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8 Min. Read

Ultimate Guide to Customer Loyalty Programs

Ultimate Guide to Customer Loyalty Programs

A customer loyalty program is a system of rewards for customers who shop at a particular store or establishment. The idea behind these programs is that consumers will be encouraged to spend more money. They can be rewarded with points, goods, discounts, and other incentives. A customer loyalty program may also be called a point-based reward system.

This article will discuss customer loyalty programs in detail, including what they are, how they work, and more.

Here’s What We’ll Cover:

The Basics of a Customer Loyalty Program

Types of Rewards Offered by a Customer Loyalty Program

Why Customer Loyalty Programs Work

Customer Loyalty Program Apps

Best Customer Loyalty Rewards Programs Today

Store Customer Loyalty Program Vs Manufacturer's Loyalty Program

Key Takeaways

The Basics of a Customer Loyalty Program

A customer loyalty program is when a store or establishment gives rewards to regular customers for shopping there. These rewards could be discounts on future purchases or points that can be redeemed for benefits. These benefits can include discounts, free items, or even entry into a raffle to win something.

A customer loyalty program works because it encourages customers to come back again. They succeed by rewarding customers for their business. If you are rewarded for shopping somewhere, then you are more likely to return there.

Customer loyalty programs can be a great way to encourage repeat business. They give customers a reason to come back or refer friends. Customer loyalty program members are more likely to continue spending at their stores even during hard economic times.

Some History of Customer Loyalty Programs

Loyalty cards have been used in Europe since the 1970s as an alternative to store credit cards. In 1986 American Airlines launched its own airline frequent flyer plan. They used the model of accumulating points from purchases instead of miles flown.

In 1993 Procter and Gamble (P&G) introduced their customer loyalty program for grocery stores. They called it P&G Community Rewards. This was a success. It helped increase sales and boosted sales during the slow winter months.

Since then, these programs have become much more popular in the United States. They are often used for retail stores and restaurants.

More than half of Americans say they belong to at least one customer loyalty program according to a recent Gallup poll. More retailers are offering them to increase sales.

Types of Rewards Offered by a Customer Loyalty Program

The most basic rewards are discounts for repeat customers. A customer loyalty program can offer a percentage off your purchase or they can give you a coupon. These coupons may be good for one purchase. They could also give you a discount on all items in the store from now until a certain date.

Another common reward for customers is points. For example, you may be rewarded one point for every dollar spent. These points can later be turned in for benefits like a discount on future purchases, free items, and more.

Customer loyalty programs can also offer special promotions or giveaways to members of their program. It could be anything from an entry into the store's monthly raffle to a voucher for a free lunch.

Why Customer Loyalty Programs Work

Retailers will invest a lot of time and energy into their customer loyalty club. These programs can increase sales and build brand loyalty. Here are some reasons why they work:

  • They encourage higher customer retention rates which result in higher sales. When shoppers feel like they are getting rewarded for shopping somewhere, then they will return more often.
  • They reward customers when it is necessary. Customer loyalty programs benefit both the customer and the retailers. Retailers get repeat business which boosts profits and customers can save money or receive benefits in exchange for their loyalty.
  • People trust rewards and discounts. They are more likely to purchase when feeling like they are getting a good deal.
  • Customer loyalty programs can be used in combination with other promotional campaigns. For example, you could give customers free items for attending an event at your store. This is separate from the customer reward program. It works in much the same way. It encourages people to shop at your store by providing a benefit. Then, the customers are more likely to participate in your customer loyalty program.

Customer Loyalty Program Apps

Some retailers offer their own app where you can sign up and use their customer loyalty program. These apps make it easy to track your balance and check for current rewards. They also make it easy to use the benefits of the program when making a purchase at their store.

Here are some of today's brands using their own customer loyalty apps:

  • Starbucks' app is called My Starbucks Rewards. Their rewards include free food and drinks after you earn 12 stars, a birthday drink or treat, and even access to exclusive events.
  • Safeway's app is called mySAFEWAY. You can use it to shop online or at their store. You can also receive personalized special offers based on your preferences and even link it to your credit card.
  • CVS's app is called CVS ExtraCare. It gives you access to special deals and savings, including a monthly coupon book just for app users. You can also scan the barcode on your receipt after making a purchase. You earn points that will help you climb the ranks of their ExtraCare loyalty program.

Best Customer Loyalty Rewards Programs Today

Each customer loyalty program has its pros and cons. Some programs offer more benefits than others. Some may be associated with a certain brand that customers already trust and prefer. Here are a few top-rated loyalty programs today:

Amazon Prime

Amazon Prime has many benefits, not just for shoppers but also for sellers. It allows you to pay lower rates when shipping products. It helps out your loyal customers too. When they sign up for Amazon Prime, they can enjoy unlimited free Two-Day Shipping with no minimum purchase. Customers enjoy the benefits and shops that sell on Amazon see increased sales.

Starbucks

Starbucks has a great program where you can collect stars for discounts, free items, and more. They even have a rewards credit card where you can earn extra points for free food and drinks. You can also order your coffee ahead of time using their mobile app. This will allow you to skip the line and pick up your drink when you arrive at Starbucks.

American Express

American Express has a few different customer loyalty programs. For example, you can join its Membership Rewards and also its OPEN savings program. With Membership Rewards, you can redeem your points for products, travel rewards, gift cards and more. Their OPEN Savings program provides discounts to participating merchants.

Kroger

Kroger is one of the largest supermarket chains in the world. They offer a few different programs for their customers, including Plenti and Fuel. Plenti members earn points at one place and can redeem them with other shops across America. It is convenient since you won't have to carry around many different cards. You just use your Plenti card and you can spend your points at many different locations.

Store Customer Loyalty Program Vs Manufacturer's Loyalty Program

There are many brands offering their own customer loyalty programs. They offer free items, discounts, and other benefits to members of their rewards program. Then, there are stores that do the same thing by partnering with specific brands or companies. You can earn points at their stores, then redeem them for free items or discounts.

There are many benefits to both store and manufacturer customer loyalty programs. Stores want you to come back so they can increase their sales. Manufacturers have the same goal, but they also just want you to buy more of their products. They use your data to see what might interest you. Then, they send you coupons and other information about their products.

Key Takeaways

Customer loyalty programs have been around for a while. They are still going strong. They offer many different benefits to customers and businesses. Whether you want discounts on products or just enjoy earning free items from your favourite brands, customer loyalty programs can provide it all.

Businesses also benefit since they will see an increase in sales and regular customers. In order to stay competitive, you need to know about the best customer loyalty programs today. Rewards can include discounts on items, shipping advantages, and more. You should also consider any program that might be associated with your credit card or shopping app.

In this article, we’ve discussed what loyalty programs are and why they're beneficial. We also discussed some popular ones today that many people use. Hopefully, this article answers all of your questions about customer loyalty programs!

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