Customer Loyalty Programs: How Brands Grow By Giving

Customer loyalty programs are integral for the brands of today. They benefit both shoppers and business owners by allowing them to get more out of their sales.

Shoppers understand that purchasing products which they’re already interested in, from brands that they like, will lead to them being rewarded for their commitment.

And brands know that they’re drawing in customers who will have inflated average customer lifetime values because they’ve set up customer loyalty programs that will reward their patronage.  

Everybody wins. That is, if you’ve got a customer loyalty scheme set up for your brand.

A recent study found that 71% of people believe that customer loyalty programs are an important part of their relationship with a brand.

Don’t panic if you don’t have a customer loyalty program in place, though. We’re here to help you succeed.

We’ll show you everything you can learn from the customer loyalty schemes that other brands already have in place, and we’ll help you to turn those learnings into actionable steps to create and leverage customer loyalty programs for your business.

Ready? Let’s dive in.

What is Customer Loyalty?

Customer loyalty refers to the probability of a customer making a purchase from a store not just once, but multiple times. Customer loyalty usually arises when brands combine an excellent shopping experience with high-quality products – combine those two and it’s only a matter of time until you build a loyal following. That’s why it’s essential to put in the extra effort to foster relationships with your customers, which will help you to build a level of customer loyalty and trust that will lead to higher average customer lifetime values.

It’s important that we’re clear on the definition of customer loyalty before we dive into the nitty gritty of why we need customer loyalty schemes – we don’t want anybody to feel lost here because this is super valuable knowledge for entrepreneurs.

Why Do We Need Customer Loyalty Programs?

Customer loyalty programs let both sides of a transaction know that they’re receiving more than just what they’re paying for. They’re tried and tested, too, as research shows that the average buyer is already signed up to an average of 14 loyalty programs, although they typically only engage with around 50% of them.

This signals two things to us:

  • People are open to joining new customer loyalty programs
  • People need their loyalty programs to be simple and accessible to get the most out of them

But how do we ensure that we deliver on making loyalty programs easy to understand, and simple to engage with?

Well, there are a few tips and tricks that you can follow, but the first step is to underline which type of customer loyalty program you want to use.

Best Loyalty Programs Types

Okay, so we’ve defined what customer loyalty is, and we’ve spoken about why both brands and buyers can benefit from customer loyalty programs.

Now it’s time to run through the different types of loyalty programs that are available.

We’ve curated a list of our favorites below – feel free to use them as inspiration when you’re setting up your own customer loyalty schemes.

Starbucks: Points for Purchases

Coffee giant Starbucks has built a massively successful customer loyalty scheme that aims to delight customers by rewarding them with points for their purchases. Of course, people can spend said points on other Starbucks goodies, and they’ll receive certain perks and benefits when they’re signed up to the customer loyalty scheme.

One of the best things about Starbucks Rewards is that it’s super accessible. It’s free to sign up, and you can use their app to track your progress through the Starbucks Rewards system.

Just download the app to your phone, enter your personal information, and you can start racking up your Starbucks Rewards points with every visit.

As you can see from the above image, Starbucks has used clever graphics and straightforward copy to ensure that people know how to get the most out of their customer loyalty program.

This is a fantastic example to follow if you’re looking to create your own customer loyalty program, especially when you consider that confusion around generating points is one of the main reasons why people lose interest in loyalty schemes.

Miles & More: A Tiered Customer Loyalty Program

German airline Lufthansa offers a fantastic customer loyalty program aimed at both aviation lovers and business people with their Miles & More brand.

This customer loyalty scheme allows people to generate points (or miles in this case) by purchasing everything related to travel.

Of course, you’ve got your staple travel purchases, like flights and hotels, which will generate a large number of points. But you’ve also got other purchases, like car rentals and travel accessories, which will help you to progress through the customer loyalty program too.

You can spend the points that you earn through Miles & More on similar products, whether they are flight upgrades, hotel stays, or a new case to take you on your trip.

This type of customer loyalty program is unique though, as it’s tiered.

The more points that you earn within a calendar year, the better your status is, and the larger the rewards are that you’ll receive.

Think complimentary upgrades on flights, lounge access, and more.

This makes the Miles & More customer loyalty program extremely powerful for Lufthansa’s brand. People are well aware that there are a wide range of airlines out there which could offer their services, sometimes even at a lower price, but the opportunity to collect points may well sway them to choose Lufthansa.

If you’re interested in using a tiered customer loyalty program for your business, take some time to think about how you’ll reward your most loyal customers when they progress through your program – it needs to be worth it for them to stick around.

LUSH: The Eco-friendly Loyalty Program

Next up we’ve got UK cosmetic brand, LUSH, which offers an eco-friendly customer loyalty program.

LUSH’s customer loyalty scheme is super simple, both in concept and application.

There are no signups required here. All people need to do to redeem this customer loyalty program is to collect five of the signature black pots which LUSH products come in, and then return them to any LUSH store once they’re finished.

Whenever people return five pots back to LUSH, they’ll offer you a free face mask that you can take then and there, and they’ll recycle the pots for you.

This customer loyalty scheme aligns so well with LUSH’s brand mission, which is all about ethical buying, fighting animal testing, and protecting the environment.

If you’re running a brand that has a similar mission statement, consider implementing an eco friendly customer loyalty program.

Nike: A Product-First Customer Loyalty Program

Sportswear giant Nike has created a product-first customer loyalty program with their NikePlus club.

You might be thinking: “Wait, aren’t all customer loyalty schemes product-first?”

That’s true. But, the emphasis is usually on purchasing products, rather than using products.

Nike’s customer loyalty program encourages people to get out there and exercise, which fits in with their slogan: “Just do it.”

You don’t need to purchase any products to sign up, but this customer loyalty program will unlock exclusive products and discounts that you can use for up to a year with Nike.

But the possible rewards aren’t just limited to Nike – people can also unlock discounts with Apple Music, Headspace, and Classpass.

All of these discounts are carefully chosen to encourage people to get more involved with fitness, which Nike is betting will lead to more sales later on down the line.

Creating Your Own Customer Loyalty Program

Now it’s time for the fun part – creating your own customer loyalty program.

Don’t worry, though. It’s not a difficult process, especially if you’re using Shopify to run your business.

There are plenty of options on Shopify’s app store which you can use to create a customer loyalty program for your brand, but our favorite customer loyalty app is Smile. It’s free, simple to use, and it works like a charm.

Let’s go through the exact steps that you’ll need to take to create your own customer loyalty program with Smile.

The first thing you’ll need to do is install the Smile app into your Shopify store.

Then you’ll need to create a free Smile account by entering in your email and password – we recommend using the email associated with your Shopify account for this.

Pretty simple so far.

Next you’ll need to fill out a few pieces of information to get your customer loyalty program off the ground.

You’re going to need to come up with a name for your customer loyalty scheme. Don’t worry about finding the perfect name at first though – you can always change the name of your loyalty program in your Smile settings later on.

Next you’ll need to choose an icon for your customer loyalty program. This will be publicly facing and will appear in the bottom right-hand corner of your store.

Then you’ll need to let Smile know what kind of products you’re selling. This is simple. You can just select a category from their drop-down menu which best fits your brand.

After you’ve selected your niche you’ll be asked some more granular questions about your store, like your profit margins, how much your average order value is, etc.  

Smile will then give you a quick recommendation on which type of customer loyalty program fits your brand best.

Remember – you can always change these later on in your Smile settings.

Then just hit next and you’ll land on Smile’s homepage.

Almost done now – just a bit of tinkering to go and then your customer loyalty program will be up and running.

On Smile’s homepage you’ll be greeted with their starter guide, which they’ve built specifically to help you fine tune your customer loyalty program.

Here’s a breakdown of what each tab from their starter guide will allow you to do:

 

  • Enable customers. This tab will allow you to change your Shopify settings to allow customers to create customer accounts. You need to enable customer accounts if you want to launch your customer loyalty program, so this tab is really handy.
  • Customize display. Here you can change the outward appearance of your customer loyalty program. You can adjust the colors, add images, and alter the positioning of your customer loyalty program pop up.
  • Review program. This tab lets you tinker with the ways that your customers can earn and spend points with your customer loyalty program. Think about what you want your customers to get out of your customer loyalty scheme when you’re completing this step.
  • Select plan. Smile has two different plans. Everybody has access to their free plan, but you can also upgrade to their “Growth” plan which offers in-depth analytics, more customization options, and more to help you get the most out of your customer loyalty scheme.
  • Launch. Head to this tab whenever you’re ready to launch your Smile customer loyalty program to the world. Just click “Launch my program” and Smile will add it directly to your Shopify store.

 

After you’ve completed the five steps from Smile’s starter guide your customer loyalty program will be live – congrats!

Wasn’t so tough, huh?

Grow Your Business With a Customer Loyalty Program

Okay, that’s all from us. In this post you’ve learned what a customer loyalty program is, you’ve seen some examples of the best customer loyalty programs, and you know the exact steps you need to take to create your own loyalty program.

Now it’s time to take all of our advice and put it into action.

Remember – everybody is a winner when it comes to loyalty programs. It’s mutually beneficial for entrepreneurs, buyers, and brands, so there really has never been a better time to get started.

Got any questions about customer loyalty schemes? Feel free to drop them in the comments section below – we read them all!

Want to Learn More?

Start using Oberlo today

All accounts have access to the forever free Starter Plan

Sign Up Free

Oberlo uses cookies to provide necessary site functionality and improve your experience. By using our website, you agree to our privacy policy.