Let’s figure out what types of loyalty programs there are, when they are ne, how to choose and implement them correctly, and evaluate their effectiveness.
A loyalty program is a system that attracts and retains customers through discounts and bonuses. With its help, a business:
generates interest and then commitment
To your brand, product or services;
attracts new customers;
encourages customers to make purchases more often;
increases the average bill;
collects personal data from customers for personaliz and marketing communications;
receives feback from the audience on what nes to be improv or chang;
retains regular customers.
When is a loyalty program ne?
Not every business nes a loyalty program. Four signs that a company is ready to implement a customer rewards system:
The business brings in a stable incom
iscounts and bonuses ruce profits. Launch, implementation and support will also require additional expenses. The company must be prepar for such expenses, so a loyalty program should be launch only if the business has already reach breakeven and become profitable.
Highly competitive market. A loyalty program is an advantage that helps a business attract attention to a product or service and stand out from other market participants. If a company has few competitors and the fight for a client is not so fierce, then a program is not ne.
High cost of attracting a new customer
If advertising costs are high and there are still few new customers, then a loyalty program will help increase the customer base.
Client base of 1 thousand contacts or more. A loyalty program will not work effectively with a small client base. If a company has a client base of 300 people, and the average bill of 1000 ₽, say, grows by 5%, then the total revenue will increase by only 15,000 ₽. At the same time, a loyalty program is an expensive business and costs the business much more.
What types of customer loyalty programs exist?
Let’s figure out what types of loyalty programs there are:
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By access free and paid
By rewards: discount, bonus, cashback.
Joint: partnership and umbrella.
By client gradation: simple and multi-level.
Free and paid buy lebanon whatsapp number data 5 million types of loyalty programs
Most loyalty programs are free to join, but there are some that require a one-time or monthly fee to participate.
What is a loyalty program, when is it ne and how to create it
Ozon Premium is one example of a paid loyalty program: the client pays a monthly subscription fee to enjoy the benefits of the service
According to sociological research
One Russian family uses an average of 16 loyalty programs, and only two of them are paid. Therefore, the advantage of a free program mobile number in is its availability. But the disadvantage is that this same availability devalues it. Everyone knows the type of buyers who collect discount cards for the thrill of it, but make purchases extremely rarely.
The advantage of a paid loyalty program is its high efficiency. Research has shown that participants in paid programs bring more income to businesses: 62% began to spend more from the moment they became participants in the program, 43% make purchases every week, and 59% give preference only to this brand.
Discount
This is one of the most common types of loyalty programs. The company gives participants a fix or cumulative discount. The size of the cumulative discount depends on the amount of purchases from the moment of participation or for a certain period – for example, 1 calendar year. The discount can apply to all goods and services or only those that, for example, are not includ in the sale.
What is a loyalty program
When is it ne and how to create it
Under the terms of the Rendez-Vous store loyalty discount program, customers increase their personal discount when they make purchases
The advantages of a discount program: a person receives immiate and tangible benefits from a purchase, the average bill becomes higher, and the company can increase sales. However, this type also has disadvantages: a client can make purchases very rarely, or buy something once and never return. Many buyers share their cards with friends and acquaintances: the cumulative discount quickly reaches its maximum, and purchases remain isolat and irregular.
Bonus
Participants in such loyalty programs buy goods without a discount, but receive points for this. As a rule, the reward is a certain percentage of the check amount. Bonuses can be accumulat and spent on new purchases: usually 1 point is equal to 1 ₽.
What is a loyalty program, when is it ne and how to create it
Aeroflot Bonus is a classic loyalty bonus program: for each flight, passengers receive miles that they can spend on a free air ticket or other partner rewards
The benefits of a bonus program: it motivates the customer to return to the retailer and make repeat purchases, because the goal is to accumulate points and then spend them profitably.
Cons: with such a program
It is easy for a business to make a mistake and disappoint a client. For example, a buyer nes to spend more than 10 thousand ₽ to get a benefit – 100 points. Also, clients are irritat by restrictions and limits, when only a certain number of points can be spent on one purchase or not all goods or services can be paid for with bonuses.
With cashback
The client instantly receives a percentage of the purchase amount, but not in points, but in “real” money. This type of loyalty program is popular with banks and telecom operators.
What is a loyalty program, when is it ne and how to create it
Alfa-Bank loyalty program participants choose increas cashback categories every month and can save on purchases
The advantages of such a program: the client values it very much, and the average purchase bill grows. The disadvantages include a narrow focus and complexity of implementation: not every business can organize cashback. In addition, such a program only works with non-cash payments.
Partnerships
Such programs unite several brands that jointly attract customers with discounts and bonus points. At the same time, the companies can be from different areas: for example, a fitness club, food delivery and a barbershop.
What is a loyalty program, when is it ne and how to create it
A Moscow network of fitness clubs has launch the Spirit.Box affiliate program. Club clients receive discounts from partners and can spend their points on their goods and services
The advantages of a partner loyalty program are that the client feels like part of a clos society, and this encourages them to make purchases. Also, within the framework of such a program, each company can replenish its client base. The disadvantage is that the program is difficult to implement, only well-known and strong brands that attract customers on their own can do it.
Umbelliferae
Such loyalty programs are us by large brand holdings. Unlike the affiliate program, the umbrella program does not involve outside companies. The goal of the umbrella program is to encourage consumers to use all the products or services of the brand within one ecosystem.
The X5 Club program unites all companies
Of the X5 holding: clients receive bonuses for purchases on a single card
Pros of an umbrella program: it is easy for a large business to manage, and it forms a single customer base, and consumers have more opportunities to receive bonuses and discounts. Cons: it is difficult to develop a rewards system, because all companies are different, and their audiences are different.
Multi-level
In simple loyalty programs there are no levels, and all clients are equal. In multi-tier programs, on the contrary, different levels of the loyalty program are creat: from basic to elite. The statuses of clients in such a loyalty program give their privileges: the more purchases they make, the more different rewards and bonuses they have.
What is a loyalty program, when is it ne and how to create it
There are five levels in the Lukoil loyalty program: bronze, silver, gold, platinum and VIP. The higher the level of the participant, the more points he receives for the purchase
Pros: it retains customers well and turns them into regulars, and also stimulates new purchases. Cons: it looks unattractive to beginners, they will have to start saving from the lowest level. In addition, such a program is difficult to implement – an advanc IT system is ne.
How to Choose a Customer Loyalty Program
To determine the appropriate type of loyalty program, you ne to:
Think about the tasks it will solve: increase the customer base, increase the average bill or the number of repeat purchases.
Analyze the target audience: what promotions might be of interest, what is the behavior of customers – under what conditions they make purchases and how much they spend on average.
Make a comparison: which of them correspond to business goals and which are easier and cheaper to implement.
Evaluate the experience of competitors: what companies that work in your niche offer.
Find out what customers think: what they would like to see.
How to Create an Effective Loyalty Program in 4 Steps
You can implement a loyalty program in your company in 4 steps.
Step 1. Calculate the implementation costs
A loyalty program requires additional costs from a business. The budget will be ne to:
Purchase loyalty program software. Ideally, it should be multifunctional: not only store data on participants and the bonuses they have accumulat, but also analyze customer behavior. The business nes to know its target audience: its age, income, shopping methods. This information will help create attractive offers for customers.
