Businesses of all sizes are always looking for ways to increase customer loyalty. Statistics show that 56% of customers stay loyal to brands that “get them“, meaning they are more likely to return and spend money again in the future. It is why businesses need to design loyalty programs to keep customers coming back for more.
This blog post will discuss what loyalty programs are, how they work, and how they help you retain existing customers. We will also provide five tips for designing an effective loyalty program with PassKit and some priceless loyalty program tips and tricks that will help you grow a loyal customer base. So if you’re interested in learning more about creating a loyalty program that your customers will love, keep reading!
What is a loyalty program?
Businesses offer loyalty programs to improve customer loyalty and increase customer retention. With loyalty programs, you can give your customers incentives such as loyalty points for their repeat purchases, reviews or referrals. Customers can redeem these points for discounts, personalized offers and other perks.
How does a loyalty program work?
A customer loyalty program is a marketing strategy companies use to attract and retain customers. The more they buy, the more loyalty points they earn, and sometimes they can even use them to get free stuff.
Customer loyalty programs can be very profitable for companies. They can boost customer loyalty, leading to more sales and increased profits. They can also help attract new customers since people are more likely to choose a business that has a customer loyalty program.
Customer loyalty programs can be very profitable for companies. They can boost customer loyalty, leading to more sales and increased profits. They can also help attract new customers since over 70% of consumers are more likely to recommend a brand if it has a good loyalty program.
Why is customer loyalty important?
Customer loyalty is essential for businesses because it helps them retain customers. When customers are loyal, they will always choose your business instead of competitors’, as 75% of consumers say they favor companies that offer rewards.
It improves your profits, customer retention rate, and brand reputation. It is why customer loyalty should be a top priority for businesses – it can have a significant impact on their bottom line.
Customer retention is the biggest perk, as 82% of companies agree that retention is cheaper than acquisition. It also offers other benefits, such as:
- Decreased marketing expenses
- Increased profit from repeat purchases
- Valuable feedback from users who visit your website more frequently
- Loyal customers who are more likely to pay premium prices
- Testing new products with a dedicated audience who knows a lot about your business
Customer loyalty program types
There are four main types of customer loyalty programs, each with its own set of benefits. Let’s explore them further.
1. Point-based loyalty programs
Point-based loyalty programs reward customers for repeat purchases with points they can redeem for discounts, free products, or other perks.
2. Tiered loyalty programs
Tiered loyalty programs offer different levels of rewards to customers based on how much they spend or how many purchases they make. Customers move up to higher tiers as they continue to purchase more and, in some cases, may be able to redeem rewards from lower tiers.
3. Paid loyalty programs
Paid loyalty programs charge customers a fee in exchange for loyalty rewards. These programs often offer better rewards than either point-based or tiered loyalty programs.
4. Value loyalty programs
Value loyalty programs are a great way to turn customers into brand ambassadors. The purpose of these value-based programs is to connect with customers emotionally. Usually, companies allow you to donate a percentage of your purchases to charity. Some companies choose one charity aligned with their values, while others give you a couple of different options.
What’s the best timing for setting up a loyalty program?
There is no one-size-fits-all answer to this question, as the timing of your loyalty program will depend on your specific business. However, we recommend designing a loyalty program to increase customer loyalty and improve your retention rate. The best time to launch a loyalty program is when you start building a solid customer base and earning revenue. That ensures that you’ll have enough people to test the pilot loyalty program with, which will allow you to optimize it until you and your customers are satisfied.
4 tips for designing an effective loyalty program with PassKit
Now that we’ve discussed the importance of customer loyalty and when to create a loyalty program, we can give you some tips for creating an effective loyalty program with PassKit.
PassKit is a new way for businesses and their customers to connect. The PassKit app turns plastic or paper cards into digital passes that users can store, organize, and access through their mobile wallets, without downloading additional apps or wasting time entering information online.
PassKit helps you take your loyalty program to a whole new level by creating convenient digital passes that customers use to collect points over time and view all their rewards in one place. Customers can use them in real-time with just a few taps on their phones!
PassKit is a platform that gives business owners the tools to offer their customers rewards for being loyal to their company. With Passkit’s easy integration into POS and CRM systems, there’s no need to replace any existing software! Businesses connect it to see how many digital passes they have distributed alongside performance data.
You can try PassKit for free now, or stay tuned to learn more about how you can use PassKit to create and deliver appealing loyalty programs.
1. Create a list of rewards for your loyalty program
The most crucial part of any loyalty program is to define the rewards your customers will receive for being members of the loyalty club. Choose a couple of different awards that customers can select according to their preference. The most common loyalty rewards are:
- Discounts
- Free samples
- Cashback
- Birthday surprises
- Early sale access
- Free shipping
- Merchandise
- Limited-edition products
- VIP experiences
2. Create attractive digital loyalty cards on the PassKit platform
- Visit the PassKit platform and create your free account.
- Name your project.
- Choose how you want the cards to look for Android and Apple users. PassKit makes sure that your design complies with the latest Apple Wallet and Google Pay design standards.
- If you want to scan the loyalty card – at your POS or using the PassKit PassReader – choose a barcode type.
- Add images such as your logo and hero image.
- Define colors you want to use.
- Add basic information for your template.
- Add useful sections.
- Add backfield information.
- Add valuable links such as social media profiles, official websites, etc.
- Save your design.
3. Determine how you will distribute digital loyalty cards to your customers
We recommend opting for digital loyalty cards instead of physical ones because they’re safer, more convenient, and germ-free. Hygiene is paramount during COVID-19, so digital passes have become the norm. You can use PassKit to design and distribute stunning digital loyalty cards to your users’ mobile wallets and encourage the contactless shopping experience.
Once customers go to your store, gym, hotel, salon, coffee shop, restaurant, or website to shop, they will be able to scan their cards or enter a unique user ID to collect points for each purchase.
PassKit helps you facilitate all the necessary tools to promote and distribute your digital loyalty cards, digital membership cards and digital coupons. If you have a pre-made email list, import it to PassKit. Customers will receive emails with personalized digital loyalty cards attached.
If you want to inspire more people to sign up, you can use the PassKit enrollment link and post it on your website and social media pages. You will also receive a QR code which you can use in stores, at check-in desks, or the reception so that customers can scan it to join your loyalty program.
PassKit creates location-driven or behavior-driven messages automatically and sends them to your customers. For example, you can ping your customers when they are near your store or send happy birthday cards alongside a reminder to redeem their loyalty points or claim a birthday reward.
4. Bring some exposure to your loyalty program
When you first launch your loyalty program, it’s important to generate some hype. It will get customers excited about the program and encourage them to sign up. There are many different ways to generate publicity, but some of the most effective include social media, email marketing, and word-of-mouth.
PassKit’s editor lets you design your digital loyalty cards, membership cards, or coupon cards compatible with your branding. Use the same color story for social media campaigns that you will use for your loyalty program to increase awareness and brand recognition.
5 additional customer loyalty program tips
Businesses need to keep a few things in mind when creating a customer loyalty program. First, the program needs to be easy to understand and use. It should also offer rewards that are appealing to customers. Finally, it’s essential to ensure that the customer loyalty program is well-promoted to help customers know about it.
1. Make your loyalty program accessible
Your customers shouldn’t have to jump through hoops to sign up for your loyalty program or redeem rewards. Ensure the process is quick and straightforward and that the rewards are easily accessible.
2. Offer a variety of rewards
Don’t just stick to one type of reward. Offer discounts, freebies, exclusive products or services, and other perks that appeal to your customer base.
3. Make the program flexible
Your customers’ needs and wants will change over time, so it’s essential to make sure your loyalty program is flexible enough. Consider offering different tiers of rewards, or allow customers to choose how they want to redeem their points.
4. Keep it fresh
To keep your loyalty program from getting stale, make sure to mix incentives up from time to time. Add new rewards, change the redemption process, or offer special promotions to keep things interesting.
5. Promote it aggressively
No loyalty program will be successful if no one knows about it. Promote your program through your website, social media channels, and other marketing materials. You can also offer incentives for customers to sign up, such as a discount on their next purchase.
10 best customer loyalty program examples
Running a business is all about keeping your customers happy. And one of the best ways to do that is by implementing a customer loyalty program.
Because there are many different ways to set up a loyalty program. We’ve compiled a list of the top 10 most successful examples that you can use as inspiration when creating your customer loyalty program.
1. Starbucks rewards program
Image source: Starbucks
Starbucks is a company that became so popular because of the creativity and innovation it introduced in the world of caffeine beverages. You will also notice their ingenuity by looking at the Starbucks Reward Program, which boasts millions of participants.
We liked the easiness and accessibility of this program the most. Users collect stars through purchases and other activities, which they later redeem for benefits. You can sign up through their website, but also the app. Starbucks prefers sign-ups through the app because it allows them to collect user information more extensively compared to the website.
To ensure that many loyalty program members use the app more frequently, they included special perks and benefits exclusive to the app. They also introduced Bonus Star challenges and Double Star Days that let you collect more stars on certain days or complete specific challenges. It is great to increase engagement and motivate customers to visit your app more frequently.
You can earn Starbucks stars in a couple of ways, namely:
- 1 star per dollar if you scan and pay separately, meaning that you use your credit card to pay instead of the app or the digital Starbucks Card
- 2 stars per dollar if you pay with a preloaded digital Starbucks Card
- 3 stars per dollar if you pay with Starbuck’s Rewards Visa Credit Card
If you want to ensure that customers use your apps or digital cards, this is how to go about it. You can use all these resources for gathering intelligence about your customers, which you can later use to optimize your campaigns and increase brand loyalty.
Some of the most common rewards you can receive through Starbuck’s Rewards Program are:
- 25 stars – customize your drink with an extra espresso shot, syrup, etc.
- 50 stars – brewed hot coffee, an item from the bakery, or hot tea
- 50 stars – handcrafted personalized drink, hot breakfast, or parfait
- 200 stars – free lunch sandwich, protein box, or salad
- 400 stars – free Starbucks merchandise
2. Sephora’s Beauty Insider
Image source: Sephora
Sephora Beauty Insider is the top loyalty program in the world of beauty. The Sephora loyalty program is a rewards system that offers customers special perks and benefits for being dedicated shoppers.
Sephora is one of the most prominent upscale makeup stores in the world. Consequently, it has a lot of connections with makeup brands. It is a great benefit when developing a loyalty program since you can work your relationships to offer significant discounts, freebies, and deals to your customers. Because Sephora could leverage these connections and create an irresistible offer for their customers, millions of makeup lovers joined.
Not only does this help Sephora increase sales in revenue, but it’s also an invaluable marketing resource since they have access to all the user information gathered through the loyalty program.
There are three tiers in the program – basic, VIB, and Rouge – each with different benefits. Basic members receive a birthday gift, free shipping on orders over $50, and access to special offers. VIB members receive the basic membership benefits, plus a 20% discount on all purchases and early access to sales. Rouge members receive all of the benefits of VIB membership, plus a free custom makeover and an additional 10% discount on all purchases.
If you know makeup and how expensive it is, you know that a 20% or 30% discount means a lot.
The lesson here should be to create as many connections with your suppliers and leverage them to create a better loyalty program than your competitors.
3. Amazon Prime
Image source: Amazon Prime
Amazon Prime is probably the most popular delivery service globally – not a day goes by that you don’t hear about it once. Even though it’s not exactly a loyalty program, there are valuable lessons we can learn from observing how Amazon approaches customer care.
Most loyalty programs are free. On the other hand, Amazon Prime charges members a flat annual fee, and they get to enjoy all the benefits all year round. The main perk is unlimited free two-day shipping. If there’s something we know about online shoppers, they are very impatient with delivery. Amazon cleverly leveraged that fact and destroyed the competition.
And it works. Research has shown that Amazon Prime members order four times more than ordinary Amazon shoppers. If there’s something that Amazon knows how to do, it’s to engage customers and create a good value proposition.
4. The North Face
Image Source: TheNorthFace
The North Face is an outdoor gear company with a loyal customer base that they’ve enforced through a flexible and personalized loyalty program. In digital marketing, it is a known fact that personalization is one of the most important things for scoring conversions. You can apply the same principle to loyalty programs and inspire existing customers to become more loyal to your brand.
The Northface XRLP Pass Program lets members earn points in various ways and then use them for unique experiences like mountain climbing trips. You get a $10 reward for 100 points that you can use towards meaningful rewards, such as:
- Limited-edition collections and collaborations
- Exclusive deals
- Opportunities to test new products
- Birthday gifts and shoutouts
- Member-only field testing option
They are particularly good at offering incentives to inspire customers to stay loyal and refer friends and family. They successfully increase their customer retention rate by encouraging customers to collect points by being generous with the point system – they give points for everything. Let’s take a closer look:
- 25 points for customer referrals
- 10 points for using reusable bags when shopping at their stores
- 5 points when you check into a National Park
- 25 points when you shop their recycled pieces
- 10 points for downloading The North Face app
- 5 points when you check into their stores
As you can see, this brings the company’s loyalty program to a whole new level. They offer 5 points when customers check into the store through their phones, incentivizing them to browse clothing and buy.
It helps create a stronger emotional connection between customer and brand.
5. Tarte point-based rewards
Image source: Glossense
Tarte is a cosmetics brand that is very popular worldwide, especially in the US. We’ve already mentioned how expensive makeup is, which is why this customer niche is more likely to join a loyalty program and enjoy rewarding discounts.
The concept of Tarte’s program is simple – join, shop to earn points, and receive rewards. The point system is as follows:
- 100 points for every signup
- 100 points for every full-sized item you purchase
- 50 points for every mini item or product that is on sale
Moreover, they give early access to sales and new releases to loyalty club members, which is another great incentive for users to join.
Another thing that Tarte does well through its loyalty program is email marketing. They frequently email members about ongoing promotions, releases, and other important information. They give special perks to loyalty members, and they send recaps of your loyalty status and how many points you gathered throughout the month.
It’s important to note how beautiful and stylish each loyalty program element looks. They use bold colors, color blocking, and graphic elements in their emails, increasing appeal and keeping customers engaged.
Tarte is currently innovating their loyalty program and plans to create a dedicated platform and bring a lot of other new options and perks. We’re excited to see what will come next because the former loyalty program was already great and successful.
6. Hilton Honors
Image source: Hilton
Hilton proves that loyalty programs are effective in the hospitality industry. However, you have to approach loyalty programs in hospitality a bit differently since customers are paying for a service instead of products.
The Hilton Honors Reward Program is a loyalty program that offers benefits and rewards to Hilton guests. Members of the program can earn points for stays at Hilton hotels, redeeming for free nights, room upgrades, airline miles, and more. The program also offers exclusive discounts and deals on travel and entertainment. Guests who are not members of the Hilton Honors program can join online or at any Hilton hotel.
Some perks of joining Hilton Honors are:
- Free Wi-Fi during stays
- Lower price for rooms
- Exclusive app features
- Elite-level members get every 5th night free
Hilton Honors also offers different American Express cards that users can get for an annual fee and enjoy insane benefits:
- Hilton Honors American Express Surpass® Card – $95 – Earn 130,000 Hilton Honors Bonus Points after spending $2,000 in purchases on the Hilton Honors Express Surpass Card in the first 3 months of Card Membership.
- Hilton Honors American Express Card – Special Offer: Earn 70,000 Hilton Honors Bonus Points plus a Free Night Reward after spending $1,000 in purchases on the Card in the first 3 months of Card Membership.
- Hilton Honors American Express Aspire Card – Earn 150,000 Hilton Honors Bonus Points after spending $4,000 on eligible purchases within your first 3 months of card membership.
It is a great way to increase your customer retention rate if you work in the hospitality industry. Hilton has hotels worldwide, so all members will be more inclined to choose their hotel and enjoy the loyalty program perks.
7. Ikea Family
Image Source: Ikea
Ikea Family is a loyalty program that offers rewards to members. Benefits include discounts on food and furniture, exclusive deals, and a sneak peek at new products. To join, create an account on the Ikea website. You need to provide basic information, like your name and email address. Once you’re a member, you’ll start earning points every time you shop at Ikea. Customers can redeem these points for discounts on future purchases.
Some benefits of joining this program are:
- Discounts
- Free product insurance and replacement
- Complimentary hot beverage during each visit
- A more extended stay at the kids’ playground
- Free workshops
- Gifts and surprises
Parents’ biggest issue when shopping or doing any chore is what to do with the kids. Not only does Ikea have playgrounds in every store, but offering more extended stays for loyalty club members will increase the store visitation rate.
Overall, this is an excellent example of how you can custom-tailor your loyalty program design to fit the needs of modern customers and improve the general customer experience.
8. Uber Rewards
Image Source: Uber
Uber is another company that offers a decent program for building customer loyalty. While it’s not the most generous out there, it is still a good way to engage valuable customers and reward them for their loyalty.
You earn points for each Uber ride and Uber Eats order. Here is how Uber’s point system works:
- 1 point per dollar spent for Uber Pool, Express Pool, and Uber Eats orders
- 2 points per dollar spent for UberX, UberXL, UberAssist, Uber Comfort, Uber Connect, Uber Pet, and Uber Select users.
- 3 points per dollar spent for Uber Black, Uber Black SUV, Uber Green users.
Here are some of the rewards you can receive by gathering points:
- 10% off your next trip (up to $3) — 250 points.
- Free coffee from Starbucks ($3 value) — 250 points.
- Up to four free months of Apple Music — 500 points.
- 30-day free trial of HBO Max for new subscribers — 1,000 points.
- Free UberX trip (up to $30) — 2,000 points.
- Free Uber Eats order (up to $25) — 2,500 points.
Uber also lets you earn a Uber Rewards Elite status by gathering a specific number of points within a six-month timeframe. There are different Elite tiers, namely:
- Gold – 500 points – you receive refunds for cancellation fees if they book another Uber within 15 minutes post-cancellation
- Platinum – 2500 points – you get priority airport pickups
- Diamond – 75000 points – you get complimentary car upgrades and a unique option within the app to book the most experienced drivers.
9. Chick-Fil-A
Image Source: Chick-Fil-A
Chick-Fil-A has one of the most popular loyalty programs in the food & beverages industry, currently boasting over 13 million active participants. This company also has an excellent social media presence, where they also promote the loyalty program to reach the target audience.
It works like any other loyalty or rewards program – earn points, receive rewards, and redeem benefits. Chick-Fil-A has four tiers. Each of which comes with its own set of benefits:
- Member – $1 amounts to 10 points, receive free birthday rewards
- Silver member – $1 amounts to 11 points, receive rewards from local Chick-Fil-A shops, send prizes to friends and family, birthday rewards, bonus challenges, learn first about new menu items.
- Red member – $1 amounts to 12 points, receive rewards from local Chick-Fil-A shops, send rewards to friends and family, birthday rewards, bonus challenges, learn first about new menu items, unlock exclusive Red Member rewards.
- Signature member – $1 amounts to 13 points, receive rewards from local Chick-Fil-A shops, send rewards to friends and family, receive birthday rewards, participate in input and voting opportunities. Get bonus challenges, learn first about new menu items and unlock exclusive Signature Member rewards.
Another smart thing this company does is run a loyalty program through their app. It helps them collect important information about users, which they can later use to improve and optimize marketing efforts.
10. Expedia Rewards
Image source: Expedia
Expedia Rewards is a great, high-value loyalty and reward program that lets customers save money on traveling. On average, Expedia Rewards members save up to $35 per booking.
The more you book your stays and travel through Expedia, the more points you will earn. You have three tiers, namely:
- Blue – 10% discount on select hotels. Receive double points when you book through their app
- Silver – you get 2 points for every dollar spent, get free breakfasts and spa days
- Gold – you get 3 points for every dollar spent, guaranteed late checkout, free room upgrades
As you can see, Expedia strongly encourages customers to use their app to make bookings. It is great for retaining customers and gathering insights and information about users to target your ads better.
Design attractive loyalty programs with PassKit
What is the key to a successful business? Keeping customers coming back for more, of course! A loyalty program is a great way to do just that. The loyalty of customers is one of the most important assets a business can have, and it’s what can set your business apart from the competition.
So, what are you waiting for? If you want to engage customers and increase the retention rate, a loyalty program is one of the most effective ways.
Try PassKit today to design a loyalty program and create an irresistible offer for your customers! With our easy-to-use platform, you can develop a unique experience for each customer. Plus, you can test our design tool for free to see how it works before you choose your paid plan. Get started today and watch your sales grow!
FAQ
What makes a good loyalty program?
A good loyalty program should provide enough value for the customer to sign up and increase customer retention. The point system should be easy and understandable, and the whole experience should be quick and effortless. It’s also important to provide customers with a convenient way to keep track of their points and rewards – we recommend using PassKit because it integrates seamlessly with Google Pay and Apple mobile wallets, where they can check the status of their rewards.
What should you keep in mind while designing a loyalty program?
When designing a loyalty program, you should stay true to your branding elements. Use the same color story for digital passes to ensure that customers know it’s your business. Also, create a system that will let you collect information about loyalty club members, which you can later use to improve your marketing efforts.
What should you look for in a loyalty program?
The most important factors that determine the popularity and effectiveness of your loyalty program are convenience, ease of use, and valuable rewards. Develop a clear reward and a point structure that you will showcase on your website for customers to see. Offer exclusive perks and deals for loyalty club members.
How does customer loyalty impact the retention rate?
There’s a lot of debate about how important customer loyalty is regarding the retention rate. But one thing’s for sure – if a customer is happy with their purchase, they’re likely to return and buy from you again. Create a good value proposition for your customers to inspire them to return, directly impacting the retention rate. Loyalty programs are a great way to provide more value for your customer.
It’s easy to see that happy customers always return to your store if you provide them with a memorable experience. And satisfied customers are the ones who receive rewards for their purchases – who doesn’t like special perks and rewards?
