Customer retention is one of the most important goals for virtually any business nowadays. The main reason is that acquiring a new customer is six to seven times more expensive than trying to retain an existing one. What’s more, your repeat business customers tend to spend as much as 67% more at your store than your newly acquired customers. That’s why so many businesses focus on improving their customer retention rates. And that’s where a good loyalty program comes into play.
Loyalty programs serve a purpose of engaging customers further and rewarding them for their loyalty, in order to encourage more purchases and repeat business. However, picking a loyalty program for your business isn’t easy, especially since you must choose a program that will appeal to your customers the most. That being said, here are a few top loyalty programs that can easily boost your customer retention rate.
The tier system
Using a tier system for your loyalty program is good for long-term engagement with customers. Companies that offer various services, such as travel agencies, airlines and hotels, oftentimes implement this system. But, the tier system can also be implemented in other business structures, such as ecommerce stores.
This system allows your customers to advance in tiers based on their purchases and loyalty. The entry level tier offers some benefits, such as discounts or freebies, while advanced level tiers offer more quality benefits, which encourages customers do conduct more repeat business and more purchases, in order to advance in tier and gain more significant rewards. The higher the tier your customers reach – the more benefits they’re entitled to.
The gift card system
Offering gift cards to customers as a reward for their loyalty is an excellent way to simplify your loyalty program and ensure customer retention. The gift card system is also ideal for ensuring customer satisfaction and loyalty. Your customers can use their gift cards to make purchases with personalized discounts or give those gift cards to someone else to make purchases for a special occasion, such as a birthday or an anniversary.
For instance, you can offer a MasterCard gift card to your customers as a reward, which they can use to purchase something whenever it suits them. That way, you’ll ensure that customers will become more engaged and that they’ll return to make purchases at your store again. After all, everyone likes getting a gift for being a regular customer.
The point system
Implementing the point system in your loyalty program can be an excellent way to ensure customer engagement and guarantee their retention, as well as loyalty. The system is simple – with every purchase your customers make they earn some points. They can then exchange collected points for discounts or rewards. For example, 5 points can be exchanged for 5% discount, 25 points can be exchanged for a free item and so on.
When implementing a point system, make sure that rewards are valuable to your customers enough to encourage them to buy more from you. In addition, make sure that the rewards don’t cost you more than you’re earning from customer retention. In other words, balance the system out, so that it doesn’t cause you financial troubles. What’s more, the point system can be combined with the tier system to further boost loyalty and engagement. The higher the tier the more points customers earn with every dollar they spend.
The VIP system
VIP loyalty programs are generally more expensive to implement, but they can yield significant benefits to your business in terms of customer retention, engagement and loyalty. VIP loyalty programs function on subscriptions. Your customers pay the monthly or yearly subscriptions and are entitled to a wide variety of benefits in exchange.
For instance, Amazon Prime is one of the best examples of implementing a VIP loyalty program. Once your customers subscribe to your loyalty program you can offer them discounts, free shipping, additional access to your other services, etc. This type of loyalty program fosters good relationships with customers and encourages them to become more loyal. The more value customers see in your offer, the more willing they’ll be to subscribe.
As you can see, there are numerous ways you can encourage your current customers to continue doing business with you. Besides, you have to give some to get some in return, and implementing a loyalty program that best suits your business is the best way to achieve it.