Loyalty marketing is fundamental to business in the USA for customer retention. There are multiples ways to engage with loyalty programs and each business needs to choose the right structure for them.
Within competitive markets, the relationship between company and consumer has become more important, making it vital for businesses to understand what motivates their customers. It has become clear that it is much more profitable to keep an existing customer than to spend money trying to acquire a new one.
Loyalty programs are a vital part of retaining customers while maintaining customer satisfaction.
Sephora utilises a tiered loyalty system called ‘Beauty Insider’ program where one loyalty point is received for every dollar that is spent in store, or online. While Sephora has a mobile app, customers need to use their email at the checkout in order to accumulate points.
Their program is split into three tiers: Beauty Insider, Very Important Beauty Insider (VIB) and VIB Rouge. The tiers feature exclusive rewards that include birthday gifts, exclusive events, and free beauty classes.
This rewards system thrives on the special and unique benefits it has offer to customers. Understanding your target market is vital to loyalty programs, and this is where Sephora excels. The exclusivity that the tier system provides creates an incentive for customers to purchase solely with Sephora.
By separating customers into a hierarchical structure, it incentivises consumers to reach goals within the tiers by purchasing products.
Starbucks utilises a rewards system which uses stars as loyalty indicators. Using integrated loyalty software, Starbucks has created a mobile loyalty app to make engaging with their loyalty program easier for consumers.
It is separated into two tiers: Green and Gold. Green is the first level, which provides a convenient beginning to existing and potential customers. It includes benefits like free refills, mobile ordering/payments and seasonal exclusive offers. Gold tier members profit from these offers as well as personalised rewards and personalised rewards cards.
This rewards system excels because of the exclusivity and the customer understanding. The offers available on the green membership are based on understanding the needs of Starbuck’s target market. By making the first level accessible and worthwhile, it allows the Gold membership to remain exclusive to the most loyal customers.
Amazon Prime is one of the most important examples when it comes to customer loyalty programs. For an annual subscription payment, customers can reap enormous benefits from Amazon that exceed the cost of the subscription. The benefits include free shipping, live streaming music, movies and TV shows exclusive to Amazon, storage for digital photos and more.
Amazon is thriving in the competitive market of online shopping because of the exclusivity Amazon Prime demands. A customer will always order on Amazon if they have free shipping, similarly if Amazon Prime is the only place to watch a TV program, consumers will always renew their subscription.
This system is an outstanding example of customer satisfaction. An active Amazon user can feel as though their making huge savings because of the frequency with which they make use of Amazon’s services. Amazon has created a loyal consumer base in an environment that is difficult to guarantee fidelity.
Walgreen’s ‘Balance Rewards’ loyalty program has 150 million registered members, 88 million of which are active users. This incredibly successful loyalty scheme is founded on personalisation. They use data to personalise marketing campaigns so that customers enjoy engaging with the retailer.
Their interaction with consumers ranges from emails regarding their next redeemable offer, a post-purchase chance to redeem or offers surrounding joining the rewards program. Every conversation between retailer and customer is tailored to appeal to the customer. This system is clearly working; 70% of sales are made by a loyalty program participant.
This structure of loyalty program clearly thrives because it presents suitable offers based on customer’s purchases. The personalisation of Walgreen’s ‘Balance Rewards’ means that customers are more likely to engage with the promotions on offer to them.
‘Target Red’ is a new customer loyalty program that is based on discount on delivery with cash back on purchases later. This is as a replacement for their existing loyalty scheme ‘REDcard’ which requires customers to sign up with a credit or debit card. ‘Target Red’ allows customers to earn 1 per cent back on any purchases made online or instore that can be redeemed on their next visit.
As well as this, consumers receive 50% off a Shipt membership and free next-day delivery through Target Restock. This move from ‘REDcard’ to ‘Target Red’ shows perspicacity on the part of Target as customers want sto signup for a loyalty program to be simple, and for the rewards to be substantial.
Another aspect of ‘Target Red’ that has proved popular is that customers are given the chance to vote for the organisations that Target give their charitable donations too. The allows customers to have even more power over their how they spend their money.
This loyalty program excels because Target understood that their ‘REDcard’ was overcomplicated and they were willing to change for the needs of the consumer. Customers want simple sign up procedures, and big benefits in exchange for their personal information.