The Ultimate Guide to Building a Customer Loyalty Program in 2023

A devoted customer base increases sales for your company. It establishes your brand as a dependable and trustworthy provider of goods and services. Building a customer loyalty program is essential for every ecommerce business seeking to expand, grow, and succeed.

In this guide on launching a loyalty program for your online store, we’ll cover what advantages this brings, what types of programs you can choose from, and how to get started.

Meanwhile, we’ll show you how Coretava's Core Loyalty solution can assist you in creating and managing a successful loyalty program. You can easily and effortlessly improve customer retention and spur revenue growth with Core Loyalty's abilities to develop personalized rewards, automate program management, and monitor user engagement.

Table of Contents

• What Is a Loyalty Program?
• 7 Benefits of a Loyalty Program
• 4 Types of Customer Loyalty Programs
• 5 Best Examples of Loyalty Programs
• How to Start Your Loyalty Program in 10 Steps
• Launching the Top Customer Loyalty Program in 2023

What Is a Loyalty Program?

A loyalty program is a marketing tactic to entice customers to make repeat purchases through incentives like rewards, savings, or special benefits. Frequently, it is also referred to as a rewards program.

When your client registers and creates an account with your customer loyalty program, you can track their purchases and offer them more personalized rewards based on their purchasing behavior and behavioral trends in your industry.

Business profit margins can expand as a result of a loyalty program's efforts to promote customer retention and foster brand loyalty among clients.

7 Benefits of a Loyalty Program

Ecommerce businesses are always on the lookout for ways to boost customer retention, sales, and customer lifetime value (LTV). Implementing a loyalty program can be a highly successful strategy to achieve these goals.

Seven of the most significant advantages of having a customer loyalty program include:

1. Higher Customer Retention Rate

Customers will want to accumulate rewards or points which motivates them to come back to your ecommerce website again and again. Loyalty programs strengthen customer relationships with brands and raise customer lifetime value and retention rates.

2. Increased Customer Engagement

Customers become more actively engaged with businesses that have invested time and effort in loyalty programs. This is done by taking proactive steps to earn their rewards. This engagement, in turn, leads to increased loyalty and lifetime.

3. Boosted Sales

Members of rewards programs spend more money and shop more frequently than non-members. There is plenty of research showing that shoppers are willing to go out of their way to buy from a brand they feel loyal to. Moreover, repeat purchases usually come at a higher value than first-time purchases.

4. Superior Client Data

Loyalty programs offer a straightforward way to collect various types of unique customer data. Companies can then use this insightful data on consumer behavior, preferences, and purchasing trends to improve marketing and sales tactics.

5. Advantage Over Competitors

A loyalty program can differentiate a company from competitors and draw in new clients. By enhancing customer loyalty, brands are able to grab a higher share of wallet within their niche.

6. Cost-Effective Marketing

Members of loyalty programs are more inclined to recommend the business to friends and family, and word of mouth is a more reliable and inexpensive marketing tactic than many other ecommerce marketing alternatives. With a referral program, you make money not only from your existing customers but also the new customers they bring on board.

7. Enhanced Inventory Management

You can manage inventory and stock levels more skillfully if you have information on customer buying habits. This leads to smoother business management processes.

4 Types of Customer Loyalty Programs

There are different types of customer loyalty programs, and choosing which one to implement to your online store depends on your business goals and target audience.

Here are the four most popular and beneficial types of loyalty programs

Note: All these customer loyalty programs are supported by Core Loyalty.

1. Points-Based Loyalty Program

With this customer loyalty program type, brands can reward customers with points for their purchases and let them redeem points for discounts or other rewards. This program is easy to implement and offers great flexibility in the rewards offered to customers. Points-based programs incentivize repeat purchases and can increase customer engagement and retention.

2. Cashback Loyalty Program

With cashback programs, customers receive a percentage of their purchase value back in the form of cash or credit. This program is popular with customers who value immediate savings, and it can increase customer loyalty and sales right away. This customer loyalty model is particularly relevant at the moment when we hear about a possible recession more and more often, which means that customers will be interested in ways to save their money.

3. Tiered Loyalty Program

This program rewards customers based on their level of engagement, with higher rewards for more frequent and higher-value purchases. Tiered programs incentivize customers to make more purchases to reach the next tier, increasing engagement and sales. Reaching a VIP tier becomes a stimulus for shoppers to make more purchases.

4. Referral Program

With a referral program, customers are rewarded for referring friends and family to the business. This means that your existing customers help you generate new leads and new customers, usually at a cost that’s just a fraction of the customer acquisition cost of other marketing channels. In this way, referral programs can increase customer acquisition, loyalty, and sales while reducing customer acquisition costs.

Core Loyalty helps ecommerce businesses launch and optimize each of these types of customer loyalty programs. With Core Loyalty, ecommerce businesses can create personalized rewards, access AI and analytics, and improve customer engagement to increase customer retention and drive revenue growth.

Click here to schedule a demo.

5 Best Examples of Loyalty Programs

Establishing a loyalty program is a highly effective method for increasing customer retention, driving sales, and improving client lifetime value for organizations. But getting started is what usually makes businesses hesitate and postpone the launch of a customer loyalty program.

Below we’ve listed five of the most successful, time-tested loyalty program names from real life to serve as an inspiration to start your own program to reap the benefits:

1. Starbucks Rewards

Starbucks Rewards is a loyalty program with points that awards consumers with stars for their purchases. These stars can be exchanged for free drinks or food through the program.

The program also provides unique prizes and member-only activities that boost client engagement and retention.

2. Sephora Beauty Insider

Makeup lovers who shop at Sephora receive points for their purchases through Sephora Beauty Insider and get free cosmetics.

Customers are encouraged to make more purchases by the program's special benefits to get free beauty lessons and early access to new items.

3. Amazon Prime

Amazon Prime subscribers receive free two-day shipping, unlimited streaming of movies and TV shows, and other monthly perks.

This promotion improves customer loyalty and lifetime value and boosts purchases from the website.

4. NikePlus

NikePlus is a loyalty program for Nike customers that offers personalized rewards, exclusive products, and free shipping on all orders.

The program also offers access to Nike events and training programs and incentivizes customers to engage with the brand and make more purchases.

5. Target Circle

Target Circle is a loyalty program that awards members with points for their purchases. These points can then be used to earn deals on more purchases in the future.

The program provides tailored discounts and early access to sales, which encourages customers to shop more frequently at Target.

These rewards programs are great examples of how businesses can use rewards and incentives to increase customer engagement, loyalty, and sales.

How to Start Your Customer Loyalty Program in 10 Steps

Are you thinking about boosting your business and growing your revenue and clientele? Launching a customer loyalty program can help you with that.

Follow these ten steps to start the best loyalty program in no time:

1. Choose the type of customer loyalty program that aligns with your brand

The first is to select a loyalty program that complements your product offers. The many options to reward your existing customers include discounts, cashback, freebies, and more.

Incentives should motivate target recipients and pique their interest. Your customer loyalty programs could be:

• Points-based A point-based loyalty program gives customers rewards for recommendations, repeat purchases, and subscriptions.
• Tier-based Tiered customer loyalty programs offer various perks to your clients according to how much they spend on your online store.
• Paid loyalty A paid loyalty program charges users a fee in exchange for specific advantages. This is common in hotel or airline industries where customers pay for lounge access or priority boarding.
• Value-based A value-based program is designed to demonstrate a company's principles and give a percentage of revenues to particular causes or charity. In this way, you can engage customers who are passionate about social responsibility and philanthropy.
• Coalition loyalty This type of program is becoming more common as companies look to collaborate and share data to improve their marketing and customer insights.
• Gamified A gamified program offers challenges or games to keep clients interested and engaged. You can build excitement around your brand and incentivize repeat purchases.

2. Define your loyalty program’s objectives

You should be clear about the results you hope to achieve through your loyalty program like increased sales or customer engagement.

For instance, let’s say you own a cosmetics company and want to raise awareness of your cause and brand. You increase sales by interacting with current patrons and customers who post about their experiences about your products on social media.

Using customer loyalty programs, you can set objectives for finding ways to boost order volume or size. Then, you need to continuously track performance against these objectives.

3. Identify your target audience

You learn about your customers' worldviews or what they desire from your brand by analyzing customer behavior and interactions. You discover which segments are the most active in engagement.

An effective data collecting and storage strategy can strengthen client interactions and show what encourages loyalty.

The data collected at numerous touchpoints should be discussed by your teams as you conduct research on your target audience or current clients.

You will be able to better serve customers by using this information to understand which goods or services to promote to your audience.

4. Personalize your loyalty program

With insights from your data, you need to choose a loyalty app or platform to manage your program and set it up according to your desired structure.The data you have gathered in the previous step can be used to tailor offers to your existing clients in the future.

A SaaS provider should be aware of which departments its clients come from and how they use the tool if it provides a service that is used by many department types. The company can customize upcoming promotions and incentives based on certain use cases thanks to this insight.

You can also learn from a customer's prior interactions if the app maintains data from previous transactions. This allows it to target better and improve future outreach.

5. Create your rewards and incentives

As a next step in starting a customer loyalty program, you need to determine what rewards you'll offer to incentivize customer loyalty. To do this, consider what will be most valuable to your target audience.

You can use your program to promote new sales, growth, and engagement by using your client base as a source of referrals.

If your customers have favorable experiences, you can readily ask for recommendations from them by posting content on social media, providing special connections or coupons, or asking for positive reviews.

Your customers can receive presents or offers from your company in exchange for something simple they do, and it's a win-win for both parties.

6. Determine your program's structure

Next, you need to decide how customers will earn rewards and how they can redeem them. The aims, values, and client preferences of your ecommerce company should be reflected in your loyalty program's structure.

You can base the incentive structure on customer's past purchases, frequency of visits, or referrals. You need to clearly explain that redeeming points can get them discounts, free goods, special access, or other advantages.

As part of the process, you should develop a compelling value proposition that fosters consumer loyalty and raises their involvement with your brand by establishing your loyalty program’s structure.

7. Create customer loyalty program materials

Before launching, you should design and develop branded materials to promote your rewards program, such as signages, email campaigns, and social media posts.

Together with a clear message about the advantages of joining, the materials must include the name, logo, and slogan of the program.

In-store and online signage should be prominently displayed and unified for providing the ultimate omnichannel experience. Meanwhile, email campaigns should be created with eye-catching visuals and a clear call to action to draw in your customers.

Social media updates should include videos and photographs that emphasize the special features of the program and be interesting and shareable.

Effectively marketing your loyalty program will boost consumer engagement and increase customer retention by developing visually appealing materials.

8. Launch your program

Before launching, you need to announce your loyalty program to your customers and begin promoting it through the channels your target segments favor.

The launch announcement should highlight your customer loyalty program's distinctive elements, advantages, and enrollment procedures. It’s important to engage your customers and create excitement by expressing the program's value proposition simply and effectively.

Promotion must continue after the program has begun if you want to keep clients interested. Offer exclusive incentives, individualized messaging, and frequent updates on fresh rewards or privileges.

9. Monitor your program’s performance

As soon as you launch, you should start keeping track of how your loyalty program is performing. Use analytics to make adjustments as needed.

Analytics metrics and tools like consumer engagement measures, transactional data, and feedback surveys help monitor the effectiveness of your loyalty program.

You can uncover trends and patterns in customer behavior by studying this data in order to take data-driven decisions to improve your program.

At the same time, you should continue reminding your clients of your program success and promote ongoing engagement with targeted communications. Give timely information on their rewards or point balance, personalized communications, and targeted promotions.

To maximize consumer engagement, raise retention rates, and promote long-term revenue development, you need to periodically monitor and modify your loyalty program.

10. Use the best customer loyalty program app

Last but not least, to streamline the process of launching and managing your program, you should consider using a customer loyalty program app like Core Loyalty.

Our app's custom branding feature enables businesses to create a unique brand identity for their loyalty program, including custom logos, colors, and messaging.

The points tracking system allows you to reward your customers based on their purchase history and frequency of visits. The sophisticated gamification features, which most of our competitors don’t offer, will help you gamify the loyalty experience for your customers to get them to engage even more often with your brand.

Core Loyalty also employs personalized messaging, targeted promotions, and automated email campaigns. Access to AI-driven, real-time analytics and reporting allows you to track program performance and make data-based decisions to optimize your program.

Check out what sets Core Loyalty apart from other loyalty apps like Smile.io and Stamped.io.

Launching a Customer Loyalty Program in 2023

Launching a customer loyalty program is a valuable strategy for ecommerce businesses looking to increase customer engagement, customer retention, and revenue growth. When creating a loyalty program, it's essential to determine the program's structure, develop branded materials, launch the program via the best app, and monitor its performance regularly.

Coretava’s Core Loyalty helps you streamline the launching and managing of your loyalty program with minimum efforts. You get a range of features, including four different types of loyalty programs, gamification, and customer engagement tools to create successful loyalty programs for your business from a single platform.

With Core Loyalty, launch the best loyalty program problem-free and create a competitive advantage in the marketplace.

Click here to schedule a demo.