August 17, 2015
Big companies understand the value of loyal customers and the role that a good loyalty program plays in encouraging loyalty. They therefore spend millions of pounds every year to come up with the most creative and effective methods to keep new customers coming back again and again. The good news is that it is more costly to come up with the ideas than it is to implement them. Below you’ll find a list of a few of the most successful loyalty programs, their own unique methods and which can easily be used for small businesses. So even though your business doesn’t have the same access to funding you can still run a successful loyalty program.
Simplicity, wide range of rewards
Clubcard and Nectar Card
These loyalty programs have been competing with each other for the best part of the last 2 decades and this has led to two of the most successful loyalty programs in the UK. Both the Clubcard, launched in 1995, and the Nectar Card, launched a year later, are both extremely successful for number of reasons. Both programs use very simple points per pound spent system, 1, or 2 points per pound respectively, which allows customers to clearly understand what rewards are available to them when they spend a set amount.
Another key driver to the success of these loyalty programs is the wide of range of rewards that customers are offered. Both supermarkets have teamed up with other companies to offer rewards ranging from discounts at restaurants to days out at theme parks. The loyalty programs can attract as many people as possible to the rewards scheme which in turn attracts more and more people to shop at Tesco’s and Sainsbury’s. As a small business it may be difficult to team up with other businesses but offering a range of rewards that you can personally deliver will still help make your loyalty program appealing to as many potentially loyal customers as possible.
Use of customer data
Boots Advantage Card
The Boots Advantage card is another one of the most successful loyalty programs in the UK due its use of customer data to personalise rewards for each customer. What the advantage card does well is that it understands the sensitive nature of customer information and therefore uses it very carefully. For example, the loyalty program aims to avoid promoting products based on a customer’s average basket as this can lead to people being offered items based on infrequent or one-off purchases. These kinds of offers only serve to make a brand seem intrusive and turn away potentially loyal customers. Instead, Boots look at a customer’s complete behaviour to try and understand what their customer genuinely find valuable. Getting to know your own customers and what motivates them is a great way to encourage their loyalty.
By setting up their rewards as a tiered system, BA have managed to create an enticing loyalty program in which their customers are encouraged to strive to the next level to receive better rewards. BA has bronze, silver and gold levels so customers can gain small rewards, such as priority boarding, worth a small amount of points or big rewards such as free upgrades and free hotel stays in exchange for larger amounts of points.
Tiered systems work well because the small rewards will keep people interested in your loyalty program with rewards that are attainable as well as offering big rewards that people will take a keen interest in and encourages them to keep using your business over a longer period of time.
Creative ways to earn points
Phillip Kingsley have succeeded in creating a great loyalty program by not only keeping their points system simple (£1 = 1 PK point), but by also allowing their loyalty members to earn points in a range of ways. The great success of this is that it keeps their customers engaged in the brand through a variety of channels but it can also increase the word of mouth exposure the brand receives.
Phillip Kingsley offer customers extra points for actions such as registering an account, liking their social media pages, signing up to the newsletter and recommending friends to shop at Phillip Kingsley. Customers are therefore rewarded for actions that improves their relationship with Phillip Kingsley as well encourages new and potentially loyal customers to start a relationship with Phillip Kingsley.
Coffee shop loyalty programs have a very good track record in encouraging loyal customers. They have an easy general method where their customers can get a free coffee for every 10 they buy. And this has been proven to work time and time again.
Where the Costa Coffee Club has excelled is their use of free points for just simply joining the loyalty program. When you sign up you immediately receive 100 free points which already puts people halfway towards a free coffee. Having a head start on a loyalty program has been shown to really motivate people to complete loyalty programs. One study created two loyalty programs, one offered a free car wash after 10 car washes and the other offered a free car wash after 12 car washes. In the 1st group there was no head start given, but the 2nd group were given a two car wash head start. Essentially both groups were using the exact same loyalty program; however researchers found that the 2nd group had nearly double the rate of completion because of their head start.
McDonalds Monopoly is a slightly unorthodox loyalty program as it is one that doesn’t run continuously throughout the year. When it does run however, McDonalds Monopoly increases sales by up to 5.6% which is a huge amount of additional income for a company of this size.
The success of the loyalty program is down to McDonalds creating a game out of the loyalty program which engages customer’s more than traditional loyalty programs and takes advantage of our human nature that makes us want to compete and win. Other companies have also enticed customers to their loyalty programs by using sweepstakes or scratch cards so customers win their rewards.
As a small company you can also turn your loyalty program into a game at little cost. Think of creative ways to engage customers in game which allow them to win small prizes. Whether they win or lose your loyalty program will be more memorable and will encourage people to keep coming back.
Exclusivity and perks
The success of Amazon Prime can be seen by the fact that people are willing to pay £79 a year for it. Not many other loyalty programs have been able to show enough value to make people willing to pay to receive its benefits.
Amazon Prime has done this by offering perks such as free access to their streaming service, free two day delivery, and even one hour delivery in some cities. These perks are only available to Amazon Prime members who therefore feel more valued by the company compared to the average customer. This has led to an estimated 7 million Amazon Prime users who spend twice as much on average as non-prime members.
As a small business you could also encourage loyalty by offering exclusive services, experiences to people on your loyalty program. These perks helping to further engender loyalty to your business.