How to Create Customer Loyalty with a Rewards Program: 2023 Guide
A customer rewards program is among the most efficient ways to foster customer loyalty and grow your company. Offering incentives and rewards for customer loyalty is a powerful marketing strategy to enhance customer engagement, cultivate brand loyalty, and - ultimately - increase revenue.
For ecommerce businesses, a well-designed rewards program can have a number of advantages. It can help to draw in new clients as well as strengthen brand loyalty and promote repeat business. Customers are more inclined to pick a brand over competitors when they notice that the company is rewarding and incentivizing them for their purchases.
In this article, we’ll look into what exactly a rewards loyalty program is, what its benefits are, and how to start your own.
We’ll also show how the Core Loyalty app helps businesses launch effective rewards programs that drive customer engagement and loyalty. With the sophisticated customization and personalization options, the platform allows businesses of all sizes to customize programs that meet their unique needs and goals.
Table of Contents
- What Is a Rewards Program?
- What Are the Benefits of Customer Rewards Programs?
- 10 Best Customer Rewards Programs Examples
- How to Start a Rewards Program for Your Ecommerce Business: 10 Steps
- Launching Your Customer Rewards Program in 2023
What Is a Rewards Program?
A rewards program, also known as a loyalty program, is a marketing strategy designed to encourage customer engagement and build brand loyalty. It comes with offering various incentives and rewards for repeat business.
Rewards programs typically involve a point system or other types of incentives that customers can earn and redeem for rewards or gifts.
There are four main types of rewards programs that businesses can implement:
- Points-based rewards program
Customers can earn points in this kind of program when they make purchases or perform other tasks like leaving reviews or referring friends.
Then, the points can be exchanged for benefits like savings, free gifts, or limited access to specials.
- Cashback rewards program
A cashback rewards program reimburses customers for a portion of their purchases as cash or store credit.
For instance, a customer might get 5% cash back on all transactions made with a specific credit card.
- Tiered rewards program
A tiered rewards program gives several degrees of prizes based on the customer's level of participation or spending.
A client may earn basic prizes for simply signing up for the program, but can unlock more valuable rewards when making more purchases or exceeding a specified spending threshold.
- Referral rewards program
Customers who recommend friends or family members to the company are rewarded under this type of system.
For each friend a customer refers to who makes a purchase, for example, they can get a discount or a free product.
What Are the Benefits of Customer Rewards Programs?
Customer rewards programs are a popular strategy for businesses to boost customer engagement, build brand loyalty, and eventually increase revenue.
Here are 13 benefits of implementing a customer rewards program:
1. Increased customer retention
According to ThinkImpact, loyalty programs boost spending among 54% of a company's customer base, and the most loyal consumers are responsible for approximately 8% of a company's total income.
2. Higher consumer spending
As reported by Queue.it, 37% of consumers, 28% of membership program participants, and 27% of loyalty program participants will spend more money with brands with which they have a retail subscription.
3. Enhanced client satisfaction
Customer loyalty programs keep repeat clients. Over 90% of businesses have a loyalty program, based on Fabric data. Brands increase the lifetime value of each customer when they reward their loyalty.
4. Rise in customer recommendations
A referral rewards program can encourage current clients to refer new clients to the company, increasing referral traffic and possibly generating new revenue.
5. More brand loyalty
White Label Loyalty reports that 79% of customers are more likely to shop at a store with a loyalty program. Meanwhile, 75% more are inclined to make a purchase from a company that knows their identity, suggests products based on previous purchases, and can personalize their experience, all of which can be readily accomplished with a loyalty program.
Customers are ultimately satisfied when they receive personalized offers and prizes based on their actions and behaviors from a well-designed loyalty program.
6. Valuable customer data
Rewards programs can provide valuable data on customer spending habits and preferences, which businesses can use to improve their ecommerce marketing and product offerings.
7. Improved brand awareness
A referral rewards program can also help to increase brand awareness when encouraging satisfied customers to share their positive experiences with friends and family.
8. Competitive advantage
Brand loyalty is still very much alive and well. 72% of consumers worldwide express loyalty towards their preferred brands, which influences their purchasing decisions, according to Stamp ME.
Focusing on customer experience and developing brand kinship can instantly enhance sales and revenue for businesses aiming to develop a loyal customer base and maximize customer retention for predictable, sustainable revenue.
In addition to building a devoted following, these customers also have the potential to develop into effective advocates for their preferred brands and contribute to further expansion through word of mouth referrals to peers.
9. Boosted social media engagement
Increased social media engagement is a direct result of having a loyalty program in place, as loyal customers are more likely to engage with a brand's social media content and share their positive experiences with others.
This increased engagement leads to greater visibility and reach for the brand, helping to build a stronger online presence.
10. Cost-effective marketing
Being a source of cost-effective marketing is another benefit of loyalty programs. Rather than investing in expensive advertising campaigns to attract new customers, businesses can use their rewards program as a marketing tool to retain existing customers and encourage repeat purchases.
This approach is typically more cost-effective and can yield a higher return on investment than many other ecommerce marketing strategies.
11. Better customer insights and targeting
The data collected through rewards programs can also provide valuable insights into customer behavior and preferences, allowing businesses to make more informed decisions when it comes to marketing and product development.
This data can inform targeted marketing efforts, allowing businesses to tailor their messaging and promotions to specific customer segments.
Additionally, businesses can use this data to identify new products or services that are likely to be popular with their customer base.
12. Enhanced customer experience
Personalized rewards and experiences through a loyalty program can enhance the overall customer experience and foster a deeper emotional connection between the brand and its customers.
This leads to increased customer satisfaction and loyalty, as well as increased lifetime value (LTV) of each customer.
13. Opportunities for cross selling and upselling
Loyalty programs can create opportunities for cross selling and upselling. Incentivizing customers to try new products or services increases sales and revenue with additional purchases.
This approach can be particularly effective when combined with personalized recommendations and offers, based on customer data collected through the rewards program.
10 Best Customer Rewards Programs Examples
Customer rewards programs are a great way for businesses to incentivize and retain their loyal customers. They can come in many forms such as loyalty points, discounts, exclusive offers, and more.
Here are ten popular rewards programs and their unique features that can inspire you when you work on your own:
1. Starbucks Rewards
Customers earn stars for purchases which can be redeemed for free drinks, food items, and other rewards.
Members also receive a free birthday reward, early access to new products, and exclusive member events.
2. World of Hyatt Loyalty Program
Hyatt has one of the most renowned travel loyalty programs that gives participants the chance to accumulate points for hotel stays that can be exchanged for extra benefits like free nights and room upgrades.
Members can also get to use free Wi-Fi and exclusive member prices.
3. Xfinity Rewards
Customers of Xfinity receive points for their purchases, which may be exchanged for bill credits, movie rentals, and other benefits.
Members have access to unique customer support and savings on Xfinity services.
4. Chipotle Rewards
Member purchases result in points that can be exchanged for free food and other benefits.
After making their first purchase as a member, members also get free chips and guacamole as well as exclusive access to new menu items.
5. Walmart Rewards
The Walmart Rewards Card provides cashback incentives for purchases made at Walmart and other merchants.
Members get access to special discounts and savings opportunities and can earn up to 5% cash back on purchases.
6. Delta Rewards
The Delta rewards program is widely regarded as the best airline loyalty program in the US. This program allows members to earn miles through flights and purchases, which can be redeemed for free flights, seat upgrades, and other perks.
Members also gain access to premium airport lounges and priority boarding.
7. Uber Rewards
For Uber rides and UberEats orders, members receive points that can be exchanged for free rides, UberEats credits, and other benefits.
In addition, loyal customers are rewarded with special benefits like price protection on particular routes.
8. Sephora Beauty Insider
Beauty junkies accumulate points for purchases that may be exchanged for free cosmetics, invitations to VIP events, and other benefits.
Members of this cosmetics rewards program also have access to free beauty lessons and free birthday presents.
9. AMC Stubs Rewards
Customers accumulate points through the purchase of goods and movie tickets, which they can exchange for free items, free tickets, and other benefits.
Frequent customers can attend events and screenings that are only available to them.
10. Shell Fuel Rewards program
Shell Fuel Rewards is one of the best gas rewards programs. The Shell program allows participants to accumulate points for gap purchases that can be used for savings on gas, vehicle washes, and other benefits.
Members also benefit from special discounts on particular goods and services.
How to Start a Rewards Program for Your Ecommerce Business: 7 Steps
Launching a rewards program can be a powerful way to drive customer loyalty and increase sales for your ecommerce business.
Incentives and rewards to your most loyal customers can encourage repeat purchases, boost engagement, and differentiate your brand from competitors.
Here are the seven steps you need to take in order to launch your own rewards loyalty program:
Step 1: Set your objectives.
The effectiveness of any rewards program depends on the clarity of your goals and objectives. For maximum results, you have to determine your goals from the start: Do you want to raise revenue, improve customer retention, or draw in new clients?
Every objective will have an ideal rewards program that can help you achieve it. Knowing your objectives will enable you to develop the loyalty strategy that yields the desired outcomes.
Step 2: Pick a type of rewards program.
Making the appropriate choice for your rewards program will help you reach your target market.
For this step, you should think about which program is best for your company and your customers: a referral program, a cashback program, a tiered program, or a point-based program.
Every program type has its own benefits as well as requirements, so it's crucial to pick one that complements your objectives and target audience's tastes.
Step 3: Create the structure of your program.
The incentives you'll offer and the ways in which consumers can earn and use them are needed to establish the framework of your program.
You need to specify all the program terms and conditions such as the duration of prizes' validity and the existence of any exclusions or limits.
You should make sure that your program's structure is clear-cut, transparent, and appealing to your target audience with creative design. Make sure that your program is better than your competitors’ rewards programs.
As part of this step, you should also think of the best name for your rewards program - something that reflects your brand values and appeals to your audience.
Step 4: Advertise your loyalty program.
When your system is ready to be launched, you need to start working on advertising your rewards program to your target audience using various channels, such as your website, email marketing, social media, and other relevant platforms.
The more people know about your program, the more likely they are to participate and become loyal customers. You should target both existing customers and new clients.
Step 5: Make use of AI-generated content.
You should consider utilizing AI generated content to create personalized and engaging program communications that resonate with your customers.
AI generated content provided by ChatGPT or other similar tools can help you create targeted messaging, optimize email subject lines and content, and even tailor your website content to each individual customer. However, you need to always review any content - whether text, images, or videos - created by AI content generators to ensure human touch and uniqueness.
Step 6: Launch your rewards program.
One of the most exciting steps is launching your rewards program once you've completed all the necessary planning and preparation. As soon as you begin, you need to start monitoring the program closely to ensure that it's functioning as expected and delivering the desired results.
You should use the data that you collect to analyze performance and decide on the necessary adjustments to improve program performance and customer engagement. It’s important to continue adjusting any time you see an opportunity.
Step 7: Measure and improve.
You should put effort into measuring the success of your program with analyzed customer behavior and program data. Then, use the gathered information to identify areas for improvement and make data-driven decisions about program changes.
It’s a must to continuously iterate and optimize your rewards program to ensure that it remains effective in achieving your business objectives and satisfying your customers’ expectations and requirements.
Launching Your Customer Rewards Program in 2023
Introducing a customer rewards program for your ecommerce website in 2023 can be a clever and efficient approach to boost sales, encourage client involvement, and foster brand loyalty.
You can build a solid and long-lasting customer base of repeat buyers with incentives and rewards for your most devoted clients.
Using Core Loyalty is one of the greatest ways to rapidly and simply start a rewards program. With Core Loyalty, you can create a rewards program with features like cashback opportunities, a points-based system, tiered awards, and referral benefits that is adaptable to your business needs and preferences. The supreme gamification features provided by Core Loyalty will ensure that you keep customers more interested and more engaged than ever before.
Design a rewards program with Core Loyalty and support the growth of your company.
The Ultimate Guide to Customer Loyalty: Definition, Importance & Strategies
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Daniela has 6 years of experience in digital marketing for ecommerce businesses.
Aws is the Co-Founder of Coretava, a complete retail ecommerce growth platform. He has 6+ years of experience in managing and growing ecommerce businesses.