Running a business is not an easy task; especially when it comes to grabbing the eyeballs of engaging new consumers towards your brand. Acquiring new customers is an activity that demands a lot of your time and attention; this completely depletes your energy making you completely inefficient to concentrate on other important areas of your business.
For entrepreneurs attaining new business is essential and a big challenge too; but what if we tell you there were other options/techniques to expand your business in less time with few resources. Seems to be a good idea, doesn’t it? Well, the option/technique to this ‘solution’ is none other than ‘Customer Loyalty Programs’. Existing customers generate more revenue as compared to new customers.
According to Deloitte’s retail survey, “Businesses with loyalty programs are 88% more profitable on an average as compared to their competitors who do not.” Converting a new customer into a repeat customer does not happen overnight. This is the reason why customer loyalty programs should be considered.
Check out these Top 10 Ways To Drive Customer Engagement.
What is Customer Loyalty?
It shows customer’s desire and inclination to buy products from a brand again and again. This happens when a customer has had a positive experience, has been satisfied with the value of the product as well as from the services he/she gets the purchased products.
In order for customers to continue purchasing your brand, entrepreneurs always work on providing good customer services.
Loyal customers tend to spend more on brands that they like and also have the tendency to share their positive experience with their family and friends. ‘Word by mouth’ a new marketing technique has gained importance as it proves to be more effective to grab the attention of new customers rather than advertising your brand.
Grabbing the attention of “new customers” and trying to convert them into “loyal customers” is a tedious, time consuming and an expensive task. Instead simply by having a word by mouth about your brand can attract new customers. But how can this be done? How do you use positive reviews, eye-catchy tweets Instagram mentions and other social media platforms to boost the development of your business?
It’s over here where the customer loyalty program proves to be useful.
What is Customer Loyalty Program?
It is basically an organized collection of customer data which is often used to offer customers add on privileges and benefits or services to loyal customers in the form of reward points, coupons vouchers or any other such benefits.
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Customer Loyalty Programs are needed for:
- Rewarding the customer for being special.
- To create a bounce in enrolments/memberships
- Grabbing the eyeballs of new customers to new attractive offers
- To generate and show a keen interest in existing customers
Top 10 Customer Loyalty Programs Ideas & Examples
1. Point-based Programs
Based on their spending capacity customers accrue points that they can redeem to get free product or service. It operates on a simple funda: “spend more to earn more.” Each time a purchase made by a customer gets him/ her certain amount of points based on the size of his/her purchase.
The point system should be simple and easy for customers to calculate and understand. For instance: Rs. 50 = 1 point.
Point-Based Customer Loyalty Program Example: Anuttara
Anuttara by Tanishq is an extension of Tanishq. A loyalty program that offers attractive reward point that the customers earn at every purchase they make at Tanishq store.
Eligibility criteria and reward points for different types of Anuttara membership.
- Be the first to know about latest offers at Tanishq
- Royale members get an exclusive preview of the new jewellery launched at the store and many more.
2. Tiered Program
This is an advanced point system. After collecting a certain number of points the customer is upgraded to the next tier and he will receive benefits of that tier. The more loyal customers stay to your brand they earn a greater reward opportunity. This program is used in e-commerce and especially in the travel industry
Tiered Customer Loyalty Program Example
Jet Airways Frequent Flyer Program- JetPrivilege
With JetPrivilege members can enjoy rewarding experiences with unique privileges across Five membership tiers: Blue, Blue Plus, Silver, Gold and the exclusive Platinum. Members who earn more miles enjoy more benefits, quicker tier upgrades and easier tier retention as well as enhanced rewards and easier redemption.
Please Note: For upgrading from Blue to BluePlus you just need 1 accrual activity (with airline or non-airline partner) in the last 12 months.
Highlights of Privileges
- Check-in at Première counters.
- Lounge access.
- Additional baggage allowance.
- Guaranteed reservations up to 24 hours before departure.
- Kiosk check-in.
- Elite members can also enjoy benefits on select airline partners like additional baggage allowance.
3. Paid Program
This program is simple to understand as in customers pay a monthly or annual fee in order to join, be a part and avail benefits of the VIP Member club. A sturdy customer base is required for this program to be effective.
Paid Customer Loyalty Program Example: Club Mahindra
Club Mahindra Membership Program: To make holiday plans simply for their members Club Mahindra have divided the year into color-coded seasons which their customers can use to match with their holiday pattern.
- Purple: An all-season color which means members can holiday anytime of the year.
- Red: This colour means members can holiday anytime during the year except for peak periods– for example a New Year’s Eve in Goa.
- White: The White season is an off season period. Those members who wish to be at resorts which are less crowded can choose this colour for their holiday plan.
- Blue: The Blue season is for those members who wish to opt for a relaxed, leisurely holiday during non-peak periods at holiday destinations.
Membership fees: Club Mahindra membership cost ranges between Rs. 2,89,300 for a Blue Studio to Rs. 19,56,800 for a Purple 2-bedroom apartment irrespective of the season and the size of accommodation that the customer opts for.
- Flight bookings
- In city experience
- International inventory
- Cruise holidays
- Vacation spit option
- Privilege to visit two places than one place in a year by opting a 4day and 3 day holiday pattern.
- Membership fees can be paid in EMIs spread across 6 to 48 months etc.
4. The Value Based Program
Creating something creative and unique rather than just mere points can make the customer remember their brand. The value based program is suitable for the e-commerce industry. If a loyalty program is structured around your customer’s values there is high possibility of them becoming your brand loyalist.
Value Based Customer Loyalty Program Example: Shiksha
Shiksha is a CSR program by P&G. It’s an essential part of global philanthropic program Live, Learn and Thrive. This program is P&G India’s research that revealed education as one of the cause that consumers are more concerned about and are looking for a simple way to contribute. Since its inception it has accumulated a donation of over Rs. 22 cores toward the noble cause of educating the less fortune children. A Shiksha e-store is also available on Amazon for customers to buy P&G products online.
All of this was possible for them from the support they received from their consumers who participated in the Shiksha movement by buying P&G brands for one quarter of the year, thus enabling P&G to contribute a part of the sales towards the cause.
This type of program gives customers a feeling of ownership in helping social causes through customer purchases.
5. The Coalition Program
Since loyalty programs are gaining importance; customers are looking for suppleness in rewards. Customer Loyalty programs can be created by partnering up with other business. This will let you build new relationships as well as it will give more prospects to customers.
Coalition Customer Loyalty Program Examples
Payback is one of India’s Multi brand loyalty program. This program lets customers earn points on their shopping be it online or in-store partners across India. Customers can earn points on their daily activities be it shopping, payments, grocery, fuel and more.
Points Earned Online Store
Shopping at online stores like Amazon, Flipkart, Jabong customer earns 4 points on every 100 Rs spent.
With Big Bazaar- PAYBACK loyalty program, shopping for daily essentials can bring in rewards points. Customers avail benefits of BigBazzar offers and best prices too. They also earn 2 PAYBACK Points for every Rs 200 spent. They can collect PAYABCK Points from various Future Group formats, like Central, Food Bazaar, Brand Factory, foodhall, Ezone
PAYBACK Members who submit reviews for publication on TripAdvisor will receive PAYBACK Points as per the below structure.
6. Cash Back Program
These programs are easy to create, maintain and easy to understand. The proposition is simple to understand – ‘You get a certain amount against the X amount you spent.’ These programs are used to increase the transaction amounts and to reduce their churn rates.
Cash Back Customer Loyalty Program Example: Topcashback.in
TopCashback is the India’s most generous cash back site to save customers money on all their online shopping. It has several e-commerce merchants like Flipkart, EBay, Paytm, Mobikwik, Jabong, Homeshop18, Myntra and a lot more.
How does it work: When customer shops at the list of retailers on topcashback.in site, topcashback.in gives the customer certain percentage of their final spending on the confirmation of their purchase.
Withdrawing your cash back amount from TopCashback.in is easy. After the customer’s cash back has gone to Payable status, they can transfer it directly to their bank account through NEFT or use their Paytm Wallet or Amazon Pay Balance Wallet. Customers are given an extra 3% bonus cash back if they withdraw their money by using Amazon Pay Balance.
- Get a wide exposure of retailers; some of whom you may have not been aware about.
- You get access to the referral bonus, where you refer a friend and get up to Rs. 500 cash back
- Get best deals on products
7. Hybrid Program
This program is a combination of more than one type of program. This program lets the customers earn points as well as get some attractive rewards too.
Customer Loyalty Program Examples: Walmart
Walmart’s hybrid program consists of a coalition program between Walmart, Murphy USA Gas Stations, Neighbourhood Markets, Sam’s Clubs and MasterCard.
Customer who hold Walmart Money Card and Walmart Credit Card receive 1% to 3% back on purchases. This again depends whether the product has been bought from a store or has it been ordered online. Customers who are a part of this loyalty program avail the privilege benefit of discount on gas as well as products. Based on the products purchased and the amount spent by the member, members acquire monthly rewards.
Note: Avoid combining too many different programs as this would leave the customer confused.
8. Healthcare Card Loyalty Program
Health insurance usually covers the hospitalization expenses. For rest medical requirements such as diagnostic tests, check-up, consultation with the doctor etc. these expenses have to be borne by the customers. On the other hand prices keep on increasing now and then which is of no help either.
This leaves a gap between what benefits the insurer offers and what expenses the customer bears on healthcare. Trying to bridge this gap insurance companies are offering healthcare discount cards which is a type of loyalty card. Customers pay a membership fee to which the insurance company offers them card which they can use to avail 30 to 35% discounts benefit on hospitalization and non-hospitalisation like check-up, diagnostic tests, medicines etc. related expenses.
Customer Loyalty Program Example: Bajaj Allianz
It is a major insurance provider in India. Bajaj Allianz, along with Yes Bank and Visa, launched an innovative program Jiyo Fit for its customers. On the purchase of a medical policy the customer can opt for a health debit card. This card entitles the customer for discounts at gyms, spa, health clinics, chemists, restaurants and retail chains. Bajaj Allianz gives their customers an option to purchase Visa debit card from Yes Bank at Rs150 per annum and open a zero balance savings account with Yes Bank.
- Earn a point on every visit to the gym.
- Earn points on purchase of healthy food and beverages at partner restaurants.
- Earn point on improving your health through regular medical check-up and diagnostic tests.
- Purchase medicines from a partner chain of chemists.
- Get privilege of exclusive offers and benefits at different retailers and service providers. A few to name are VLCC, Make me Healthy, Gold’s Gym, More, Hetero, Dr. Batra’s etc.
- The points can be redeemed using the Visa network.
9. Stamp Card and Mobile App Loyalty program
It an old and well known loyalty program. The basic idea behind it is to provide customer loyalty cards which can be stamped by the brand when they make a purchase on certain services and products. This stamped card can be used by the customer as a reward to avail free product or services of a same value. Customers can avail points by placing an order through mobile app too.
Stamp Card and Mobile App Customer Loyalty Program Examples
McDonald’s Breakfast Club
It offers mouth-watering breakfast offers for its customers. All the customer need to do is place an order of Rs. 100 during the breakfast hours and get his or her card stamped on every visit to avail exciting offers.
Offers such as:
- On your second visit get a free hash brown.
- On your third visit get veg muffins/egg & cheese muffins.
- On your fourth visit get free hot cakes.
- On the fifth visit get fresh Brew coffee/tea.
- On the sixth visit get free veg supreme/ chicken sausage mc muffin with egg.
McDonald’s Gold Points
It’s a loyalty program that operates in the west and south regions of India. Customers can earn McGold Points when the customer places an order either through McDelivery website or app and use these points to pay for their next meal.
A customer who places an order that exceed Rs. 649 on McDelivery app/web store can get 30% McGold which can be redeemed 3 times per user.
10. No Program at all
Businesses don’t benefit always from customer loyalty programs meaning to say is that certain products are so unique that they don’t require any incentive program to acquire new customers as well as encourage the existing customers.
No Program at all Example: Apple
Apple has succeeded in creating a brand name in the market for its product and services. Their brand and product is strong enough to generate and create a list of brand loyalist. The craze for their products has increased tremendously over the period of time. Owing an apple phone has a direct impact on your status in the society.
However, this is a rare scenario as there are very few businesses that bank on their products in order to increase customer loyalty.
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Rules of Building a Customer Loyalty Program
- Design the program based on the customers’ requirements and goals.
- Update the loyalty programs regularly.
- Technology- Make the most out of it. Use it as a tool to customize benefits.
- Everything is bound to undergo a change therefore invest regularly in making improvements and changes in your loyalty programs.
Steps to Build a Customer Loyalty Program:
- Do research work on your current customers. Understand their behaviour patterns as in how much do they purchase in a year? What type of products they purchase frequently? What is the profit margin you earn on their purchases? Are they satisfied with your products? How to improve your business relationships?
- Plan out a loyalty program: Just as we try, test and obtain feedback before we launch any product so is the same with loyalty programs before you introduce them you need to do your homework meaning, you need to evaluate the level of satisfaction of your customers using your product. This of course can be done through techniques like interviews, surveys, assessing the feedback comments from the customers.
- Then pick employees who are have good people skills and can deal with customers in an effective way. Such employees can be a part of the loyalty program. According to your analysis you can focus on those customers who purchase your products regularly and can be handled effectively so as to make them more profitable for you.
- Set your goals and measure them with CRM: Without a goal in mind you can plan your business in a strategic way. So make sure you have set a clear well defined goal at the inception of the program. For instance: if a customer purchase 4 times per year set a goal or target of 4.4 times a year. This will help you to increase your sale by 10% with minimal additional expenses. Use good CRM software to manage this program.
- Set a budget: Set two different budget one for your existing customers and the other for your new customers.
- Think of hacks that will encourage more customers: Think of loyalty rewards that would encourage more customers to buy your products. Few hacks could be:
- Earn additional discounts when purchase milestones are reached.
- Offer premium services and a lot more.
In India customer loyalty programs have been active since 1995. Every major vertical today be it travel, hospitality, healthcare, retail, telecom, media outlets etc. have invested in some kind of loyalty programs. The biggest challenge faced by Indian marketers is deriving actionable insights from customer data. Marketers lack in knowledge such as how to develop, administer and use loyalty programs in an effective manner.
In India customer loyalty programs are still in its embryonic stage as most of the programs are either point driven or offer discount and voucher schemes. It is tough to benefit from a CRM Program without well-organized database.