4 Things the World’s Most Successful Loyalty Programs Have in Common

Today’s businesses dedicate their time not only to figuring out how to attract new customers but also to retaining the ones they already have. Harvard Business Review (HBR) reports that gaining a new customer is actually 5 to 25 times more expensive than keeping an existing one. So, it makes sense to invest a decent share of your marketing dollars in nurturing your relationships with people who’ve already purchased from you.

According to Bain & Company, improving customer retention rates by just five percent has shown the potential to increase profits up to 75%, and 80% of a company’s future revenue comes from just 20% of its existing customers. Customer loyalty programs are one of the best ways to make sure you’re rewarding your customers and keeping them engaged with your brand and products.

Unfortunately, many loyalty programs aren’t performing to expectations—of either brands or their customers. The key reasons for this are:

• A lack of reward relevance, flexibility and value (44%)
• A lack of a seamless omnichannel experience (33%)
• Customer service issues (17%)

Brands need to update their loyalty programs in order to improve these numbers and leverage the full power of loyalty marketing. Let’s take a look at four things that the world’s most successful loyalty and reward programs have in common.

Keys to the most successful loyalty programs

Outstanding rewards

One of the biggest problems with loyalty programs is that customers don’t care enough about the perks and rewards that are offered. Many programs offer chances to earn a prize, such as a product or points toward a trip. Research shows 57% of customers sign up for a program to save money, so bear this in mind when choosing your reward structure.

While today’s consumers want more than a transactional relationship with brands, discounts on products, cash back and other money-savers still are a big reason customers choose to join your program. To differentiate yourself, ensure that monetary rewards enhance the brand experience, too.

You can also use unique rewards like limited-edition products, exclusive access and member-only benefits to motivate your customers to engage and interact with your brand.

Emotional connection

Customers also remain in loyalty programs because they feel a sense of connection to a brand. According to a report published by Forrester, emotion and an emotional connection to a brand is a stronger driver of loyalty than factors like ease and effectiveness.

Customers are looking for a full experience rather than just purchasing from a brand. One study found that the top five reasons customers gave for feeling a connection with a brand were all related to caring:

• Cares about me
• Cares about the world
• Understands me
• Has an audience of people like me (my tribe)
• Makes me feel special

Furthermore, 89% of Americans are willing to switch brands in order to support a cause, and 76% of consumers would think more highly of a company that helps them support a cause they care about.

A great example is TOMS Passport Rewards. Members have the option to redeem points toward a charitable cause or initiative. Members can redeem points for a $25 donation to help TOMS support U.S.-based after-school groups and community development programs. TOMS has found a way to make their company appeal to customers because, when they sign up, they’re taking part in a bigger cause.

Digital optimization

Another important way to connect with customers is to make sure that your program is easy to navigate on mobile. Many companies run into trouble when users have a bad experience with their mobile app or when their website isn’t fully responsive.

Mobile was responsible for 48% of Black Friday sales in 2022. That means that in order for customers to get excited about using a program, they have to be able to easily use it on mobile.

Apart from being mobile-friendly, the program needs to be interactive and fun to participate. Annex Cloud’s gamification and survey features are great ways to engage customers outside of purchases—plus they’re great ways to collect additional customer data.

It’s also helpful to have integrations with mobile-specific features like Messenger and WhatsApp. The more seamless a user experience is, the more popular the app will be, and if they can easily share info with friends and communicate back and forth with your brand, they’ll be more likely to use it.

Page speed optimization is also essential. Every second of delay can result in a 7% reduction in conversions. Make sure your site is running without any glitches and that pages load quickly, so you don’t keep customers waiting.

Thinking beyond transactions

Basing a program merely on transaction doesn’t create the warm and fuzzies amongst your customers. You don’t want them to feel like you’re just selling to them.

It’s important to reward activities other than purchases to keep them engaged and further promote your brand.

Activities such as writing product reviews, sharing on social channels, completing surveys and quizzes, referring others and downloading your apps are all great examples of things customers could be rewarded for.

Check out Bebe’s customer loyalty program. They do a great job of making sure customers get rewards for various activities, like referring friends, hashtagging photos on Instagram and Twitter and even just visiting their website.

Loyal customers are your most engaged, highest-spending and most frequent buyers. So, clearly, loyalty programs are a great way to make customers come back for more.

But where do you start? Below are some examples of successful loyalty programs examples for you to gain some inspiration.

The feel-good factor

2020 saw a global awakening. For the first time in many years, the world as a whole was facing a crisis, and the effects it had on the individual psyche were universal in nature.

Rewards can be meaningful even if they don’t offer direct benefit to the customers. Various brand across the world partnered with charities or stood for a cause and the customers were more than willing to join programs that supported charitable causes. It gave the customers a sense of satisfaction in doing a little bit towards building a better community.

Examples of successful loyalty programs

1. UO Rewards by Urban Outfitters

Urban Outfitters is a multinational lifestyle retailer. As an Urban Outfitters UO program member, you can earn points and rewards by shopping online or making purchases at their stores.

Even when you share their posts on social media using their hashtags and read the company’s blog, you can earn points and rewards. Program perks include access to exclusive offers, tickets to events and signed merchandise from various artists. And you can keep earning points to advance to the Silver and Gold Tiers for even more perks.

2. e.l.f.’s Beauty Squad – A free membership program

e.l.f. Beauty Squad lets you earn and unlock e.l.f. reward points on purchases. Program members can also earn points by referring friends and engaging with their brand on social media.

Many customers join the program because they receive an enrollment gift. The program also rewards them with early access to sales and new products, redeemable products, free beauty sets and various discounts. There are three levels with additional benefits within each level: EXTRA, EPIC and ICON.

3. American Airlines’ AAdvantage

Customer-centricity is at the front and center of all their communications with loyal members. When you fly on American Airlines or with any of its partner airlines, you earn miles.

You can redeem them for award flights, upgrades, car rentals, hotel stays, vacations, Admirals Club airport lounge access and much more. You earn them based on how much you spend on tickets, not how far you fly. Also, if you’re a frequent flyer, the rewards program shows how far you are from becoming a gold member.

Best loyalty programs in the world

Starbucks and Sephora are among the best loyalty programs in the world. They’ve successfully tapped into their worldwide reach through strong brand loyalty and frequently returning customers.

Their loyalty reward programs go beyond points, and they’re heavily focus on delivering a great customer experience. Here’s what’s you can learn from these brands:

1. Starbucks Rewards

One of the best loyalty programs in the world, the Starbucks loyalty program has taken the personalized experience to the next level. When you purchase something at Starbucks, you get ‘Star Points’ which you can redeem for rewards. The more stars you earn, the more rewards you get. Plus, you can also pay via your mobile app and get notifications of special offers and seasonal drinks.

2. Sephora Beauty Insider

There are three tiers in the program; White, Black, & Gold, and benefits include private sales, exclusive events, offers on favorite brands, birthday surprises and a gift of your choice with every 200 points.

Loyalty programs are a fantastic way to engage customers and spread the word about your brand. Follow these four tips from the most successful loyalty programs to make sure you’re getting the most out of yours.

Annex Cloud’s Loyalty Experience Platform comes complete with a full set of next-gen loyalty capabilities to recognize and reward your customers no matter where they shop. It’s easy to configure for your brand to help you differentiate your loyalty program. If you’re ready to elevate your loyalty program, request a demo today, so you can see what’s possible.