Breakthrough Loyalty Strategies Transforming Brand Relationships

Customer retention is a key benefit and goal of loyalty programs today. Since churn results in companies losing customers at about the same rate they gain them, finding ways to retain current customers is an ongoing battle.

Loyalty programs must go beyond the simple formula of offering discounts/rewards and develop organic ways to generate interest and value for program participants.

Below are five unique loyalty program strategies, along with the companies and industries that use them. 

Personalization

Example: Sephora

While Sephora is mainly 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 in customer rewards. On the contrary, personalization is one of the first features your loyalty program should implement. Yet it’s worth outlining precisely how personalized Sephora makes its 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 – eye 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 explicitly positions itself as its customers’ personal shopper from the moment a consumer chooses to participate. Because Sephora combines program members' voluntary personal details with past purchase data, it can create highly customized offerings addressing customers' top priorities.

Most importantly, Sephora uses its profile system to create unique buying opportunities that its competitors find difficult to replicate and beat.

Example: Percival

British menswear brand Percival has redefined customer loyalty by creating an exclusive community called "The Closed Circle." This initiative invites top customers into a private chat with the brand's key figures, offering them exclusive content and direct engagement opportunities. This approach not only personalizes the customer experience but also fosters a sense of belonging and loyalty among patrons. Additionally, Percival's crowdfunding campaign, which raised over £1 million from loyal customers and supporters, underscores the strength of their community-driven strategy.

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 their keys in the car. Yet AAA’s memberships include far more than roadside assistance; they include several 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 of a AAA membership help justify paying the yearly membership fee or upgrading your membership tier.

Because AAA expands its offerings into its customers’ everyday lives, it's positioned as a positive source of recurring benefits. AAA memberships can be used for many purposes, not just when something goes wrong.

Gamification

Example: Duelz Casino

Duelz Casino has introduced a gamified loyalty program that sets it apart in the online gaming industry. Players can engage in battles against each other, earning points and rewards as they play. This competitive element not only enhances user engagement but also encourages repeat visits, as players are motivated to improve their rankings and earn exclusive rewards. Such gamification strategies have proven effective in increasing customer retention and loyalty.

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 that 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 as part of their membership offerings.

One great example of a loyalty program that incorporates 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 ones — built around their main product: 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 reward 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 aligns with your brand and products can result in consistently delighting customers and increasing your customer retention rate.

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Want to explore how your organization can create a loyalty program that offers unique benefits or experiences? Contact the Loyalty Strategy experts at Brandmovers today!