According to Thanx platform statistics, the average spending from loyal customers is 67% higher than that of new customers. Another report from Harvard University also indicates that simply increasing the customer retention rate by 5% can lead to a profit increase ranging from 25 to 95% for businesses. This comes from the fact that when customers become loyal, they tend to shop more frequently, make more purchases, and even refer new customers. These figures truly demonstrate the value of loyalty programs for businesses. How can we create attractive, professional, and highly beneficial loyalty programs? In today’s article, Optimal Agency will explore various methods of building loyalty programs.
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Understanding loyalty programs
A customer loyalty program is a set of policies and actions that build a strong relationship between a brand and its customers, to benefit and add value to their lifecycle. Not only does it bring stable income to businesses, but more importantly, loyal customers provide a valuable source of data to analyze customer behavior and needs, thereby providing important information for research and product development, communications, and marketing activities.
Some may mistakenly believe that implementing loyalty programs falls under the responsibility of customer service departments. In reality, businesses highly value these programs and often see them as an integral part of their marketing and business strategies, requiring involvement from all departments to varying degrees. Although there are various implementation methods, generally, all loyalty programs are based on a tiered mechanism. According to this mechanism, customers are ranked based on their interaction level with the brand, and each tier will have corresponding benefits and privileges. This mechanism helps personalize and provide appropriate benefits for each customer group and encourages their purchasing behavior to maintain or upgrade their status.
Common types of loyalty programs
If you want to build a loyalty program, you can consider specific ideas as shared by Optimal:
Membership points program
The points program is one of the most popular loyalty programs in Vietnam. In this type of program, customers accumulate points every time they purchase or interact with the business. They can earn points through purchasing products, and by participating in reviews, sharing on social media, and similar activities. This not only helps businesses increase revenue but also creates a free brand promotion effect.
For customers, when they accumulate enough points, they can redeem them for rewards such as gifts, vouchers, or even purchase brand products at a discounted price. These rewards make customers interested and motivate them to interact positively with the brand. Airlines often apply points programs for frequent flyers. When customers use the airline’s services, they accumulate mileage points. These mileage points can be used to redeem rewards such as free plane tickets, ticket upgrades, or other benefits.
Loyalty cards
When customers use loyalty cards for payment, they enjoy a range of attractive benefits such as earning points receiving deductions from the total bill, or even purchasing items at a special discounted price. This program not only helps businesses make a profound impression on customers but also makes them think of the brand first when they need to shop. Typically, supermarkets like BigC, and Winmart often apply this program to satisfy and retain their customers.
Membership rank
Loyalty policies by membership tier were the second most popular type of program mentioned. In this program, customers enjoy different benefits depending on the membership level they achieve. Businesses typically categorize members into groups based on the frequency of purchases and the amount of money customers have contributed.
Loyal customer community
This is a trend that is attracting the attention of businesses. Specifically, businesses are implementing the creation of one or more loyal customer communities in the form of exchange groups. These groups are built based on factors such as customers’ interests, needs, shopping behavior, and online behavior, such as “Sales Hunting Group”, and “Beauty Association”. In particular, big brands such as KFC, Shopee,… have succeeded in creating quality communities. Instead of directly interacting with customers, they allow members to post, exchange information, and answer each other’s questions, creating a natural and shared environment among members.
Voucher when introducing new customers
Incentive promotions for loyal customers when introducing new people is a measure to encourage current customers to introduce friends and relatives to buy goods or use the services of the business. When a successful referral is made, current customers will be rewarded with vouchers, gifts, bonus points, etc and the business will have more new customers. This is an effective way to create spread and expand the business’s customer network.
How to build a customer loyalty program successfully
To build a customer loyalty program successfully, you can follow these steps:
Step 1: Learn carefully about the needs of your loyal customers
Businesses need to clearly understand the needs, desires, and factors that satisfy or dissatisfy their loyal customers. This requires digging deeper into your understanding of what customers need, and expect from your brand, and whether they care about material or emotional values. To collect this information, you can use data analysis tools, customer insight research tool, create surveys, conduct interviews, or organize in-person seminars to exchange ideas with customers. This helps businesses better understand their goals and optimize business strategies to serve customers most effectively.
Step 2: Divide the types of loyal customers
After understanding the core information about loyal customers, the next step is to group them based on Customer Insights (including barriers, needs, problems, and pains) or based on membership class ( such as copper, silver, gold, and diamond). This way, we can divide customers into appropriate subgroups, thereby implementing programs and strategies more effectively.
Step 3: Create real benefit value for each loyal customer file
Depending on the customer’s preferences, whether they favor material values or spiritual values, you can create relevant and attractive benefits. For example, you can offer discount vouchers or free shipping to customer group 1, while reserving small gift packages such as hair ties, socks, or canvas bags for customer group 2.
Step 4: Optimize loyalty program pricing
To successfully deploy the program, businesses need to simplify and optimize the process. This helps reduce hassle and increase convenience for participating customers, while also helping businesses manage data effectively. Instead of doing everything manually and possibly missing some customers, use modern technologies or services that help deploy automated, accurate, and personalized programs, such as Email Marketing, SMS, codes QR, etc. Additionally, using easy-to-understand language and a clear structure helps customers quickly understand the program’s rules and terms, as well as the loyalty policy the brand has in place.
Step 5: Regularly run customer loyalty programs
Place a link to your loyalty policy page right in the footer of your website so customers can easily access it when viewing any subpages. At the same time, actively promote this program and policy on popular social networking platforms such as Facebook, TikTok, Instagram, etc. An effective way is to design an attractive and easy-to-understand Infographic image, presenting detailed information about the business’s customer loyalty policy.
Step 6: Evaluate and edit the program by creating a feedback sheet from customers
When completing a loyalty program, businesses should create a form to collect feedback from customers. Through this, they can evaluate and review feedback to consider making adjustments to future programs, ensuring that they accurately and closely reflect customer desires.
In the article on Optimal Agency, we have listed specific information most accurately. We hope that the content we share can help everyone find out ideas about loyal customer programs and take steps to build a successful program.
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Frequently asked questions
Although loyalty programs offer many benefits such as increasing loyalty and creating a community of advocates for the brand, they also have their disadvantages. One of the most notable disadvantages is cost. Implementing and maintaining this program can be expensive, especially for small businesses with limited resources. Besides, program management also requires careful care and control to ensure fairness and efficiency. Sometimes, the program may be outdated or incompatible with the brand’s goals and values, leading to objections from customers or a waste of resources from the business.
Shopee’s Loyalty Program is one of the great opportunities this online shopping platform offers to users. By participating in this program, users have the opportunity to receive many attractive incentives, from accumulating points to redeeming gifts to special offers and exclusive discounts. The Shopee Loyalty Program creates a more positive shopping experience for users and helps strengthen the relationship between Shopee and its user community.
