Innovative Customer Loyalty Programs for Retailers

YASHITA | 2020-01-18 10:30:00+00:00

What are Loyalty Programs? 


Loyalty Program is a very structured marketing strategy used commonly today. It is a system of rewarding the customers for the desired action that maybe be - on each transaction with the brand, transaction of or above a certain amount, providing referrals, availing specific services, giving comments/suggestions, or as structured by the brand. 

We have frequently heard that it costs more to acquire a new customer than to retain an existing customer. Loyalty Programs for brands are designed in such a manner so as to tactfully play with the customer's mind by rewarding them for their loyalty to the brand. When rewarded, the customer engages more often with the services of that brand that they would otherwise. 

Thorndike's “law of effect” gave birth to a theory -  Behavior that is followed by pleasant or desirable consequences is likely to be repeated, while behavior that is followed by undesirable consequences is less likely to be repeated.

The system of loyalty program revolves around this theory that when consumers are rewarded for their actions, they have a tendency to engage with the brand frequently. 


Why do you need a Customer Loyalty Program? 


  • Build Customer Loyalty to Broaden Engagement

Customer Loyalty Program is a great strategy to make your customers feel valued and reward them for choosing your company over the other brand each time. It is an amazing opportunity for your business to build lifetime customers with a customer loyalty program.


  • Build Customer Loyalty to Boost Revenue

Building your brand distinction is a key component in making your presence felt in the market. Members of the Customer Loyalty Program are the priority customers who earn points through repeated visits and purchases, thus, increasing the sales of the company. 


What are the benefits of a Loyalty Program? 


Customer loyalty operates on two principles i.e. reward and reinforcement. It helps to retain customers by rewarding them with points for desired actions or repeat purchases.


1. Customer Retention

Loyalty Programs have a positive impact on customers. Rewards & loyalty points make them feel valued which drives them to stay connected with the brand. This results in customer retention as the customer will be motivated to make more purchases to utilize their loyalty points & earn more.



2. Customer Data and Trends

When a customer signs up for a customer loyalty program with their details the company’s database starts recording the necessary information about them. This data lets you understand the customer’s behaviour, buying habits, and preferences which can help to determine the pricing, the inventory and the promotional strategy for the brand.


3. Leveraging Profitable Customers

A well-designed loyalty program makes you aware of the customer's buying behaviour. The companies can provide deals through the loyalty program to retain customers that generate more profits and have a high average ticket size. You also come to know about what chunk of people just go for discounted products and don’t invest in the high-end market on a regular basis. This helps to align the brand’s promotions and deals accordingly. 


4. Better Customer Communication

Loyalty programs help to build brand awareness and increase customer loyalty by providing them with regular information about the brand. It is essential to regularly update them with the new products/services, events, promotions, reward programs, and special offers so they keep coming back for more. These customers also turn into promoters.


5. Brand Differentiation 

Whenever a customer is looking for products/ services they compare prices and brands to get their best out of their buck. When they are part of your customer loyalty programs and are updated with the offers and discounts they tend to choose your brand over any other. This differs from other brands as due to the Customer Loyalty Program you have an added advantage.


 The Best Loyalty Programs Go Beyond Rewards

- Forbes


What are the different types of Loyalty Programs?  


1. Loyalty Points Program

It is the most commonly used point-based loyalty system that is malleable and easy to understand. Customers earn points on the basis of their billing amount. Each time the customers place their order they are rewarded with points that keep on accumulating. The redemption can be conditional or unconditional as designed by the brand. In case of an unconditional program, points can be redeemed whenever the customer wishes to even if it is their next visit to the store whereas, in case of a conditional program, customers can be restricted to redeem it only after limited points i.e. the brand can set minimum points condition. 

For instance, for every 100 bucks spent, you may choose to reward 1 loyalty point with a condition that these points are redeemable only when you have at least 50 points in your account. Each point is equivalent to one rupee. So now if a customer wishes to redeem his 150 points someday, then INR 150 will be deducted from his bill. 

It is a flexible program that can be molded in accordance with the brand’s policies. Earlier, each customer enrolling for this program got a plastic loyalty card that had to be present at the time of billing but now it has all been simplified since the customer's mobile number is their unique identity. 


2. Tiered Loyalty Program


It is again a common loyalty program used by brands to encourage customers to make regular and high-value purchases from them. It is a sort of scale, where, with each purchase points are added and you move higher on the ladder i.e. cross a milestone. These are levels, as set by the company and on reaching each level, there are certain rewards or benefits attached. It becomes more like a status symbol, giving a sense of pride to the customers. 

For instance, on a collection of 2500 loyalty points, XYZ brand’s customers become silver cardholders and can avail an 8% additional discount on all their future purchases. On reaching 5000 points, they become gold card members with free parking and 10% additional discount on all future purchases and on reaching 10,000 points, they reach the highest level which is platinum to avail 20% additional discount on merchandise, free parking, birthday month discounts and first entry to the end of season sales. 



3. Premium Loyalty Program 

This fee-based loyalty program involves a fee to be paid for subscribing to the benefits and special services. Although, it is more time and effort consuming as the customers are to be convinced to take up subscription but since it promises instant benefits unlike other loyalty programs, people find it rewarding. It is also known as Premium Loyalty Program since the average customers do not readily take it up because of the upfront charges involved. 

Two self-explanatory examples of premium loyalty programs are Zomato Gold and Amazon Prime. Subscribing to it means we can avail instant benefits for a period of time - a shorter span of delivery, access to the video content, 1+1 offers, additional discounts, etc. 


4. Coalition Loyalty Program 

Coalition loyalty programs are also known as reward partnerships are a kind of combined loyalty program for many brands together. It is useful when brands wish to extend their marketing reach and reward customers for associating with any of the brands on their portfolio. The points or gifts are valid across associated brands in such models. It is a flexible structure offering the convenience of redemption across all brands. 

Coalition Program is useful for companies having multiple brands or involved in various sectors since they can offer a single loyalty program across all their brands. This is advantageous to them since the overall walk-ins and engagement of the customers with the company strengthens. It stimulates brand penetration across all its businesses. Brands may also choose to partner up with other businesses instead of their own to ensure variety or simply to attract their base of loyal customers. 



5. Community-based Loyalty Program 

Brands are starting to reward the right behaviour with their spending. This loyalty program’s objective is to reward people for a behaviour that directly links them to the brand. A good example of this is CureFit. It is an Indian health and fitness company offering digital and offline experiences across fitness, mental well-being (CultFit), nutrition (EatFit) and Cult Gear. When members take their fitness membership - they book their classes through the app. On successfully attending each class, they are rewarded with points on the app. These points can be used across all of their services on the app - to buy meals or purchase fitness wear/gear. Customers can use their membership to other existing services for discounts on products that group is more likely to use. 

Loyalty is not just points and rewards, it’s more emotional than that. As choice and competition in retail continues to deepen, an emotional bond has to be met to bind the customers for the long-run. 


6. Hybrid Loyalty Program 

These offer elements from several different loyalty strategies. Brands may choose to amalgamate two or more loyalty programs to create their own convenient loyalty program for customers. The whole idea is to boost customer lifetime value and drive customer retention. 



Associating games with loyalty programs tends to drive customer engagement with the brand. In this program, customers unlock gifts by climbing up the ladder i.e. completing a series of actions that entitle them to corresponding gifts. You need more than a standard rewards program to encourage deeper loyalty. Putting game design elements in your marketing creates a positive and attractive loop for your customers.


Some examples of this are - 

  • Everybody likes the word ‘Free’. This is another easy way to encourage your customers for repeated visits. You can offer your customers free gifts after their 5th visit or 10th visit or 15th visit and so on and so forth. Remember to increase the value of the gift with increased visits. Implement this scheme if you’re looking to increase the footfall of the customers in your store.

  • Foreign language learning software Duolingo is a mobile application to help make learning a foreign language more fun and interactive. It asks users to achieve their learning goals by dividing the whole module into small sessions for each day. On daily practice, learning and assignments, people get rewarded with points which they compare with their other friends/learners’ progress in the App itself. It sends notifications and reminders each day to the users to complete their target. 

  • Starbucks reward program is also a great example of gamification model. With every purchased product, users accumulate stars. Stars look like cups that are graphically filled in. They accumulate points to become gold cardholders in order to avail of an extra cup of coffee, birthday gifts & coupons or offers designed specifically for the customer. Now there is another twist to this, in order to retain their gold card, customers have to collect a certain number of points each year or they lose out on their benefits. This makes people regular customers of the brand since once they have become gold users, they won’t be willing to give it up. 

Gamification in loyalty programs is designing user engagement in a way that promotes brand association. Take time to experiment until you find the right strategy perfectly suited to your brand for a successful campaign. 


How to design an attractive loyalty program for customers?



What are some loyalty benefits that can be offered to customers?


Here is a list of a few benefits that you can align with your loyalty program from us. To be honest, the list is endless. It takes a combination of the right strategy and your imagination to create a powerful Loyalty Program for an excellent ROI. 

  • Points as discounts

  • Free Parking

  • Convenient Seating in case of Cinemas, Restaurants

  • Complimentary dish/drink or gift 

  • Invitation for special events

  • First entry to check fresh season merchandise or to the sale period

  • Points on successful referrals

  • Offers on special occasions like birthdays, anniversaries or even festivals

  • Additional discounts 

  • Cashback 

  • Vouchers and coupons for sister brands

Choose a program that aligns with your company’s goal while at the same time ensure that it is customer-centric and enticing. Give some time to gauge the success of the loyalty program by measuring the ROI diligently. There is no hard and fast rule when it comes to selecting a particular loyalty program. The beauty of it is that it can be molded and fine-tuned to engage and retain customers in order to jack up revenue. 


Grow your Business with our Smart Customer Loyalty Management System - FellaFeeds


FellaFeeds provides a powerful loyalty management system to retailers based on the gamification model. It has been helping businesses to engage with their customers making them visit frequently. Their customer feedback management tool along with loyalty and referral programs provides a 360-degree solution to brands. 

Check out our blog on 30 Outstanding Customer Feedback Tools to get more insight into various types of feedback tools offered in the market. 



The following features make it the first choice for businessmen. 


- No Sign-up Required

The bounce rate increases due to unnecessary sign-up or multiple steps for login. With our customer loyalty program, all you have to do is click on the link and you will be able to redeem your points. It is as simple as it can get.


- Track Your History

It has never been easier to track the coupons that are active, redeemed or expired. You can track the history of all the coupons through our dashboard to stay updated and formulate better marketing strategies. 


- Customize Loyalty Programs

Get an edge over your competitors by customizing your loyalty program to add more value to your reward system. You can set the loyalty program as per your preference by either giving back a certain percentage of the bill as loyalty points or increasing rewards for every visit to the store. 


- Linked Referral Program

Linking the referral program with a loyalty program is a smart way to leverage the existing customer base to generate more customers for the business. For that reason, we have linked our referral program with the loyalty program.


Follow Five Easy Steps To Get Started


Step 1- Create an Account either on the website or on the app.

Step 2- Log in with the username and password used to create an account.

Step 3- Go to the menu and select the Loyalty Program.

Step 4- Select Add Products to add products for rewards.

Step 5- Save it and Voila you’re done!


To start your Loyalty Program today click here.