Customer loyalty programs have the potential to save you a lot of money on the purchases that you already make. While there are several different types of loyalty programs on the market, they share one key aspect: rewarding customers with substantial savings.
Loyalty programs not only provide you with savings, but retailers gain more revenue from these programs as customers are more inclined to shop with them again. It is estimated that repeat customers spend as much as 67 percent more than new customers. By rewarding you for your loyalty, retailers stand to make more money.
While there are several types of customer loyalty programs, it is important to review each loyalty program that you come across as most retailers will provide limitations, such as expiration dates and maximum reward limits, and some rewards programs will require a membership. By understanding each type of loyalty program and how you can benefit from the rewards that are offered, you have the opportunity to maximize your potential savings.
For more information about customer loyalty programs, including the types of programs and rewards that are commonly offered and the benefits of these programs, review the information that has been provided in the sections below.
How a Customer’s Loyalty is Great for Business
While it may seem obvious, businesses strive to provide their customers with great customer service, durable products and a wide selection of merchandise in order to further their company’s success and growth. Yet your loyalty as a customer is expected to grow businesses faster than any marketing or sales campaign. Statistically, repeat customers are more likely to spend more than new customers. It is estimated that up to 40 percent of online shopping revenue comes from purchases made by existing customers, which explains the surge in loyalty programs over the last few years.
The truth is that it costs more to earn the business of new customers in comparison to existing ones. Therefore, more and more businesses have begun to offer customer loyalty programs in an effort to retain and reward existing customers.
Customer Loyalty Programs Save You Money
Loyalty programs can offer you a variety of benefits such as hefty discounts on future purchases, free merchandise, free shipping and even advance notice on the release of new products. A customer loyalty program will essentially reward you for purchases from the brands you love. In fact, most households in the United States that participate in online shopping take part in at least one loyalty program. There is no limit to the amount of customer loyalty programs that you can be enrolled in at one time, though each program may have rules and limitations that you should take note of.
While there are a vast amount of similarities between loyalty programs that are derived from the same type of program, each customer loyalty program has the potential to be widely different from the next. Retail businesses have the option of setting their own rules and limitations for the programs that they offer. The most common limitation comes in the form of expiration. While this is not always the case, many loyalty programs, such as those offering points or tiered membership, will have an expiration date. As such, you must use your rewards before they expire or lose them forever. Some companies will also impose limitations on the amount of rewards a customer can earn within a one year period. As you delve into the savings that loyalty programs have to offer, be on the lookout for company policies regarding customer rewards as most companies readily divulge these key points of their program.
The Types of Loyalty Programs You May Find
While each customer loyalty program may differ from another in some way, the most common types of customer rewards programs include:
- The point system.
- The tier system.
- The value-based system.
- Game rewards programs.
- Paid programs.
Each of these programs have a variety of benefits to offer you, but the way in which you earn rewards is different. Some of the best customer loyalty programs are simple. Complex programs tend to turn more customers away. Thankfully, most businesses have strived to make their rewards programs simple, so that you can enjoy special savings without exerting as much brainpower.
The point systems reward customers with points for every purchase that they make. Point systems are generally easy to understand with clear strategies for gaining more rewards. For example, you might earn one point for every dollar that you spend. After you reach a set amount of points, you can exchange your points for free merchandise, free shipping and discounts. Many of these programs will also provide you with additional points for completing tasks such as liking the retailer on social media, referring a friend or leaving customer feedback after a purchase.
The tier system operates a bit differently. The more you spend at a retailer with a tier system, the more rewards that you will receive with each purchase. For example, if a retailer has a three-tier system that offers different benefits to its loyal customers, you would “level up” to the next tier after you have met a certain purchase amount over time. Each tier typically offers increased benefits to the one before it.
Value based systems are similar to point based systems in that they offer rewards after you have spent a certain amount of money, or rewards are based upon your purchase amount. A retailer that offers value based rewards programs is Amazon. Amazon allows customers to pick a charity of their choice from a list of eligible charities. After a charity is selected, 0.5 percent of your purchase price will be donated to that charity.
A game loyalty program is not only rewarding financially, but it is fun, too. These concepts are very simple. Once you have made a qualifying purchase or you have spent a certain amount, you gain the chance to play a game and win a number of prizes. Some prizes are instant, such as discounts on your next purchase, free shipping or free merchandise. Other prizes may include sweepstake entries that offer larger valued prizes.
Finally, paid loyalty programs are essentially memberships in which you receive substantial discounts, extra merchandise and, at times, early access to new products. Memberships can be annual or monthly, depending on the retailer. A great example of a paid loyalty program comes in the form of Amazon Prime. Amazon Prime offers their loyal customers a variety of benefits for their yearly subscription including free shipping two day shipping on every order, free amazon music, free audiobooks and digital books and free prime video.