Did You Know
69% of consumers say choice of retailer is influenced by loyalty/rewards programs?
73% are more likely to recommend brands with a good loyalty program?
According to a Harris Poll
79% of consumers are more likely to join a loyalty program that does not require a card.
58% of Americans are LESS LIKELY to join a customer loyalty program that requires an app.
The Right Loyalty Program Means...
But if Cards and Apps are out, what's the Solution?
The same Harris Poll found that an equal percentage WOULD sign up for a Rewards program that ONLY asked for a phone number.
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About Customer Loyalty Rewards Programs
Customer loyalty rewards programs have been around for a couple of hundred years. In the late 19th Century, certain retailers in America began offering copper tokens to loyal customers. The customers would save the tokens and later redeem them for products in the store.
Eventually, the tokens gave way to stamps and other printed means to provide rewards. For instance, Better Crocker began printing codes and images on their box tops - save the tops and redeem. In fact, the program started by the company in 1929 only recently ended, in 2006.
Today, Box Top rewards are still used by many companies to encourage giving to schools. Called Box Tops for Education, these loyalty rewards coupons are cut from the packaging of participating product manufacturers and turned into your local school. The school can then turn them in for supplies and more as needed.
What is the Purpose of Customer Loyalty Programs?
The main purpose of customer loyalty rewards programs is marketing. In 1896, the S&H Green Stamp Company was founded. The mission of that program was to help grocers who were part of their network retain customers. These came about at a time when many communities were growing and competiton was starting to appear for the same goods and services.
The core concept behind that and similar programs since is providing loyal customers with a value-added benefit they can get nowhere else. Today, customer loyalty programs abound in nearly every nation, for virtually any product and in various modes. Every product or service offers some kind of customer loyalty rewards program.
Some of the most common customer loyalty rewards programs include:
- Frequent Flyer Miles
- Credit Card Rewards and Bonus Points
- Grocery Rewards
- Retailer Rewards
- Pizza and other Food Rewards
- Special Club Rewards
Types of Customer Loyalty Rewards Programs
In fact, there are 7 distinct kinds of customer loyalty rewards programs, but all have the ultimate goal of encouraging repeat business. The 8 types are:
- Points for general spending
- Higher points or tiers for increased spending
- VIP clubs or membership rewards
- Values points, where purchases support a cause or charity
- Partnerships where members interact for the good of each other
- Games which provide prizes or points
- Hybrid loyalty programs which combine two or more of the other rewards programs
What Loyalty Programs Work Best?
While there is no one-size-fits-all approach to a customer loyalty rewards program, there are some elements that marketing research shows make any program more likely to succeed.
For instance, one thing that is a must is simplicity. No matter the loyalty rewards, if the program is not simple, it is less likely to attract customers. For instance, some companies today are engaging in loyalty apps. However, to get the rewards points, a customer must access the app and in some way use it. For some business models, this may be fine. For most, the apps just never get used. Why?
Because often, people are just too busy to access the app and take the steps needed to gain the rewards. In fact, a recent Harris Poll found that people signing up for a customer loyalty app only used it about 25% of the time. Over time, this will translate into fewer rewards points earned and a further dropoff in use. To retain customers using such a program, considerable money must be spent just advertising the app. This costs more in the long-term than it is worth for most small businesses.
The same Harris Poll found that 71% of consumers prefer a loyalty rewards program that did not ask for much information - the less the better. And wallet cards rated even lower.
Finally, HelloWorld found that when rewards take too long to be realized, loyalty declines. So, rapid rewards are best.
What does this mean for customer loyalty programs?
What this means is that any customer loyalty program a small business undertakes needs to be simple and provide benefits to customers quickly.
One of the best methods used today involves the use of cell phones. Using SMS Text messages, small business owners can let customers sign up using just their phone number. Then, the rewards can be easily given and quickly distributed. They can use the numbers for marketing specials and discounts, improving customer loyalty.
In fact, one recent study found that SMS Text messages have a 90% open rate. And for those who did open them, nearly a quarter responded in a positive way. Best of all, use of SMS Text as a customer rewards marketing tool provides the best Return-on-Investment (ROI) of any marketing today.