20 Best Retail Reward Programs - The Important Takeaways
Loyalty programs are becoming increasingly popular in the retail sector, thanks to their positive effect on customer retention. Consumers are spending more on their favourite brands and companies achieve a higher ROI* as a result.
Data proves the point:
- 75% of consumers prefer companies that offers some form of audience rewards.
- 65% of business derives from existing customers that are nurtured through retention strategies.
- 56% of customers claim they's purchase again if the referral loyalty program seems to "get" them.
Knowing the above, it might be a good idea to look into the best retail reward programs. By doing so, you could use their ideas as a guideline to build or improve your retention strategy and reach business success.
We compiled a list with the 20 best retail reward programs, describing each of them shortly, and listing the main takeaways that can help you improve your offer. After reading this post you should be able to come up with many new ideas for referral programs, based upon tested concepts.
- What can the best retail reward programs teach us?
- Missguided: Refer A Friend
- Barnes & Noble - The paid program
- The Bodyshop - Love Your Body
- Simply Be: Perks
- LUISAVIAROMA PRIVILEGE
- Rebel Active
- E.l.f. - The Tier program
- The north face - The points program
- Dynamite: Dynamite Studio App
- REI Co-op
- Design Shoe Warehouse
- Warby Parker - Buy a pair give a pair
- Neiman Marcus member rewards
- JC Penney Rewards
- NET-A-PORTER: Extremely Important Person
- The BRIGHT Rewards
- Cents of Style's VIP Rewards
- My Best Buy Rewards
- Zara Club
- Validating referral programs ideas
- Summarizing key takeaways
What can the best retail reward programs teach us?
Nowadays, there’s a lot more to loyalty than discounts and free shipping. Customer referral programs are expected to understand the needs of the customer and tap into their needs, problems and wishes, turning them into money-making opportunities. The success of the following companies can help you extract useful information that you can use for your own business.
Missguided: Refer A Friend
Who said that referral programs are not, in fact, reward programs? Missguided, a popular US fashion retailer, offers a 30% discount to buyers that discover the website through existing members. The best part? The member who invites their friends gets the same discount.
- Word-of-mouth advertising is is a great way to attract younger generations to fashion brands. Misguided is using this to their advantage since their main target is the millennial generation.
- A flexible discount rate (discount percentage instead of $$ coupons) makes larger purchases more rewarding and leads to larger buying volumes from new and existing customers.
Barnes & Noble - The paid program
Cost: $25 per year
The Barnes & Noble Membership program is designed for the store’s most frequent visitors. Members receive large discounts on hardcover bestsellers and 10% off pretty much everything in their physical stores. When ordering from the B&N webstore, members receive free premium shipping on all their orders. Finally, members who verify their email address get numerous offers throughout the year and a free birthday gift.
- Your rewards may be distributed according to your company’s goals (e.g. increase foot traffic in physical stores). In the example of Barnes & Noble, their strategy leads to additional revenue from their cafe, newsstand, etc.
- You can offer a small reward to people that verify their email address, to ensure you have a clean email list. Barnes & Noble stores do this effectively by giving a birthday gift.
The Bodyshop - Love Your Body
The Body Shop completely changed its loyalty program a few years ago, emphasizing the importance of social values. The brand’s reward program is focused on a point-collection system that does not require a membership card or an upfront payment to partake in. While every region has its own terms and conditions, members can expect, among others, to receive approximately 10% of their purchases in coupons that they can either redeem in-store or donate to one of the partner charities.
- Use your loyalty program to promote and support values that your audience identifies with. By doing so, customers show their “human” side and are able to connect with their customers on a deeper level.
- The shift towards a more universal concept makes The Body Shop’s program more relatable to a broader audience of consumers that would otherwise ignore it. This way, even smaller segments of the audience are able to find value in the offer.
Simply Be: Perks
Simply Be has developer one of the best retail reward programs when it comes to simplicity. Instead of using cards, qualify for higher tiers, and collect points, the company rewards its customers based on prior purchase history. Their rewards aren’t random either. The company sends out surveys via email to ask for feedback and recommendations from their customers.
- Focus on co-creation and personalization. Simply Be does this by involving their customers in the decision-making process, hosting community events, and encouraging user-generated content. This leads to an increase in engagement.
- The company has optimized its reward program to make it as effortless as possible. Due to the decreased attention span in the average consumer, this makes it less complex and easier to be part of.
LUISVIAROMA has a multifaceted reward program that focuses on two areas: social sharing and repeat purchases. Users can earn points primarily by giving up their personal information, making purchases on the website, and promoting their product through social media sharing. But that’s not all. The program also rewards users that return to the website multiple times per months (get points by logging in) and offers flexibility when it comes to point redemption; either receive a gift card or spend the points on a luxury experience.
- Leverage the power of community. The luxury retailer is heavily focused on community growth through social media engagement and rewards users accordingly. For example, upon signing up, users receive points simply by following the brand’s Twitter account.
- To improve its targetted advertising efforts, the brand gives a large point reward (100 points - $5) for users that simply fill out the information in their profile. This includes information on the users’ favorite brands, color, and clothing sizes.
- The brand has partnered up with companies that provide luxury experiences (relevant to the target audience), and allows users to redeem their coins for these particular offers. This way, the members have more options at their disposal.
The Australian sports apparel brand bets big on community building. Their reward program allows members to participate in competitions, join exclusive events, and even get instant prices without any effort. One thing we like especially about their program is the “receipts” area, where users can access the receipts of all their previous purchases if need be.
- A rewards program is not only about giving gifts and discounts. It is also a great way to optimize the customer experience. Rebel does this well, thanks to the different areas that members can access after their sign up.
E.l.f. - The Tier program
E.l.f. has developed a tiered program that users can qualify for the more points they collect. The app-based program works very simple. After a purchase is made, members can scan their receipt to receive points, which they can then use in a variety of ways in the store. Additionally, members receive free points and a birthday gift upon signing up
- Make your mobile app easy to use. Thanks to the help of a simplistic app, e.l.f. users enjoy collecting points while the store increases their retention numbers.
Retail CRM Cloud helps your business do the same for just a fraction of the cost. Our experts can setup a customizable rewards program and even build a custom app for it. Feel free to request a demo and see what we can do for you.
The north face - The points program
The North Face has one of the most rewarding programs in the industry. With an average return rate of 12,5%, collecting points is easier than most programs out there. What we list most about this program is its name, as it fully represents the sense of exclusivity and joy that their audience receives when being part of it.
- Choosing a clever name for your program can make a big difference in its adoption rate. In this case, The North Face has managed to find a name that identifies with both the brand and the audience they are trying to attract (VIP = exclusivity, Peak = explore the outdoors more).
Dynamite: Dynamite Studio App
Dynamite has managed to integrate every part of their rewards program within their application. As soon as they register, members receive a unique code which they can scan in the store to track their progress and qualify for rewards. The program also has a separate tab where users can check their current status, the badges they have earned, as well as a wishlist product recommendations.
- Make it playful. Dynamite has turned its rewards program into a mobile “game”, betting on a popular trend known as gamification. By turning its program into a playful but competitive experience, the store increases its sales numbers and members feel motivated to use the app.
Cost: $20 for lifetime membership
REI Co-op is a value-driven rewards program. The most loyal members can qualify for exclusive outdoor experiences and receive a $100 gift card when applying for their Mastercard. Every time members use the card, REI donates part of the funds to charity. What makes this program unique is the ability of the audience to participate in the company’s decision-making, and even receive an annual dividend when they can use for in-store purchases or donations.
- Involve your audience as much as possible. REI focuses on co-creation and makes its audience feel like a part of the organization, thanks to the intangible perks.
- Apart from that, the company promotes a set of values, which strengthen the emotional connection with their audience. For instance, the company donates nearly 70% of all their profits the the development on stewardship projects.
Design Shoe Warehouse
DSW is one of the leading footwear stores, having more than 500 stores in the US. The company recently relaunched its customer app, which includes one of the best retail reward programs in the market. Among their large list of perks, users can opt for a “Shoe Donation.” By partnering up with charitable foundations, members of the program can collect points every time their donate their old shoes to people in need.
- Reward activities that match your company’s values. DSW has a great way of doing this. By donating their old shoes, users feel good about their actions and associate the brand with their decision to do so. As a result, they create a stronger emotional connection with DSW, receiving rewards along the way.
- The reward program allows members to send a $5 coupon to their friends as a birthday present. This leads to an improvement in customer acquisition and indirect word-of-mouth advertisement.
Tarte has built an intelligent rewards program that perfectly suits the needs of its target audience. Among the multiple rewards, members can qualify for tiers that offer free samples of makeup. Users can select from a wide array of testers, try them at home, and eliminate the risk of wrong purchases. The more you earn, the more free samples you can receive.
- The rewards of a loyalty program can be used strategically to help users see which product(s) they wish to purchase in the future. Tarte does this right, by offering samples of all sizes and having customers choose the product they wish to receive.
Warby Parker - Buy a pair give a pair
Continuing on the importance of shared values, Warby Parker incentivizes customers in less egotistical way. Their reward program is simple - buy a pair of glasses and someone in need will receive a free pair of glasses as well. Apart from that, the company regularly offers personalized gifts that are “Instagram-worthy”, and community engagement increases as a result.
- Pay attention to the small details. Warby Parker does this well. By offering multiple unexpected but noteworthy rewards, customers remain in touch with the brand and talk about it with their peers. And those rewards can also include the ability to help others.
Neiman Marcus Member Rewards
The Neiman Marcus membership is not as easy to join as other reward programs. Users need to apply for a credit card, which they can then use to collect points in seven different tiers, spanning from $1 to $75000+ in purchases annually. Membership rewards include gift cards, discounts, free premium shipping, and a personal concierge (talk about luxury!).
- Reward programs don’t always need to be easy to join, but they do need to improve the customer experience. Even if users have to obtain a branded credit card, they will happily go through the process knowing that the buying process becomes easier and more rewarding.
JC Penney Rewards
JCPenney’s recently performed a complete loyalty program audit to improve its offer, making it’s program easier to use and more rewarding. Users now have more flexibility and earning opportunities, along with an easy to use app. According to the company, members of the new rewards program purchase twice as much as non-reward customers.
- Audit and improve your rewards program on a regular basis. Even though JC Penney’s program has been successful since 2008, the company saw the importance of performing an audit. By doing so, they brought their offer up to date, so it can match some of the best retail reward programs in the market.
NET-A-PORTER: Extremely Important Person
Extremely important people require extremely targetted privileges, and NET-A-PORTER knows this. Their loyalty strategy aims to increase the lifetime value of their top-tier customers by offering exclusive perks in the forms of products, experiences, and an improved customer journey. Their program has been praised repeatedly for the quality of their rewards and the responsiveness of their customer service.
- Luxury customers expect a reward program tailored to their needs. When it comes to fashion brands, a great way to do this offering personal consultation from professional style advisors. A successful application of this tactic can strengthen the emotional bond between brand and customer, improving repeat purchases along the way.
The BRIGHT Rewards
BRIGHT is a rewards program that allows users to collect points and earn rewards on 5 different brands. The concept is simple - every purchase in the store can be used to collect points, which you collect by offering your customer number at the point of checkout. Once the points are collected you can redeem them on any of the brands that they support. The program already counts more than 1 million members and is considered very successful.
- Partner up with other brands to improve reward flexibility. Why limit yourself to rewards of just one store? BE BRIGHT allows its customers to redeem their points on 5 different brands and hundreds of different store locations.
Cents of Style's VIP Rewards
Cent’s of Style is one more company that rewards its users with points for both in-store purchases and social sharing. What makes this program unique, however, are the “daily deals”. The exclusive deals change on a daily basis making customers return often to check if the offer matches their needs.
- Implementing time-bound is a great tactic to induce an emotional response known as Fear Of Missing Out (FOMO). This leads to more member visits to your store and, eventually, an increase in sales.
My Best Buy Rewards
My Best Buy’s reward program offers several perks to its members. These include, free shipping, early access to new products, product discounts and exclusive deals. The program has 3 Tiers and users can qualify for each level by conducting purchases of a specific value in a given calendar year. According to its audience, the company has one of the best retail reward programs in the market.
- If you decide to implement Tiers in your program, make sure that even the lowest tiers are rewarding. My Best Buy offers multiple perks even for their most basic membership level, which makes even low-frequency buyers feel valued.
Popular clothing retailer Zara has built a rewards program that aims to strengthen its community and reward repeat customers. They do this by offering free shipping, birthday gifts, exclusive offers, early access to collections and, our personal favorite, a live chat to connect with the Zara community. Additionally, users receive a massive 40% discount when they download the official app, which makes the reward program easier to use.
- Co-creation can lead to positive feelings associated with your brand. This in turn, leads to top-of-mind awareness. Zara does this well by allowing its customers to share their outfit ideas and receive feedback from a community of likeminded individuals, who are available on a live chat at all times.
Validating referral programs ideas
Now that you have a better idea of the things that are being done by some of the best retail rewards programs, you may start pondering on new ideas. Sure, some of them may derive from the examples shown above, while other may be the result of your brainstorming. But, once an idea seems intriguing what is the best way to validate it before going full on "testing mode"?
The best referral programs usually start out through a combination of efforts that aim to gather information on the audience. There is qualitative research (asking customers for feedback, observing their actions) but there is also quantitative information gathering (existing data, competitor research, predetermined questionnaires from large samples, etc.).
The research that turns into an eventual loyalty referral program is best outlined in a report, which is then presented (with all the necessary data) to the marketing manager. The document should not only look into the target audience but also into the viability from the company's side to make the project come to life (budget, resources, timing, etc.).
Once the management shows support towards the idea, a preliminary testing phase can start. This can be done to a small sample of customers (the so called Beta testers), which will later give useful feedback to improve the final offer. Once several of these rounds have passed, you should have one of the top referral programs in your industry.
Summarizing the key takeaways
The best retail reward programs are uniquely built around the audience they are trying to attract. That being said, there are some common characteristics that make loyalty schemes more powerful and attractive:
- In a world that is becoming increasingly more disconnected, consider providing experiences that could bring the community together.
- Implement personalization elements to show that your company understands the problem, wishes, and needs of its audience.
- Tiered programs are linked with a sense of exclusivity and hierarchical status, which creates a positive emotional connection between brand and customer.
- Rewards must be worth the effort (instead of a small discount, offer an actual gift). Additionally, the UX/UI should also match the generation of your target audience.
- Customer referral program ideas should be validated, and not simply pursued from an assumption-based viewpoint.
- Each newly introduced retail rewards program should first be tested to smaller samples (segments) of the audience to improve the final version.
Would you like to learn more about retail membership programs and the strategies you can implement to attract returning customers? Then find out what causes customer loyalty and create one of the best customer referral programs.
*Compared to customer acquisition strategies.