What do loyalty programs do for businesses?
In retail and any other consumer driven market, it has become an expectation that we can gain points from buying something, or reach the highest of tiers for that VIP status. Additional discounts, invitations to events, birthday gifts, free shipping… the list goes on.
A survey by RetailMeNot found that approximately 80% of consumers are more dedicated to brands that offer a loyalty program, however it’s important to note that overall, a loyalty program needs to be compelling and mutually beneficial, both for you and your customer.
We recently wrote about the benefits of a loyalty program, if you’re interested to read more on that.
In this article, we’ll user Uber as a case study to demonstrate what a successful loyalty program can look like.
The Uber loyalty program: A case study
When Uber released its own rewards system in Australia via their app, users started increasing their rides and takeout deliveries to keep up their status, motivated by further discounts and perks. Even though, understandably, perks and discounts make us feel good, what did Uber do better than their competitors to get people to increase their spend and engagement?
User experience
Amongst other things, Uber was offering customers cheaper fares between two frequently travelled destinations. This level of personalisation was both impressive and welcomed. It doesn’t take a genius to understand why brands and companies alike offer loyalty programs. They want us to return, right? If you look at most big brands, chances are there is a program they want you to be part of.
Rewards programs retain and engage us through their points and goals system. We are naturally, as human beings, competitive and like free stuff. It’s these point systems that keep us coming back and engaged beyond the point of sale.
Loyalty programs don’t just benefit customers
The experience itself is a win-win situation for both businesses and customers. Most of the time, it costs more to acquire a new customer than to retain a customer for repeat purchases. Loyalty programs give you the chance to get to know your customers better. You get to see which promotions prompted them to hike up their rewards points and which didn’t. It’s a clever, valuable way to gain more customer insights.
Just as the Uber rating system created a frenzy amongst friends, their new points tier did just the same. With the lure of saving up to 50% off rides for VIPs, Uber referrals increased through word-of-mouth. Existing customers were rewarded for telling friends, who then received cheaper fares.
The result? Uber acquired new customers at lower cost, gained invaluable customer data, and kept existing customers happy with referral discounts. A win-win-win situation.
Personalisation
How special do you feel when someone remembers things about you? Even just your name at the local coffee shop. You feel valued, right? Keep this feeling in mind, because this is how your customers want to feel, too.
Think personalised deals, birthday incentives and a special offer on anniversaries, eg. when a customer first joined your loyalty program. With rewards programs, you can tailor (and automate) offers according to individual customers to keep them happy and feeling valued.
Personal and consistent customer interactions create an emotional connection with a brand. Tailor to the needs and wants of your customer, and you create a far more personal experience.
Emotions drive purchases.
The convenience of in-app programs
70% of people are more likely to join a loyalty program if it’s easily accessible on their mobile – why is that?
Accessibility
Put simply, it’s convenient. We all know our mobile phones are constantly attached to our hands. We have access to just about anything, whenever we want.
Remember having to search for your rewards card in the deepest crevices of your handbag, or standing at a busy register providing your email address? Brands who optimise their rewards programs for mobile create happier customers because it is just so easy and effortless.
Easy payment systems
It’s important to make sure your customers’ buying experience is as smooth as it can be. By combining your loyalty program with a payment system inside an app, you can optimise the experiences even further and encourages repeat business.
On top of that, you can use notifications to alter your customers of special offers. If people are reminded that there’s constantly something in it for them if they purchase, you’ll find them checking their loyalty points more frequently. It’s this fun aspect in your loyalty program that will keep your customers happy and engaged, driving your retention rate.
Next up: Wondering how to incorporate a loyalty program into your business? Read on.
