How Online Businesses Can Use Loyalty Schemes To Retain Their Customers

Every business strives for constant growth, and for many of them, most marketing is about finding new customers.

But just as important as sourcing new customers is retaining those you already have, and loyalty schemes are instrumental in this. There are myriad strategies for building loyal customers who return to your business, each with different methods but the same ultimate goal.

In this piece we give an overview of the most common, so you can learn how to build a dedicated customer community that returns to your business time and again.

Freebies, bonuses, and rewards for loyalty

Rewards and bonus-based schemes are among the most common types of customer loyalty strategies.

The tactic is simple: customers sign up to a brand and create an account, and they are then eligible to receive a variety of bonuses: money off future purchases, freebies, event tickets, and similar. This encourages them to continue shopping with that brand to receive more of the same rewards.

This is a strategy employed to great effect by many brands.

Online lottery tickets sites such as Lotto247, in particular, are known for their inventive and attractive bonus structures, and is a niche well worth taking inspiration from. Indeed, the bonuses are those that reward players for returning to the games by providing exciting limited promotions, such as cashback, wagers, freebies, login prizes, and so on.

The more enticing the rewards, the more willing customers will be to stay loyal with your brand and return to shop.

This strategy can be taken further by offering personalized bonuses and rewards to your customers.

For instance, let’s use the example of an apparel store. If your customer’s spending habits indicate a preference for a brand of clothing, your rewards could provide discounts off that specific line as part of your points loyalty scheme.

Points-based loyalty schemes are simple and easy to implement, but no less effective. Consequently, for brands who are just starting to explore the benefits of loyalty programs, points schemes are the perfect place to begin.

Tier-based schemes for exclusivity

Tiered loyalty schemes are similar to points programs, but with extra levels of rewards.

Customers accumulate points the same as they do in the scheme above, but ‘complete’ scaling levels of spending. Complete one level, and they receive better benefits and bonuses which increase in quality.

Part of the efficacy of tiered loyalty schemes lies in their ability to create a sense of exclusivity. Those customers on a higher tier receive a certain degree of VIP treatment, creating an attractive and enticing ‘club’ which those on lower tiers will strive towards.

You can develop this further by encouraging those customers on the top tier to share their exclusive rewards and bonuses on social media, with added incentives (such as entry into a prize draw) for those that do.

In short, the more exclusive and VIP your higher tier feels (and, indeed, looks), the more enticing it will be to prospective customers, thus encouraging repeat custom as a result.

Generate loyalty through gamification

Gamification is a relatively young notion, having its roots in computer software development of the late Noughties. Today, the term refers to the application of gaming (points, competition, reward) to a customer-facing activity, particularly that of marketing.

The idea of gamification for loyalty schemes has taken great strides in recent years. The ubiquity of smartphones and the lowered barrier to entry for app development has made it easier for businesses of all sizes to connect with customers through a dedicated branded app.

Starbucks, in particular, is known for its fun and creative loyalty strategy via a gamified mobile app. Coffee lovers are rewarded with points in the form of Stars, combined with push notification marketing to encourage more visits.

But Starbucks took this further by rewarding those customers who spent more money during a shorter timespan, thus encouraging repeat and frequent custom. Further to this, the scheme was also expanded to allow Stars to be redeemed for items beyond coffee, such as extra shots or Starbucks gifts.

Apps are, arguably, the best way to take advantage of gamified loyalty schemes. The ability to send push notifications to customers via smartphone taps is essential, an always-on strategy that encourages instant engagement.

These notifications appear alongside your customers’ messages from friends and family via social media, text, and messaging apps. This taps into the same instant gratification loop offered by these platforms, encouraging your customers to ‘play’ your game and engage with your loyalty scheme further.

Connect with ethical consumers through value-based schemes

Most of the loyalty schemes outlined here hinge on rewards that directly benefit the consumer: discounts, prizes, monetary bonuses, and so on.

While customer-centric is generally best practice for loyalty schemes, it is possible to retain customers through loyalty schemes with more altruistic benefits by catering to your customers’ values, rather than your customers themselves.

Rather than rewarding your customers for spending money or accumulating points, consider making a donation to a charity that complements your brand.

Value-based loyalty programs are especially effective for those brands with a strong charitable or ethical focus — think Patagonia or Toms, for instance. Patagonia is especially aligned with environmental causes, something shared by its customer base, and has a number of charitable collaborations powered by consumer action.

This is crucial here — it’s important to find a charitable beneficiary which aligns with your brand values. Beyond this, if your customer base does not consist of ethically-conscious shoppers, the prospect of their reward going to someone else won’t seem as enticing.

The benefits of a value-based loyalty program go beyond customer retention. The altruistic nature of the scheme also enhances your branding, positioning your business as caring and outward-looking.

This in turn strengthens your customer community, helping you create deeper, more meaningful, and indeed more lasting relationships with them as a result.

The strategies above are just a few ways online businesses can use loyalty schemes to retain customers. How these schemes are implemented vary depending on your brand and industry, but they exemplify how customer loyalty can be nurtured — essential during the period of upheaval the world is enduring today.

Leave a Comment