The 8 Biggest Benefits of Loyalty Programs

Brands are constantly searching for innovative ways to retain customers, boost engagement, and stay ahead of the competition. One way to do this is to implement and reap the benefits of loyalty programs.

Why are they important? More than 90% of companies now have a loyalty program, and 84% of consumers are likelier to stick with a brand that offers one.

How can your business utilize the benefits of loyalty programs? Let's delve deeper.

Read more on:

1. Benefits of Loyalty Programs
2. Choosing the Right Loyalty Program Provider
3. Loyalty Program Examples

What are Loyalty Programs?

Loyalty programs encourage customers to continue shopping at or using your services. These programs reward customers for loyalty and enrich meaningful relationships - driving long-term brand success. The rewards include points, discounts, or exclusive rewards for making repeat purchases, specific behaviors, or referrals. Loyalty programs incentivize customers to choose a brand over competitors by offering them additional value for their loyalty.

The Benefits of Loyalty Programs

Today’s consumers have countless options. Building and maintaining customer loyalty while competing with competitors is more crucial than ever.

Loyalty programs play a critical role in achieving this by:

1. Increasing Customer Loyalty and Lifetime Value

Customers are likelier to remain loyal to brands that recognize and appreciate their support. Increased loyalty translates into higher customer lifetime value, as loyal customers tend to spend more over time. In fact, 70% of consumers spend more and engage more frequently with brands whose loyalty programs they are members of. 

2. Enhancing Customer Engagement and Building Relationships

Personalization is critical to superior customer experiences. Loyalty programs enable you to tailor rewards and incentives to customer preferences and behaviors, enhancing their satisfaction and connection with your brand.

From implementing gamification to exclusive offers, you can provide a seamless omnichannel experience for customers across all platforms. 

3. Acquiring and Retaining New Consumers

While loyalty programs cater to current customers, they can also persuade new ones. One way of encouraging sign ups and sales is to influence customers to refer friends and family through a referral scheme. For example, Nestle encouraged new users to sign up for a newsletter in return for an unmissable sweepstake entry.

Encouraging customers to sign up for loyalty programs allows you access to high-quality leads for future marketing. This makes your emailers more likely to get results with a more refined, engaged contact list. 

4. Driving Customer Advocacy

Loyalty programs create a sense of community and exclusivity among customers, encouraging them to engage with your brand on a deeper level. Your customers are the best endorsements and free advertising your brand could ever receive. By offering targeted promotions and rewards, you can keep customers excited and involved, turning them into brand advocates. 

5. Accelerating Slow Seasons

Loyalty programs help to drive sales during slow periods by giving customers a valid reason to shop. Consider offering more rewards during these times, including a promotion expiration date, to ensure customers get to the store or website and purchase within a time by adding an element of urgency.

6. Capturing Customer Data and Insights

One of the most valuable aspects of loyalty programs is the wealth of customer data they generate. Tracking customer behavior gives valuable insights into customer needs and preferences throughout the buying journey. You can then use this data to segment and target customers more effectively, delivering personalized experiences that drive engagement and loyalty.

7. Connecting Online and Offline Channels

Customers expect a seamless experience across all touchpoints. Loyalty programs help you bridge the gap between online and offline channels, creating a unified customer journey. Customers can access the same rewards and benefits, ensuring a consistent brand experience, in-store and online.

See the Spencer's Nation case study for an example of bridging online and offline channels via a loyalty program.

8. Providing a Competitive Advantage 

Well structured and unique loyalty programs give brands a competitive edge. Building a strong emotional connection through engagement and personalization ensures the consumer consistently chooses your brand over the competition.

Choosing the Right Loyalty Program Provider

Choosing the right loyalty program provider doesn’t have to feel daunting. Here are some tips to help you make the right choice:

Define Your Goals and KPIs

Clearly define your goals and key performance indicators (KPIs). Are you looking to increase customer retention, boost average order value, or drive repeat purchases? Understanding your objectives will help you choose a provider whose solution aligns with your goals.

Check Case Studies and Testimonials

Research the provider's track record by checking their case studies and client testimonials. Look for success stories demonstrating the provider's ability to deliver results for businesses like yours – no one’s more trustworthy than a previous customer.

Request a Demo or Trial

Before committing to a loyalty program provider, request a demo or trial of their solution. This will allow you to see the platform and evaluate its features and usability before making a commitment.

Compare Features and Capabilities

Look for features like customizable rewards, advanced member segmentation, and integration with your existing systems. Compare features and capabilities against your shortlisted providers

Loyalty Program Examples

Punch Card Loyalty Program App for Hagen

Hagen aimed to enhance loyalty and increase sales across Canada's extensive pet food portfolio. Some of their brands relied on outdated, paper-based programs at independent retailers, leading to a cumbersome experience for both pet owners and retailers.

We developed a punch card loyalty mobile app. Users earn punches by photographing receipts from purchases of participating products at any retailer. The app features six separate punch cards, each corresponding to one of the six brands in the program.

Each punch card has its own currency. Once complete, it rewards the customer with a coupon for a free bag of pet food.

Loyalty Rewards Program for Reckitt - Schiff

Schiff introduced an engaging loyalty program across its related vitamin brands as part of its data acquisition and customer retention strategy. They sought a partner with a strong platform, appealing rewards, and the capability to handle complex integrations within the Reckitt Ecosystem.

Schiff Rewards allows consumers to earn points for purchases made through any channel (in-store, online, and direct-to-consumer) and receive various digital rewards and product coupons. Additionally, consumers can earn points through non-purchase activities and achieve status tiers by completing different milestones, unlocking further benefits.

Loyalty Rewards Program for Paw Points

A modern twist on traditional on-pack programs, Paw Points Rewards lets customers earn points on any cat product, including litter, food, and treats. Since launch, the program has helped Paw Points:

• Sign up more cat owners and drive purchase frequency
• Understand the purchase mix and total spend of cat owners
• Offer a seamless customer experience
• Enhance earning and redemption options

Using Snipp's proprietary transaction processing technology, consumers can earn points on a wide range of everyday cat purchases. They upload their qualifying purchase receipts or complete non-purchase activities to earn rewards.

B2B Loyalty Program for DSI Westbury Pro Rewards

After conducting extensive research, including surveying target Contractors, who were all exclusively part of building product loyalty programs, DSI embarked on a customer engagement strategy. As a result of the research, they wanted to launch a new Contractor training ecosystem to enroll them in a two-tiered rewards program that is, first and foremost, easy to use.

Snipp created a B2B Loyalty Program, leveraging our Snipp CARE platform, that rewarded Contractors for purchases of qualifying DSI products. Snipp implemented its full tech stack, which included managing the digital enrollment process, invoice/receipt validation, customer service, contractor quarterly rebate payouts via physical check, and dashboard reporting.

The Future and Benefits of Loyalty Programs

Loyalty programs offer many benefits for brands beyond enhancing customer loyalty, engagement, and satisfaction. By rewarding customers for loyalty and providing personalized experiences, you can build stronger relationships, drive long-term success, and build cost efficiency.

With the right loyalty program in place, brands can unlock the full potential of their customer relationships and stay ahead in the competitive market. Learn more about our customer loyalty platform.