How to Reward Loyal Customers That Support Your Brand
While more and more businesses are building up their retention programs and trying to find ways to increase engagement, many fail to understand how to reward loyal customers. They either don’t offer enough value or they simply don’t understand the needs of their target audience.
In this article, we will help you get more creative, by listing some commonly used practises and tactics that you can use to give back to your community. After reading this post, you should be able to audit and improve your own reward program and build strategies that improve engagement.
- How to reward loyal customers
- Offer a gift to customers that engage with your brand
- Personalized advice from company representative
- Acknowledge your customers publicly
- Invite your loyal customers to an exclusive event
- Incentivize word-of-mouth referrals
How to reward loyal customers
The following list will help you set the right foundations to make your loyalty strategy a long-term success. In no particular order of importance, here are some ideas to get you started.
Offer a gift to customers that engage with your brand
Before reinventing the wheel and jumping to costly initiatives that are assumptions at best, it is a good idea to research what type of rewards you customers would appreciate. Is it a personalized tangible gift? Is it convenience? Or maybe "pampering" that aims to a perceived status elevation?
According to Kunz's study, part of our brain reacts with empathy when somebody offers something to us. As a result, we are much more willing to return the favour.
There are many examples that we can offer here:
Outletcity, one of Europes biggest fashion outlets, offers free parking for their VIP customers (or parking discounts). They also offer a glass of free champaign and even hotel nights next to their store for their highest-tier loyal customers. Such practises have a high change of increasing purchase behaviour.
El Corte Ingles, a Spanish department store, also offers free parking for customers that participate in their loyalty program.
Other stores are more inclined towards monetary discounts. This can be a 1-15% "Pay with your points" deal, so that customers spend more money over time. Via Outlet is a good example of this.
Finally, there is a growing tendency to offer useful (yet cheap) gifts when a customer makes a purchase above a certain threshold. BODY&FIT, one of Europe's largest fitness supplement stores, offers a free gift when a customer spends more than 25 EUR, a second gift when spending more than 50 EURt, and a third gift when spending more than 100 EUR. These gifts range form pill boxes, protein shake testers, and branded shakers (cheap production cost but very useful for customers).
So don’t go light on this one - the feedback can help you better understand how to reward loyal customers and you can offer a reward that will fuel a potential future purchase (e.g. discounts or coupons).
Personalized advice from company representative
Your ability to enhance customer service efforts can also be seen as a reward for the customers that choose your brand. Whether your store is virtual or physical (or both), this form of communication is imperative, as it helps you with the following:
- Build rapport with your customers through qualitative feedback (personalized)
- Improves customer experience by removing any potential doubts, issues, or bottlenecks of the process.
- Offers a great opportunity to turn a complex customer journey into a review-worthy positive one.
An example of excellent customer support would be turning a negative experience into a positive one by simply taking the time to engage in a conversation and offer personalized solutions.
Deciem does this really well. Part of the huge success of their cosmetics brand is the amount of attention and personalized advice their offer to their customers - even those that are disappointed with their products. Each and every review receives feedback from a qualified team and expert recommendation(s) in case these are needed.
Acknowledge your customers publicly
When thinking how to reward loyal customers, don’t only think of gifts and discounts. Emotional rewards are a great way to reward your audience too. And that is done perfectly through customer recognition.
Featuring a loyal customer on your online channels (but also in-store) is a great way to show:
- That you share common values with your audience
- That you appreciate each and every person who trusts your brand
- Encouragement to your audience to become more interactive (increase engagement)
A really good example is “Starbucks’ customer of the month”. There are certain rules to follow in order to qualify as the best customer of the month. Here is a brief overview:
Needless to say, loyalty schemes that publicly acknowledge their audience make up for an increased level of competition. In turn, this could lead to repetitive purchases which result in an increase of sales. This is also one of the most direct ways of rewarding customers who support your brand, because recognition will build more trust and therefore brand awareness.
Invite your loyal customers to an exclusive event
In a digital-first world, there are not many opportunities for the majority of people to come together and get to know each other. This is why consumers have a special kind of weakness for meetups with likeminded people. And brands can be a great way to share this enthusiasm.
Events are a great way to:
- Make your customers feel included and rewarded for their continuous support of your brand
- Highlight new launches, discounts or sale season and therefore increase sales
- Encourage word-of-mouth advertisement
Of course, in most cases, not everyone is welcome to such meetups. There will most likely be some sort of qualification process to determine which part of your audience is eligible to join.
Maybe it is all the members of a brand’s loyalty scheme. Maybe it is only the top-tier that spends a significant amount of money on an annual basis. You would need to brainstorm on all the different ways you could use to leverage such an event as a way to reach your targets.
Here are some common types of events you could brainstorm about:
- Fashion outlets can host showroom openings or “new release” events.
- Cosmetic brands could host events where customers can try on different product samples and get expert advice from qualified professionals.
- Fitness goods stores can host competitions with company-related rewards.
Incentivize word-of-mouth referrals
Known method for not only rewarding loyal customers, but also attracting new clients is offering bonuses for every new referral. You don't have to spend big bucks when trying to figure out how to reward loyal customers. Sometimes even a 10% off or 5$ discount is a worth-while win for the loyal customer.
Needless to say, if someone already loves your product or service, then receiving that extra for sharing their love for your product with a friend will seem like a cherry on top.
Best part about this method is that about 92% of customers trust their friends opinion more than brand commercials so the ROI is guaranteed. Other good things about this method includes:
- You can choose the amount you want to reward your customers with, i.e - an award that your business can afford at the time;
- It's a great way to kick-start your business and can be promoted both online and offline;
- If made correctly the referral codes are easy to share and too good not to utilize;
- Few of the biggest B2C companies have successfully implemented this method, thus many good examples are available;
AirBnB’s referral program is a great example. They don’t only reward the person who made a referral, but they also the person that joins the platform through that effort.
The tips we list above form a good foundation what is comes to different ideas on how to reward loyal customers. To recap, here are the methods we explored:
- Offer a reward to customers who engage with your brand
- Personalized advice from company representative
- Acknowledge your customers publicly
- Invite your loyal customers to an event
- Incentivize word of mouth referrals
Most of these loyalty rewarding methods will be applied by your competitors as well. Therefore, it's important to remain creative and keep testing different ideas to stay ahead of your game, and into your customers’ minds.
Frequently Asked Questions
If you're wondering just what advantage implementing any of the above mentioned methods might bring to your business, then check out the following FAQs:
What is a customer loyalty program?
Loyalty programs are a part of marketing strategies, which are specifically designed for returning customers to provide them with worthwhile deals and/or initiatives from the brand. A customer loyalty program can consist of one or several different methods which in one way or another will reward the customer when spending money and is structured around non-monetary values of the customer.
What are the main goals of retail loyalty programs?
Whilst keeping a current customer is about 5 times cheaper than acquiring a new one, the goal of retail loyalty programs is to save budget by investing in returning customers and offering them exclusive perks and discounts when buying regularly. Other goals include staying ahead of competition, word-of-mouth advertisement and long-term engagement.
Why do customers join loyalty programs?
According to The Loyalty Report which was conducted between more than 28 000 respondents, 81% admitted that Loyalty Programs make them more likely to continue purchasing from a brand. According to the survey, the experience is more important than the monetary advantage in a Loyalty Program. Therefore the main reasons customers might join a loyalty program are:
- the enjoyment of participating in a program;
- the program makes whole brand experience better;
- the level of personalization with a brand increases and helps decision making when purchasing.
How do you incentivize customers?
Loyalty programs are one of the best ways to incentivize customers. There are a few ways of incentivizing customers, one of which we show above as the 5th point.
Other ways include:
- Offering to earn points with every 5th or 10th buy;
- Buy 2, get the 3rd product free;
- Return used packaging/clothes and receiving discount coupons in return.
But every business will have to determine the most fitted and effective way of creating their loyalty program.
Do rewards really create customer loyalty?
Not always. At least, it is not the most important factor. The latest is mainly the result of a positive experience with your brand as well as frequent communication and personalized offers. In short - it’s all about the customer experience.
How do you build brand loyalty?
Building brand loyalty consists of several different activities, but the most important one is staying true to your brand values - according to The Loyalty Report trust is the key to loyalty. Here are other ways to build brand loyalty:
- More is More. Overdelivering will ensure that the customers remember your brand positively among the competition, because they receive more value.
- Customer engagement. Engaging with customers will create more trust between them and the brand, whilst encouraging them to share experiences and feedback.
- Consistency. Consistency in your brand activities will create a sense of familiarity, which will result in more trust towards your brand and brand loyalty. Be sure to keep up with marketing activities, staying relevant on social media and service/product quality.
- Focus on customer experience. Sales is great, but it won't scale your business unless you put your customer first. Customer experience can create a snow-ball effect thanks to word of mouth advertisement and establishing brand identity. How you treat your customer can make or break your business.
Do loyalty programs increase sales?
The simple answer to this is - yes.
- According to Marketing Metrics, the probability of selling your goods to an existing customer is 60%-70%, whilst the probability of selling to a new customer is only 5%-20%.
- Customer retention and therefore loyalty programs is at an all time high - this report by Fundera suggests that 43% of customers are spending more money at brands they're loyal to.
How much do loyalty programs increase sales?
Increasing customer retention rates by 5% will increase profits by 25% to 95%, which means that investing in loyal customers does not only mean building a trustworthy community, but also greatly affects your sales volume in long-term.
Do loyal customers spend more?
Yes, loyal customers spend about 12-18% more per year compared to non-loyalty members, which is a considerable amount when thinking about long-term strategies.