Over 90% of companies in the U.S. have some type of loyalty program. You’ve probably seen loyalty programs at the grocery store, coffee shop, and clothing retailers, but these kinds of programs can help any business (big or small) turn satisfied customers into repeat customers. And during financially lean times, deploying a high-quality loyalty program can help you earn the hard-earned cash of frugal consumers.
Loyalty Program Benefits
We all know that a well-run loyalty program is valuable to consumers, but how do loyalty programs benefit businesses?
Deeper customer understanding.
When customers use loyalty programs, businesses can collect data on their spending habits as well as important demographic information. And the data collected can help illuminate which marketing campaigns are most effective.
Many loyalty program users will purchase more products/services especially if you offer valuable deals and coupons for what interests them the most.
Improved and long-lasting customer relationships.
Consumers who engage with your loyalty program are more likely to return to your brand repeatedly.
Create brand communities. Well-designed loyalty programs will help cultivate a community around a brand’s identity and products/services. Getting consumers to talk about your company is more valuable than an advertisement.
- Over 50% of American consumers will join the loyalty program of a brand they buy from often.
- To get the most out of a loyalty program, 66% of consumers will change their purchasing behavior.
- Loyalty programs are used across generations: 70% of Millennials, 71% of Generation X, and 63% of Baby Boomers say that what they purchase is influenced by the loyalty programs they belong to.
- However, Generation Z has the lowest number of people participating in the loyalty programs (59%). Loyalty programs may need to be adapted to speak to this generation’s needs and values.
Probably one of the most important statistics is that only 44% of consumers using loyalty programs are satisfied with them. That means there’s room for improvement. We’ll get to that later; let’s first explore some of the most common types of loyalty programs.
Tiered loyalty program
This kind of program offers various levels to participants. They might offer bronze, silver, and gold with the gold level offering more benefits than the bronze and silver. They might also offer free and paid levels.
Example: Sephora’s Beauty Insider loyalty program
Sephora offers a loyalty program tier for different kinds of consumers.