Different loyalty programmes cater to various business models and customer preferences. In this blog we illustrate 8 loyalty models that, from experience, we know work. To run a successful loyalty programme, you must ensure that your chosen model has been tailored to suit your audience and your brand. One size definitely doesn’t fit all when it comes to loyalty. Here we will explore real life examples of loyalty models that have achieved success for household brands and help you to understand how you could best use these in your environment.  

 

1. Points Based Programmes  

PointsBasedProgramme...This is probably the most utilised loyalty programme. Your customers will quickly be able to understand how the programme works as long as you keep the metrics simple!  

You choose which behaviours to reward, whether that be increased spend, total spend, specific spend on products or categories, referrals or engagement. Decide whether to display points as points or as a monetary value depending on what your customers will value most.   

 A simple points system works well when customers are engaging frequently with your brand. Rewards could take the shape of free products, discounts, extra service items or retail products or experiences. The type of rewards you offer will depend on who is purchasing and therefore who holds the reward account. In a B2B environment if it is not the business owner then free products or discounts may not be seen to be of value.   

Points systems must be simple to understand. Where most programmes fail is that the metrics for awarding points and/or redeeming points is too confusing or complex.   

The three biggest players in the UK loyalty landscape – Tesco Clubcard, Nectar and Boots Advantage Card – all remain strong advocates of points-based programmes. However, all have introduced additional metrics to further motivate and reward customers.  

2. Tiered Loyalty Programmes  

TieredLoyaltyProgram...With a tiered loyalty programme, you are able to provide initial benefits to new customers, as well as providing enhanced benefits or rewards to existing loyal customers or for those who change buying behaviours.   

A tiered programme can also be overlaid onto a simple points system, as seen in the previous example. A tiered programme can provide additional earning potential for your top customers or open up access to different rewards.   

This type of programme also emphasises to your customers that you appreciate their loyalty to your brand.  

3. Paid For Programmes (VIP Loyalty)  

VIPLOyaltyPaid for loyalty programmes have become more popular in recent times as people enjoy feeling part of something, but, to pay for VIP benefits, customers must feel confident that the rewards they receive outweigh the initial cost.  Charging an upfront fee (subscription) for VIP benefits will only work for existing customers that already see the benefit in your service or product.   

Charging for VIP benefits has become a popular trend in recent years, with UK programmes such as Tesco and Boots introducing their Clubcard Plus and Advantage Plus programmes.  

4. Cash Back Loyalty Programmes  

CashBackLoyaltyProgr...Cash back has long been a big driver in building relationships in B2B, but it is slowly being replaced by incentive programmes and loyalty mechanics that drive engagement. Whilst cash is often voted the preferred reward offering by members, it doesn't provide the same level of brand advocacy and value that an experience can. Cash back doesn't reward as many people in the business; but, it can help to secure business relationships if money/procurement is the driver.   

If this is part of your business model it is a good idea to explore how you can split the reward buckets to still offer cash but also to offer other rewards ideas that can boost advocacy, engagement and, in turn, customer retention.  

5. Coalition Loyalty Programmes  

CoalitionLOyaltyProg...Partner with other companies to provide an all-inclusive service or offering   

If your customers must shop with more than one provider to complete their purchases, you could find that by partnering with other non-competitive companies in your sector to provide an all-inclusive service offering, you are able to provide more value to your customers. We have seen this work particularly well for manufacturers.   

By partnering with another company your customers could purchase everything they need through one site making their buying process more efficient, easier and more rewarding.   

Another way of partnering with other brands is to provide the ability for customers to redeem their points with these other companies rather than just with your brand. Mando-Connect and YouGov research found that on average, across key loyalty sectors in the UK, 58% of Britons want rewards from brand partners with 19% finding partner rewards more appealing than a brand’s own.  

6. Community Loyalty Programmes  

CommunityLOyaltyProg...Depending on your industry and your audience, your customers may see more value in extra service than financial benefits.   

Airlines and hotels are doing this effectively with their tiered loyalty programmes in that the more loyalty a customer displays, the more services they are able to open up. This could be in the form of a personal concierge service or lounge access.   

A non-monetary programme could simply be one where customers always receive an upgraded room when they have stayed at a hotel for the required number of nights, or free porterage.  

7. Gamification Loyalty Programmes  

GamificationLoyaltyP...People enjoy healthy competition!   

We see this on fitness apps from the likes of Fitbit, Apple Activity and Strava, in friends’ leaderboard and badge awards, internally with customer service software, on LinkedIn with the AllStar profile, and in Dropbox with their offer of more space.   

Gamification does not have to be linked to traditional rewards in terms of customers receiving points or money. Gamification can create loyalty just by providing customers with motivating, personalised messaging and communications, with recognition when they have achieved success and pointers, and with motivation when they need that little extra push.   

People enjoy recognition and competition if it is executed in an engaging manner.  

8. Surprise and Delight Loyalty Programmes  

SurpriseandDelgihtPr...'Surprise and Delight’ loyalty is a strategy that gives customers unanticipated benefits and rewards to re-ignite interest in products or services whilst nurturing customer relations – it is far more than offering a discount code for the next purchase. According to CrowdTwist, 67% of customers say that surprise gifts are a very important part of a loyalty programme.   

A Surprise and Delight strategy is ideal where you can target behaviour for specific customer segments rather than a mass audience. With the key to Surprise and Delight being the anticipation of not knowing when or how they will happen, it makes them an ideal metric to be able to rapidly deploy and freeze based on market dynamics.   

With movements like #BeKind mobilising and empowering generations, empowering your staff to offer customers instant surprise and delight loyalty will not only make the customer feel good, it will also generate staff goodwill and positivity. Plus, it gives the added bonus of being something your teams are now actively engaged with and therefore more likely to talk about to their peers. They are now supporting and referencing your brand in a positive way as brand advocates. 

In conclusion, choosing the right loyalty programme model for your business is crucial for building long-term customer relationships and driving growth. By carefully evaluating your business goals, customer base, and available resources, you can select a model that aligns with your objectives and resonates with your customers. Whether you opt for a points-based system, a tiered structure, or a subscription model, the key is to ensure that your programme adds genuine value and fosters loyalty. Remember, the most effective loyalty programmes are those that are continually optimised based on customer feedback and data insights. By doing so, you can create a loyalty programme that not only rewards your customers but also propels your business to new heights. 

About the Author

Melanie Parker

Melanie Parker

Stream’s co-founder, Melanie, became the first British woman to become accredited with the CLMP from The Loyalty Academy. Passionate about all things loyalty, Melanie cuts through the technical jargon and gets to the real business issue. Melanie loves to develop engaging digital solutions that appear simple whilst creating long lasting partnerships that add value to all.

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LoyaltyStream Key Features

  • 21 loyalty campaign types to suit every business
  • Options to deploy gamification campaigns such as Spin-To-Win and Prize Draws as well as Badges
  • Ability to track and reward all behaviours from transactions to actions
  • In-depth visual analytics and insights on Campaigns, Members, actions and transactions
  • Customisable CRM and segmentation options to suit your Member profile
  • Scalable modular SaaS platform that can grow with your business

 

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