How to create a bussin’ loyalty program

With personalisation on the rise, loyalty programs are gaining popularity once again.

When done right, they’re a win-win for customers and brands alike.

However, in the past, loyalty programs were… kinda sh*t.

Some even prompted customers to switch sides, with little to no benefits to the customer.

As they regain their position as a tool for customer engagement and retention, one must ask: what makes a loyalty program actually worthwhile?

To be truly effective, you have to go beyond simply offering points or discounts.

So here are some key factors that contribute to making your loyalty program truly stand out.

First, you need a clear value prop.

Your customers need to understand what exactly they’re gaining from the program. Shocking, I know.

Clear concise messaging about rewards, benefits, and of course, how to earn them ensures they see the value in signing up (and staying on.)

Who does it right?

Sephora's ‘Beauty Insider.’ The retail giant knows what the girlies want and how to give it to them. It’s simple and easy to understand--all members earn 1 point per $1 spent.

The points get you to different tiers. And the benefits (savings, samples and experiences) are all listed clearly for each tier, increasing in value as you climb.

On that note, a tiered rewards system is very effective.

Offering different tiers of rewards motivates customers to engage more to unlock higher levels of benefits. This taps into the psychological principle of progression, driving your customers to aspire to climb the tiers.

Obviously, if I know I’m about to unlock the next level of benefits, I’m going to spend that little bit extra. It’s genius.

Who does it right?

Hilton Honors. Like Sephora, the hotel brand has a tiered program where members can move up from Silver to Gold to Diamond status, the more points they earn. Moving up unlocks increasing levels of perks like room upgrades and free breakfast.

Gamification.

Elements like challenges, badges, or competitions encourage your customers to stay engaged and connected by tapping into their natural desire for achievement. Because who doesn’t love a little praise? 😉

Who does it right?

Duolingo. Their streaks and leaderboard system uses gamification to engage its users. The platform rewards users' continuous participation and creates friendly competition. And this is why they have a cult following.

Flexibility in rewards.

We don’t all like the same things – crazy, right? Providing customers with a range of options for redeeming points (e.g., discounts, products, experiences) increases engagement. It also ensures rewards cater to different customer preferences.

Who does it right?

Chase Ultimate Rewards. The bank offers a system that allows cardholders to redeem points for travel, cash back, gift cards, or purchases through partners like Amazon. This gives customers a variety of options.

Omnichannel integration.

In this day and age – it's a must. Loyalty programs should be seamless across all channels, from online to in-store, and even through mobile apps. Customers should be able to engage with the program wherever they interact with the brand.

Who does it right?

Nordstrom’s Rewards. Or 'The Nordy Club.' The program is fully integrated across their app, website, and physical stores. This mean customers can easily earn and redeem rewards, no matter where they shop. Perfecto.

Lastly, offer exclusive experiences.

Discounts are great and all…but can you throw in something that makes your customers feel extra special?

Offering more than just discounts can set your loyalty program apart. Exclusive experiences, like early access to new products, VIP events, or personalised services, are obviously going to enhance your program’s appeal.

Who does it right?

Nike. Nike's Membership offers 'a little something extra.' Members get early access to new sneaker drops and invites to exclusive fitness events. This makes the program more attractive and unique. It’s all about the community, and they like to offer their community 'all kinds of thank-yous.'

The benefits of having a loyalty program are endless. Customer retention, increased sales, data collection, advocacy, and cost-effective customer acquisition just to name a few.

The benefits to having a damn good loyalty program? You’ll hook your customers for life.

-Sophie, Writer