10 Most Typical Rewards Programs Worth Learning
Converting customers into brand loyalists is not a piece of cake. For one thing, you will need a repeatable and predictable strategy for persuading shoppers to purchase from you over again.
And that’s where reward programs come in handy.
With the suitable initiative, you can convert first-time customers into repeat ones and keep your brand in mind.
In this article, we’ll bring you some of the most successful reward program examples from renowned brands. Thereby, you can model them to earn more sales, enhance customer retention, and reinforce stronger relationships with your customers.
Table of Contents
- What are Types of Rewards Programs
- Successful Reward Programs to Learn From
- Change the game with your rewards program!
What are Types of Rewards Programs
There are normally 4 types of rewards programs, including Point-based loyalty, Tiered loyalty, Paid loyalty, and Value loyalty programs.
Point programs are the most popular sort of programs. They allow customers to collect points they can exchange for freebies, perks, cashback, and so on. Buyers don’t just gain points from purchases, but also from sharing on social media, having a birthday, leaving feedback, or through gamification.
Tiered loyalty programs are a kind of membership where shoppers receive different benefits based on their rank. Businesses often classify membership into groups according to specific metrics like engagement or sales.
These rewards programs create a goal for shoppers. The higher their tier, the more exclusive rewards they can gain.
Paid loyalty, or known as fee-based loyalty programs, brings customers instant and ongoing benefits for a participation fee. These fees can be one-time or recurring.
Paid programs may ask proof-of-value from customers to get signups, but the business can achieve higher customer value from members. A report by McKinsey shows that customers are 63% more inclined to buy from a brand after joining a paid loyalty program.
In the same writing, McKinsey also indicated three elements that effective paid loyalty programs have in common:
- The benefits clearly override the fees, which stimulate sign-ups.
- Members stick around for more experiential benefits, like member-exclusively content and personalized experiences.
- Engagement levels are high. Great paid programs get a constant flywheel of interaction that boosts the program’s value.
The nature of a value-based loyalty program is to interact with buyers on a higher level. It covers giving a percentage of purchases to charity or welfare organizations. You can provide various options for different charities to select from or have one that truly matches your customers’ values.
This type of program doesn’t actually give customers rewards, but it keeps a special place for them, since the rewards are used to benefit society. Brands often build a hybrid loyalty program using this model.
Successful Reward Programs to Learn From
1. The Body Shop
The Body Shop has selected the value-based loyalty type by making animal welfare part of their program.
In addition to getting rewards and receive VIP benefits, members have another exclusive benefit: They can decide to donate their rewards to Born Free USA (a charity for animal welfare).
Besides, a main value of The Body Shop is its responsibility to the environment:
The Body Shop’s buyers share these values, which makes the donation option even more crucial to buyers. This type of program opens a unique chance to connect with your customers on a higher level, which bolsters your relationship with them.
When providing exclusive membership advantages, you should contemplate making your business value one or more of the benefits. If they’re essential to you, they tend to resonate with your audience as well.
2. Bean Box
To elevate customer loyalty, Bean Box comes with multiple types of coffee beans as subscriptions, as shoppers don’t have to worry about running out of coffee.
Selling coffee as a subscription, Bean Box can escalate the lifetime value of their customers. And as of writing, they leverage a “Save 20%” incentive to encourage customers to select the 6-month plan over the one-month plan.
After all, incentivizing shoppers to commit for 6 months brings more value to Bean Box than if shoppers only shop once.
If your product is appropriate for subscription, let’s do it. Customers are searching for convenience, and the faster and easier they can get their hands on what they want, the better. You can stimulate leads to pick a subscription over a one-time purchase by giving a discount on your subscriptions.
3. Designer Shoe Warehouse
Designer Shoe Warehouse ( also known as DSW) has implemented a traditional VIP loyalty program that gets customers points for every order and provides tiers of rewards that customers can unlock as they spend more.
Its program runs smoothly. There is no loyalty card that shoppers have to remember- rather, DSW’s online system identifies shoppers by their name, phone number, or payment details.
One drawback as rewards are automatic is that buyers forget about the program. Buyers who forget about the loyalty program are not encouraged to spend more to gain more. DSW needed a way to keep customers committed to their program and retell them where they stood and what they could receive by spending more at DSW stores.
So, in early 2017, DSW came up with an email campaign reminding customers of their program. The campaign involves a personalized email detailing:
- The number of points they would need to earn their next $10-off certificate.
- Deals they currently were qualified for
- A snapshot of their interactions with DSW, covering how long they had become a loyalty member, how many points they had got, and how much money they had saved in the previous years
The deciding factor to the campaign’s success was the level of personalization. A loyalty program like this allows the brand to access a tremendous amount of customer information. DSW took that advantage along with some reliable email automation to create super-personalized and relevant emails - a significant difference from generic marketing emails staying at customers’ inboxes.
4. Sephora Beauty Insider
Sephora’s Beauty Insider rewards program is well-known. It prides itself on gaining more than 25 million loyal members, and members account for as much as 80% of Sephora’s annual sales. Customers get rewards for every purchase depending on a traditional point system. This innovative part is that members can decide how to utilize their reward points.
One of the most significant barriers for a huge number of Sephora customers is price - Sephora products are quite pricey. Beauty Insider members can exhange their rewards points for discounts and gift cards, which helps compensate for purchase prices without decreasing the products’ value. Plus, loyalty members can also exchange points for more unique things, like limited edition items or in-store beauty tutorials.
Letting loyalty members have the flexibility to choose allows Sephora to provide customers the deals and items they really need without devaluing the perceived value of their products.
5. REI Co-op
As customers, we can be fairly doubtful about brands and marketing initiatives. They know the final goal is always to invite them to purchase more products and spend more money. That’s the reason why the most innovative loyalty program takes the focus away from convincing shoppers to spend more and re-centers itself on offering value to them.
REI’s program brings shoppers back to the brand’s humble beginnings as a co-op - a brand owned by its customers. For $20, consumers can become a lifetime REI Co-op member. When they have joined, shoppers can have access to serious value, like 10% back on every purchase, sharply discounted “garage sales”, and discounts on experiences like adventure classes.
At the end of the day, the most successful loyalty programs concentrate on the customers - motivating real value that actually speaks to the power of loyal consumers and their influence on a business. Sharp discounts are not practical for small retailers, but by learning from the above examples, you can still seek a financially viable way to be genuinely generous towards loyal customers.
6. Starbuck Rewards
It’s common for retailers to build a mobile app to manage loyalty programs, but when Starbucks first released Starbucks Rewards on the Starbucks app, it was an innovative idea. Running the program via the app makes it simple for shoppers - no punch card to lose or forget, no sign-in needed.
To gain loyalty points, buyers must order or pay with the Starbuck app. Getting customers to make on-app transactions will generate a chunk of information on customer preferences and behaviors.
Take-away drink order, customer lifetime value, frequently visited locations, seasonal favorites - by encouraging customers to use its app, Starbucks can accumulate data on all of these habits and more, empowering the brand to provide more relevant perks and communication to its consumers.
If a loyalty app is proper for your store, it can be a perfect way to gather and centralize customer information. Or else, a capable point-of-sale system can help you gain most of the same data.
Points programs are helpful as points are easy to gain and redeem. Consumers can exchange points for credit towards their next purchase, discounted services, or giveaways.
Consumers can monitor points programs with a loyalty card, online account, or mobile app. As there are a lot of brands using a points program, it’s an easily recognizable format for customers. They know how to leverage them; it will be a wonderful experience.
For instance, Marriott builds a customer loyalty rewards program known as Marriott Bonvoy Benefits.
Travelers can exchange points for free hotel nights, dining, and other experiences. They can also achieve po9ints with car rentals and flights, share points with family and friends, and get free wifi and special rates.
Personalization has played a vital role in boosting Marriot’s increased brand loyalty.
The benefits of rewarding customers via a point-based system mean that it enables Marriott to analyze customer behavior and use that customer information to develop a superior experience tailored to each individual. The more they understand their customers’ preferences, the more the company can provide personalized rewards.
8. Ben & Jerry’s
Not all rewards programs concentrate on tiers and discount codes. If your business has a strong social mission, then you may want to use a customer loyalty program with a cause.
Aligning with a mission or cause enables you to enhance customer engagement and drive repeat purchases via your share values. These programs can work more effectively when you cooperate with a non-profit organization with a close connection to the brand’s mission.
Ben & Jerry’s produces social justice-themed ice cream flavors and donates sales to charities that protect animals and the environment.
A mission-driven customer loyalty program will let customers feel like their purchases are meaningful to society.
Before trying this type of program, you should ensure your company values and mission are perfectly matched. Then, find organizations or causes that would well resonate with your audience.
Progress is an excellent motivator.
The more people believe, the more likely they will reach a goal, the more committed they are to their attempts to reach that goal.
This is defined as the endowed progress effect, and it’s a powerful psychological trigger you can utilize in your loyalty program to motivate repeat engagement.
And Nike is a typical example of this, promoting an active lifestyle. The brand establishes some different training apps to support members to achieve their training objectives.
The Nike Training Club and Nike Run Club apps reward members with badges and other rewards whenever they pass a new milestone, such as completing your first 10k.
This is a good example of how you can leverage progress to escalate engagement.
Nike also comprehends that the more achievements their customers have with their training, the more loyalty they become. The reason is people always attach their success to the person or brand that created the difference.
10. The North Face
The North Face - Apparel and outdoor gear retailer - motivates loyalty members to gain more and more rewards by giving flexibility in how they’re redeemed - with choices specifically designed to match its customers’ lifestyles.
Customers get points with the XPLR Pass program in the traditional way on each purchase, and in some unique ways, like joining The North Face events, checking in at some locations, and installing The North Face app. In regard to redeeming rewards, customers can use points for interesting travel experiences, like a mountain hiking adventure in Nepal.
In addition to incentivizing customers to spend more, The North Face’s rewards speak directly to its target customers. They are not generic discounts on goods - they are selected experiences that help to reinforce a stronger emotional connection between customers and the brand.
While paying for a climbing trip in Alaska may exceed your capability as a small retailer, you can still draw a loyalty and reward program that’s tailored with your audience in mind and helps foster the bond between you and your customers.
Read more: How to build an Effective Loyalty Program?
Change the game with your rewards program!
Loyalty and customer rewards programs have boasted they’re an efficient way to raise customer retention rates, increase customer lifetime value, offer great customer service, and motivate brand loyalty.
Truly listen to your audience, and let them be the guide in the process of building a rewards program for your brand. Besides, some Magento 2 extensions can greatly support you in generating your program, and one of the remarkable names is Mageplaza Rewards Points extension. Consider using this module to make it easier to generate your program.
What sort of rewards program are you running? Have you known other inspiring examples of rewards programs? Please drop a comment below.
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