Due to the recent pandemic crisis, retail penetration is higher than ever before. It’s created a situation where competing with other retail companies has become even more difficult than it used to be. Simply having a retail loyalty program is not enough anymore. You have to make it unique and attractive. In this article, we want to inspire marketers in the retail companies by presenting the best examples of retail loyalty programs around the world.
What are the benefits of customer retail loyalty programs?
Before the internet, advertisements were aimed at the masses. This made ads less effective, inauthentic, and even irritating. Fortunately, modern marketing allows many different methods of promotion that will reach the customer with one-on-one communication and will help to improve customer lifetime value. A retail loyalty program is one of the best tools for moving the marketing strategy to the next level. It’s an ideal tool for collecting user data, (including the most valuable zero-party data) and understanding a client's purchasing patterns. In exchange, customers get more personalized offers and additional benefits from joining a customer loyalty program. This significantly increases the customer experience and reduces customer churn.
What are the most popular types of customer loyalty programs?
Points-based loyalty programs
Points-based loyalty programs are one the most common type of loyalty schemes on the market. In the most common configuration customers earn points every time they spend money, and the more they spend, the more rewards points they get. Customers may receive points for various activities related to transactions, like buying something specific or a certain amount of points per dollar spent. They can also receive points for non-transactional activities like joining the program, referring a friend, celebrating their birthday, or sharing something on social media. Afterward, points can be used to earn rewards, like free products, special offers, or discounts.
Such rewards program platforms help to attract repeat purchases and increase customer lifetime value. Points-based loyalty programs have low barriers to entry and are a great tool for collecting data from customers. This model can be very effective for retailers who have a very high frequency of purchases and for those who sell unified products like fuel, or multi-brand FMCG products.
Tier-based loyalty programs
The tiered loyalty program is another popular form of a loyalty scheme. In this type of retail loyalty program, companies focus on giving better rewards to more valuable customers.
Tiers are a special type of segment where program participants are promoted depending on what actions you want to motivate customers towards. The tiers can be set on the basis of expenses, points, miles or other parameters that define customer engagement. Tiers open access to the better offer, discounts, and other privileges.
In more advanced configurations of the tier loyalty program systems, the tiers are regularly recalculated. In the result, customers have to keep on spending to stay in the specific tier.
Partner retail loyalty programs
Another option is running a retail loyalty program with a strategic partner. It’s an interesting choice if you want to gain new customers from the other partners. An example of this type of loyalty campaign is the cooperation where partners exchange discount coupons in the co-promotional campaigns. This initiative gives additional value to members of the both loyalty programs. The key to this type of cooperation is to find partners who are from a similar industry but aren’t your direct competitors.
Subscription-based loyalty programs
The idea of making loyal customers pay a membership fee for joining your loyalty program may sound controversial. However, the truth is that this type of loyalty strategy is becoming more and more popular. Charging a monthly or annual fee in exchange for free delivery, discounts, and other special offers is very attractive for repeat customers who spend a lot of money in your business anyway. The most popular loyalty program of this type is Amazon Prime.
Referral-based loyalty programs
A loyalty program based on referrals is a pretty good idea when it comes to the companies with lower shopping frequency or when the strategy should focus of growing the customer base. In the simplest scenario a customer buys a product from the brand, tries it, and recommends the company to other people. In turn, for recommending a new customers, the referrer gains tangible benefits for themselves.
The mechanics of the referral loyalty program vary depending on the strategy. For instance, the customer can get a reward for each referral, after the referred person joined the loyalty program, bought the first product, or every time the new customer buys something.
More advanced referral program systems are based on milestones. In this case, a member gets better and better rewards by recommending more people to the brand.
The 10 most interesting loyalty programs in retail
1. IKEA Family
IKEA Family is one of the most recognizable and the biggest loyalty program in the world. By being a member, users receive discounts, special offers, happy birthday surprises, and free hot coffee or tea with every visit to an IKEA store. Customers just need to register an account and verify a phone number on IKEA's website. It’s worth mentioning that IKEA’s rewards program has already reached over 150 million members in 2020 and it’s growing every day.
IKEA Family’s mobile app is the key part of IKEA's strategy. The brand sends out text messages and push notifications to keep consumers engaged and updated on new products.
2. Samsung Rewards
To start using the Samsung customer loyalty program, users of Samsung Rewards have to join by creating a Samsung account. They’ll earn points after purchasing eligible products on Samsung.com, the Shop Samsung App, Samsung Pay, and the Samsung Galaxy store.
With the program, you earn points back on purchases. For example, you get 4 points for every $1 spent on QLED TVs, The Frame TVs, home appliances, and all accessories. Usually, points are claimed between 15 to 30 days after the date of delivery. The points can be redeemed for future purchases on Samsung.com or the Shop Samsung App.
3. Gap, Inc. Good Rewards
There are two possible ways to start using the Gap Good Rewards customer loyalty program. The first one is simply becoming a member by registering on the Gap website. After that, users can start earning 1 point per every $1 they spend as a Gap Good Rewards member by buying products from the brands in the group. Every 100 points they earn can be redeemed for $1 that can be spent on Gap family products.
It’s also possible to apply for a dedicated Gap credit card, which is part of the customer loyalty program scheme. In this case, users can earn 1 point for every $5 they spend on Gap products on the first tier while using the card and 1 point for every $1 they spend on the second and third tiers. To advance from the first to the second tier, they have to spend over $500 annually on Gap products using a Gap credit card. A nice bonus is 20% off for the first purchase when they open a new credit card and shop with it.
4. Timberland Community
“We’re on a mission to create a movement for a more equitable and greener future. As part of our 2030 goals to be net positive, we want to create a membership program where our customers can share their voice, and together we’ll do something special. We’re also committing with our partner Treedom to create a ‘Community forest,’ helping to build a greener world. The Timberland Community will engage members and create a movement where they can share their experiences and feel part of it. We’ll surprise them with exclusive benefits and perks, tailored to their interests.”
Timberland Senior Marketing Director
Everyone can join the Timberland Community loyalty program by registering on their website. By joining the Timberland Community, users can earn points from purchases, gain the possibility to redeem accumulated points for rewards, and access members-only products. That’s on top of exclusive promotions, 10% off for the first purchase, and even a birthday gift.
5. Dell Rewards
Dell Rewards is based on simple and effective cash-back logic. To join Dell Rewards, the user has to sign into a Dell Account or create a new one. After registering, they will be able to get 3% back in rewards when they purchase at least $800 in products in a 12-month period or if they use Dell financing. Additionally, members qualify for free expedited delivery. So, for instance, if a user buys a laptop for $1,500 then they’ll receive $45 back. Rewards can be redeemed through the Dell Rewards’ member portal and usually appear in the account within 30 business days after the order's delivery date.
6. LEGO VIP
LEGO VIP is a customer loyalty program that rewards people for buying LEGO products through eCommerce and their stationary stores. Despite its name, LEGO VIP is a program for everyone who wants to sign up on the LEGO website. All it takes is to visit the LEGO VIP landing page and register an account. It’s important to remember that for now it’s impossible to get any points from buying LEGO products from other stores like Amazon.
Besides points, they receive early access, which allows them to view and purchase certain LEGO sets before the customers who’re not the members of the program. VIP also grants free add-on items and sets when buying specific LEGO products.
7. Nike Membership
Nike Membership is a retail loyalty program that does not revolve around earning points. Instead, users are given access to the community, deals, free shipping (and returns), and exclusive Nike products.
After registering, users get immediate benefits that include free shipping and returns options (the US only), and access to the member shop with a unique collection of Nike shoes and gear available exclusively to Nike Members. It also provides users with special offers and promos.
Being a part of Nike Membership also allows access to 4 engaging mobile applications. The first one is Nike App - a shopping application that keeps the customer updated with the latest products and personalized promotions. The next one is Nike Run Club app with the feature that helps runners improve through the voices and guidance of Nike coaches and athletes. Nike Training Club app provides hundreds of workouts for various fitness levels with a broad range of different styles, lengths, and intensity levels. It also has training programs, nutrition tips, and wellness guidance from Nike trainers. Last but not least, there’s the SNKRS app.
8. GameStop PowerUp Rewards Pro
GameStop PowerUp Rewards Pro is a very interesting, yet simple, tier-based retail loyalty program. Users just have to sign up and pay a $14.99 yearly fee to gain privileges like a $5 monthly reward, $10 welcome bonus, double points, 2% back in rewards points, and exclusive early access to many products.
9. The Nordy Club
The Nordy Club is a customer loyalty programs in retail that can be categorized as a classic model. Users just need to register as a Nordy Club member or apply for a Nordstrom credit card. Users earn 1 point for every $1 spent with any payment method or 2 points for $1 spent if using a Nordstrom credit card to pay. In addition, it’s possible to convert Nordy Club points into Nordstrom Notes that can be spent on any Nordstrom products. Additionally, members get access to exclusive sales, offers, and events.
10 H&M Members
To join the H&M retail loyalty program, users need to register on the H&M site or in the H&M app. After joining the program, it’s possible to start earning points on every purchase and enjoy exclusive perks and discounts.
Every $1 spent in H&M gives 1 point. Every 200 points can be exchanged for a $5 reward. Also, after joining the program, it’s possible to buy the first product at 10% off. Users also get access to free delivery on purchases over $25, free online returns, birthday treats, exclusive invites to shopping events, and digital receipts. With the H&M mobile app, customers can stay up to date on promotions and great deals.