8 Types of Customer Loyalty Programs!
Customer Loyalty Programs take a lot of different forms. Some businesses decide to use only one model, while others may combine two or more!
We hope that this article will be of value to you and help you choose the best type of customer loyalty program that corresponds to your business needs and customers.
1. Point Program
The point program is the most common program around the commerce world as it is the simplest one. It is based on one simple principle: Spend more to get more.
Every time a customer makes a purchase in-store or on your website, they get a certain amount of points depending on the size of their purchase. These points are translated into some type of reward. Whether it is a discount or a special customer treatment, customers seems to work toward collecting a certain amount of points to redeem their reward.
2. Spend Program
In spend programs, customer get loyalty credits for the amount they spend at a business. This program is very easy to understand, create and maintain. It is also proven to be an effective way to increase transaction amounts and reduce churn rate.
3. Tiered Program
One way to find the right balance between attainable and desirable rewards is to implement a tiered system, which rewards initial loyalty and encourages more purchases.
In a nutshell, the tier program is based on levels of loyalty. Customers get points whenever they purchase something. The more points they receive, the higher loyalty level they will reach. And the higher the level, the more rewards they will get.
4. Paid Program – VIP member club
Customers pay a monthly or annual fee to join your VIP member club with access to special services, discounts or unique opportunities. Your paid program should include benefits that are exclusive to members or either wise it will lose its value.
5. Value – based Program
If you structure a loyalty program that is aligned to your customers’ values, they are more likely to become brand ambassadors. The million-dollar question here is: How do you reward your customers without rewarding them?
First, it is very important to define your values. Let’s imagine that you run an online pet store and you know that your audience values animal welfare. One thing you may do it, is to start a loyalty program, similar to the point system, where customers’ purchases translate into currency. Then, every time a customer makes a 50€ purchase, you would donate 5€ to an animal rescue organization.
The reward when choosing the value-based program is to connect with customers on a deeper level by creating a strong and ethical relationship with them.
6. Partnered Program
Strategic partnership for customer loyalty can be super effective regarding customer retention, as you offer them more opportunities. At the same time, it can help the growth of your business by building new business relationships (partnerships).
While providing your customers with value that is relevant to them and goes beyond what your company can exclusively offer them, you are showing them that you truly understand and care about their needs.
7. Game Program
Who doesn’t love games?
A good idea is to turn your loyalty program into a game application to encourage repeat purchases, increase customer loyalty, entertain customers and help strengthen your brand’s image in a more entertainment way.
8. Hybrid Loyalty Programs
A hybrid loyalty program is a combination of more than one type of loyalty systems. You may merge 2 different systems such as the tier and the game program, where customers reach new levels of loyalty every time they complete a new level in your game. The participation in the game should of course entail a purchase.
The most common combination is that of point-based system with a tier program as it makes the calculation of points easy for the customers and encourages them to pursue next loyalty level and thus, more purchases.
Do you find Customer Loyalty an interesting topic? Read more about it:
- What about Customer Loyalty?
- Customer Loyalty Playbook: 10 things you should do!
- Customer Loyalty Programs: Will they benefit my business?
- The 4 steps you should take while creating a Customer Loyalty Program
- Is your loyalty program effective?
Also published on Medium.