3 Examples of Unique Loyalty Strategies

Customer retention is one of the key benefits and the key goals of loyalty programs today. Since churn results in companies losing customers in almost equal amounts as they gain them, finding ways to retain current customers is an ongoing battle.

Loyalty programs must go beyond the simple formula of providing discounts/rewards and develop organic methods of generating interest and value for program participants. Below we have three examples unique loyalty program strategies and the companies and industries who utilize them. 

Personalization

Example: Sephora

While Sephora is mostly recognized for its phenomenal tiered rewards system, one of its more defining features is the personalization of customer profiles.

By itself, personalization is not a new feature when it comes to customer rewards. On the contrary, personalization is one of the first features your loyalty program should implement. Yet it’s worth outlining exactly how personalized Sephora makes their loyalty program.

When you sign up (for free) you submit the normal personal information – name, age, birthdate.

Next, you can specifically identify your unique features – eyes color, hair color, skin tone & type.

Now, what are your skin concerns? Aging? Wrinkles? Dark spots? Dullness or sun damage?

What about hair concerns? Drying out? Color protection? Curl enhancing?

The way Sephora lets customers list their beauty concerns helps the retailer address the very issues its customers experience. Sephora specifically sets itself up as their customers’ personal shopper from the moment a consumer chooses to participate. Because Sephora combines program members voluntary personal details with past purchase data they can create extremely customized offerings addressing customers' top priorities.

Most importantly, Sephora utilizes its profile system to create unique buying opportunities in a way that its competitors can find difficult to replicate and beat.

Third-Party Partnerships

Example: AAA

AAA is a nonprofit federation of affiliated motor clubs with over 50 million members in the US. Most people associate AAA with flat tires on highways or someone to call after locking your keys in the car. Yet AAA’s memberships include far more than roadside assistance; they include a number of shopping, dining, and travel benefits.

AAA’s primary value is emergency assistance. Their significant secondary value is their third-party discounts and rewards.

AAA members get discounts on hotel bookings, business services such as printing business cards at FedEx or purchasing printer ink through HP, and even theme park tickets. In addition, the numerous benefits associated with a AAA membership also helps justify paying the yearly membership fee or even upgrading your membership tier.

Because AAA expands their offerings into their customers’ everyday lives, it's positioned as a positive source of recurring benefits. AAA memberships can be utilized for a number of occasions instead of being limited to instances when something goes wrong,

Experiences

Example: Wine Clubs

Music festivals, concerts, meet-ups, sports events — the rapid expansion of the experience economy shows an ongoing shift in consumer spending trends. Research by the Harris group revealed 82% of Millennials attended or participated in live experiences in the past year. 78% would choose to spend money on a desirable event over a desirable object.

Since Millennials alone contributed over $600 billion in annual consumer spending in 2017, current loyalty programs should include experiences within their membership offerings.

One great example of loyalty programs that incorporate events is in the beer and wine industry. Wine clubs in particular go far beyond simple discounts on bottles or specialty merchandise. They offer unique experiences — in some cases very unique experiences — built around their main product offering: wine. Events like special group tastings organized for new releases, members-only brunches, holiday celebrations, and exclusive live music performances are all examples of experiences incorporated into a wine club loyalty program.

Even B2B loyalty programs can extend their programs beyond the basic customer experience. B2B loyalty programs can organize events such as workshops or industry-related meet-ups. Creating opportunities to interact with clients and suppliers face-to-face in turn helps strengthen the long-term relationships that form the B2B industry.

Loyalty programs can be more than simple rewards systems; they can build consumer communities of like-minded people who enjoy both the products and the experiences created by the producers. Incorporating a loyalty strategy that fits with your brand and your products can result in repeatedly delighting customers and increasing your rate of customer retention.

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This article was first posted in 2018. It was updated on June 21, 2019