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How to Build Customer Rewards Programs that Foster Brand Loyalty

Thinking about starting a customer rewards program? It’s a smart move. In fact, acquiring a new customer is anywhere from five to 25 times more expensive than retaining an existing one! That means nurturing your current customers is far more lucrative than investing in marketing outreach.

Customer rewards programs are one of the best and most successful ways to build brand loyalty and boost sales, but not all rewards are created equal. Turning a casual shopper into a brand advocate takes a thoughtful and customized approach. In order to build a customer rewards program that works for your unique brand, you need to learn what consumers want, how rewards are evolving with technology, and how today’s top companies are getting results.

 

Why Do I Need a Customer Rewards Program?

First things first. The term “customer rewards program” or “customer loyalty program” refers to any number of rewards systems that a business implements in order to retain its repeat customers.

They come in many shapes and sizes such as a coffee punch card, a points-based rewards system, or even a digital rewards center where shoppers get to choose their own reward. The scope and type of rewards program you offer your customers should reflect the size and personality of your business.

Why have these programs become so prevalent in recent years? Well, aside from the fact that everyone loves freebies, reciprocity really works! When executed in a way that feels valuable, customer rewards programs make your shoppers feel appreciated. This, in turn encourages them to come back for more. Plus, in today’s digital age, when so many things are automated and impersonal, giving your customers something back creates an emotional connection that builds positive associations with your brand.

And what happens when someone falls in love with your brand? They tell the world! Word of mouth marketing is one of the most influential factors when it comes to driving purchases, with 1000 customer generating around 500,000 conversations about a brand.

Plus, loyal customers convert more and spend more too. The Adobe Digital Index Report tracked 40% of US retail revenue from returning or repeat purchasers. And the kicker? Those customers only represent 8% of all visitors! When 40% of your sales come from 8% of your customers, it’s time to show that powerful majority your appreciation.

Remember, when the stakes are this high, it’s important to do things right from the onset. A poorly-designed program could be detrimental to your overall goals.

What Kind of Rewards Programs Do Customers Want?

Now that you know just how valuable repeat customers can be for your bottom line, it’s important to build a customer rewards program that reflects that. Cookie-cutter programs and cheap-feeling rewards will do little to motivate and gratify that valuable 8%.

Your customers expect a loyalty program that lives up to the quality standards and customer service of your business and its products. In fact, it’s a direct reflection of your brand.

Simply put, your rewards need to be original, attainable, and easy to understand in order to move the needle. Poorly designed sites, hard to use APIs, poor customer service and long wait times for rewards can be a huge hindrance to your program’s overall success. A simple, inclusive program with valuable, fast rewards is always the best route.

There are many different ways to structure your customer rewards program, so it’s important to choose the approach that fits best with the nature and personality of your business. Don’t let someone else design a loyalty program that feels completely isolated from your business. The two should work together in order to create a stronger, longer-lasting connection.

To summarize, a loyalty program is an extension of your brand and its values.

Make it Original

In order to illicite true engagement and loyalty, your program has to stand out from the crowd. Yes, Sephora’s VIB program is a smashing success–but will copying the format give your business the same results? With customers drowning in rewards programs left and right, it’s a good idea to structure yours in a unique way that reflects your brand and stands out from the crowd.

Easier said than done, but truth be told, it’s worth the time and effort to have your team brainstorm something special and unique that promotes true loyalty instead of copying another brand’s system. In the end, you’ll be glad you did.

Make Rewards Attainable

You can’t assume that your customers are willing to invest a lot of time or energy into chasing your proverbial carrot. If you offer amazing rewards, but not many people receive them, your program is only going to work for a very small amount of customers. Chances are, the majority of repeat customers are eventually going to give up.

Consumers want rewards that are easy to obtain. Smaller, more frequent rewards, even $5 gift cards, may do more for your brand loyalty than one big prize at the end of the tunnel.

Be Transparent

Confusion is a turn off. Be sure your website and program are easy to use and that the rewards potential is clear from the beginning. Focusing on this will also help you build trust, an essential piece of the customer loyalty puzzle. Customers want loyalty programs that are easy to use and easy to understand. Programs should feel like second nature and they should always be intuitive – the last thing your best customers want is to spend time trying to navigate the steps of your rewards program. If it’s going to be difficult, it won’t be worth it.

5 Tips for Building Brand Loyalty

Now that you know what kind of program customers want, you can start designing the perfect one for your brand. Here are some specific tips and tricks that can help you build a rewards program that works.

1. Go Digital to Deliver Better Results

If you want to position yourself as a modern leader in your field, it’s essential to offer easily-redeemable rewards that are both fun and valuable. The best retailers make sure that shopping and paying is the same on every screen.

Virtual rewards are leading the pack when it comes to customer loyalty programs. Although bulk plastic cards are still a good option for some companies, virtual rewards are quickly replacing them as retailers find value in the easy-to-purchase, easy-to-use virtual solutions that eliminate the lag time between achievement and reward. Visa® Virtual Rewards work just like physical cards, but are actually faster and more secure. Plus, if the money is instantly transferred to their email, they are likely to reinvest it on your website.

2. Make Mobile a Priority

On a similar note, 69% of loyalty program members agree that they’re more likely to participate in a loyalty program if a mobile app is available. Plus, 39% of online shoppers use their smartphone to shop—so it makes sense to earn and redeem rewards on mobile.

Mobile-first technology makes redeeming rewards while shopping from smartphones a breeze. If rewards are easy to redeem on the go, you’re giving your customers instant gratification, and that can go a long way towards brand loyalty.

3. Give the Gift of Choice

Does one gift work for everyone? Actually, yes! Visa® and MasterCard® Virtual Rewards, Amazon gift cards, and flexible choose-your-own reward options such as GiftCard Pass are far more enticing than a single reward from a specific vendor or brand–even if it’s your own!

Choice is both empowering and exciting which makes that happy jolt of adrenaline even more exciting for your recipient.

4. Make it Personal

Digital doesn’t have to mean impersonal. If you want your customers to know how much you value them, you have to start by letting them know that their reward is coming from you–and not an impersonal third party rewards company. Consistent brand experience is everything.

At Virtual Incentives, we customize our rewards to further your brand’s mission and enhance the association between the recipient’s rewards and your company. Digital incentives like egift cards can actually make the personalization process easier and more efficient when you partner with the right provider.

5. Be Sure Your Rewards are as Friendly as Your Brand

Speaking of the right provider, it’s important to look for a company that does more than hook you up with rewards. If you don’t have time to manage your rewards program’s customer service, you might as well not have one at all.

Bad experiences with rewards redemption can negate all the hard work you invested in the first place. That’s why it’s essential to partner with a company that also handles customer service in a timely and respectful manner. When you’re working hard to increase brand loyalty, customer service is of the utmost importance.

Customer Loyalty Program Trends to Look Out for in 2019

Want to get ahead of next year’s trends. Here are 3 to look out for as you craft your own modern rewards program.

1. An Increase in Paid Loyalty Programs

Amazon Prime is the #1 example of a paid loyalty program, but many more retailers are beginning to follow suite. Look out for more companies charging their customers to participate in loyalty programs over the next few years. Research shows that younger customers are willing to pay to participate in a loyalty program if- and only if- it feels valuable to them.

2. More Data Mining and More Personalization

For better or worse, technological advancements now offer brands more information about their customers than ever before. This gives savvy businesses the opportunity to customize reward experiences to their customers in a meaningful way. For example, marketing data about a certain set of customers could reveal preferences for a certain gift card or reward. If your shoppers also shop at another non-competitive store, you may consider a surprising them with a reward that reflects their unique tastes.

3. Location-Based Rewards

New location-based technology and social apps now allow for location-based rewards for shoppers who visit a physical retail store or pop-up event. You may already have experienced this with a free coupon when you walk into a Starbucks, for example.

4. A Shift from Discounts to Cold Hard Cash

Financial rewards are the most highly-valued loyalty-program benefits for members of all ages. Although older shopper still value discounts nearly as much as cash rewards, it seems that money talks. Look out for more companies shifting from a discount or products-based reward system to a virtual gift card solution in the coming months.

Looking for more trends and ideas that can help you build a better program? Download our free ebook “The Future of Rewards” to review the data from our recent research study.

No matter how you structure your loyalty program, it’s important to make sure that it delivers on your brand’s values and enhances your relationships with your customers. The most successful loyalty programs prioritize the needs of their customer over their own and respect the person behind the shopping cart. If you can customize your rewards to the individual needs of your shoppers, you will deepen your relationships and build brand loyalty that lasts long beyond the purchase.

We’re here to help you brainstorm which customer reward options are best for your brand and then build a program that gets results. Talk to a rewards expert at Virtual Incentives today to learn more about our flexible, customizable customer rewards programs.

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