of mouth marketing – Loyal customers are more likely to recommend your brand to friends and family. And, since 81 percent of customers trust these types of recommendations, this is crucial. 

 

– Lower customer acquisition costs – It costs 5-times more to attract a new customer than it does to retain an existing customer.

 

– Attract more customers – As many as 82 percent of shoppers prefer to buy from businesses with a loyalty program.

 

– Increase customer lifetime value (LTV) – Customers who join loyalty programs are worth ten times the value of their first purchase.

 

– Easier than acquisition – 80 percent of businesses consider customer retention as easier than acquisition.

 

– Beat recession Loyal customers tend to buy even during economic difficulties. 

 

– Loyal customers perform better in seasonal sales – with up to 25 percent more in seasonal sales.

 

– Higher conversion – Loyal customers have a higher conversion rate at 24 percent compared to 6 percent for normal customers.

 

Customer Loyalty

Get the full load down on the top 41 loyalty program usage statistics.

VIP Customers

VIP customers are those who bring the most profit and value to your business. Assessing your customer database to define your VIP customers is a hugely beneficial exercise.

The Benefits of Identifying Your VIP Customers

The benefits of identifying who your VIP customers are and giving them special treatment include:

-Ability to provide them precisely targeted and personalized communication

-Tracking their customer journey to find others like them and to move others to VIP status

-Improved customer satisfaction and engagement

-Reduced customer churn rates for premium customers

Higher customer lifetime value

-Greater advocacy, social proof, and referrals

-Increased sales and revenue when customers buy more to achieve VIP status

-Improved customer relationships and better overall customer experience

 –Increased customer loyalty and long-term customer retention

What Makes a VIP Customer?

To identify your VIP Customers, you need to accurately segment your existing customers to find the ones that:

-Are currently active and engaged

-Spend frequently

-Spend a lot

-Generate value in ways other than direct purchases, such as social proof or referrals

 –Are currently inactive but have high potential if they can be retargeted effectively

-Customers who fall just short of VIP status but have the potential to get there

Seven Metrics to Identify Your VIP Customers 

To find exactly what defines your highest value customers and by extension which customers worth including in your VIP program, you can track and measure the following metrics.

1.Number and Frequency of Purchases

2.Average Order Value

3.High-Profit Purchases

4.Customer Lifetime Value

5.Type of Products Purchased

6.Indirect Customer Costs – Support and Returns

7.Referrals, User Generated Content, and Social Proof

Using the metrics above, you can identify which customers are your VIP customers. This allows you to identify and target new VIP Customers from within your database and from within your target market. It also allows you to curate a VIP experience that will retain them and attract new VIPs.  

How to Treat Your VIP Customers

Some ideas to incentivize and reward VIP Customers include:

-VIP-only promotions – Sales or promotional offers that only your VIPs have access to

-Exclusive early access – Give your VIP customers early access to your existing promotional events like sales and new product launches

-Points based incentives (loyalty programs) – give extra points or perks to your VIP tier

-Surprise gifts – give your VIPs a little something extra with a gift or gift certificate

-Celebrate with them – send them cards and goodies on birthdays and major holidays

-Free access to add-on services – for example, if you offer tailoring or alterations, give it to your VIP customers for free

-Personalized thank you cards and gifts

-Charitable donations to causes they care about

-Surprise discounts or upgrades – give them a voucher for a discount on their current or next purchase, upgrade their subscription for free or give them priority shipping at no extra cost

-Exclusive access to services/benefits – if you offer services, you can give your VIPs preferential treatment when it comes to bookings, allow them to access VIP-only spaces, or skip the line to enter. These kinds of benefits make them feel like a VIP and cost you very little to provide.  

Leveraging Your VIP Customer Experience to Create More VIP Customers

A VIP customer experience can also attract new VIP customers and incentivize existing customers to strive for VIP status. Make sure that your VIP experience is highly visible and easy to understand – that way, customers know exactly what they need to do to achieve VIP status.

VIP Treament_infograph-01

Final Words

While developing and implementing a successful customer loyalty program is no easy task, this step-by-step guide has outlined proven yet simple tactics to get you off the right track.

 

Furthermore, it has drawn from existing, successful rewards programs to provide you with best practices to empower you to make the right decisions at the right time.

You now have the tools to develop a system where customers are educated about the rewards of loyalty and are incentivized to earn them – all in the pursuit of sustainable and measurable loyalty.

Will you give it a go?

 

 

Frequently Asked Questions

What is a Customer Loyalty Program?

Customer Loyalty Programs offer rewards, discounts and other incentives to customers and are designed as a reward for their loyalty to the brand. The programs benefit brands by not only increasing customer loyalty but also providing information on how customers are spending and what products or offers they find the most appealing.

How to measure Customer Loyalty?

To track the performance of a Customer Loyalty program or just to measure customer loyalty in general, you will need to collect data through CRM software. The software will allow you to understand the data from various perspectives and give you insights into how loyal your customer are.

Why should I have a Loyalty Program?

Loyalty Programs are a great tool to encourage customer spending and increase retention rates. Through these programs, the customers keep coming back to the brand for repeat purchases.

How do I create an effective Loyalty Program?

For a loyalty program to be effective, you need to make sure that your expectations and goals are clear. Once you clearly define the goals, you can decide the rewards for a variety of actions and make the deals valuable for customers. You also need to track data through software so that you can keep improving the program along the way.

Do Loyalty Programs help increase sales?

Loyalty Programs can do wonders for your sales figures if implemented the right way. They help increase customer retentions and increasing retention by just 5% through customer loyalty programs can boost sales by 25 to 95%