Business is more than transactions because it involves building relationships, creating value, and nurturing trust and loyalty.
When a business invests in their loyal customers by offering rewards, they build a relationship that grows stronger over time. In this article, you will learn how to reward loyal customers!
The Benefits of Rewarding Customers
Before we discuss the benefits of rewarding customers, we should first answer the question, what is a loyalty reward? A loyalty reward is an incentive offered to customers who frequently engage with or support your brand or business.
The main goal of loyalty rewards is to recognize and appreciate customers for their repeat business. Customer rewards examples include discounts, point-based rewards, exclusive access, free products, experiences, and more.
Rewarding customers is not just beneficial for them, but also for your business. Here are some of the benefits you can experience:
Increased retention
Customer retention refers to your business's ability to maintain a loyal customer base over a specific period. Rewarding customers leads to increased retention because it makes them feel appreciated and valued.
Satisfied and rewarded customers are less likely to switch to competitors, which results in higher retention rates. Rewards serve as positive reinforcement for desired behaviors, such as making frequent purchases, providing feedback, or referring friends.
Additionally, keeping current customers is usually cheaper than finding new ones.
Read: Customer Acquisition vs Retention: Which is Better for Your Business?
Higher lifetime value
Lifetime value refers to the total revenue a business can expect from a single customer over the entire duration of its relationship with the company.
Customers who are part of a rewards program are often more motivated to make frequent purchases to accumulate points or rewards, which leads to an increase in purchase frequency.
Moreover, regular interaction through rewards programs keeps customers engaged with the brand, which makes them more likely to return and make repeat purchases over time. Increased purchase frequency can significantly increase customer lifetime value.
Positive word-of-mouth and referrals
Satisfied and rewarded customers are more likely to recommend your brand to others and bring in new customers who may also become loyal and high-value customers.
Rewards programs often include incentives for customers to refer others or share their experiences. For example, offering referral bonuses, discounts, or exclusive rewards for bringing in new customers motivates existing customers to actively promote the brand. One way to encourage more referrals is through giveaways.
Read: Word of Mouth Marketing Examples and Strategies
How to Reward Loyal Customers
Loyal customers make repeat purchases over time, spend more than new customers, and often become brand advocates. They play a pivotal role in the success and sustainability of your business.
Here are ways on how to reward a loyal customer:
Invite them to participate in a giveaway
Giveaways generate excitement and engagement among customers. They encourage your loyal customers to interact with your business in a fun and rewarding way. A giveaway rewards them by recognizing their ongoing support and providing them with an opportunity to win valuable prizes or experiences.
When organizing a giveaway, select a prize that is attractive to your target audience. It could be a popular product, gift card, or exclusive experience.
Silvia Llop's giveaway campaign is a great example of using giveaways to reward her customers. She focused her campaign on her existing email list because she knew that her current audience was already familiar with her and likely to be enthusiastic about sharing her content. This approach allowed her to maximize the effectiveness of her referral campaign.
Silvia also used a milestone contest where participants could earn rewards by reaching specific referral goals. The tiered rewards include a PDF file written by Silvia for 5 referrals, an interview for 10 referrals, and so on. The grand prize was a personal visit with Silvia in Spain.
This setup rewarded loyal customers by offering valuable prizes and recognition for their efforts in promoting Silvia’s content and growing her email list.
Create a VIP loyalty program
A VIP loyalty program is a type of customer loyalty scheme designed to reward your company’s most valuable and loyal customers with exclusive benefits and privileges. The program aims to create a sense of exclusivity and special status, which encourages high-spending customers to continue supporting your brand.
The first step is to identify your VIP customers. Your criteria could be high spending levels, frequent purchases, or long-term customers. Create exclusive rewards for VIPs, such as discounts, early access to new products, personalized experiences, or events.
Let’s take a look at the Hilton Honors Diamond, which is the top-tier membership status offered by Hilton for frequent travelers. Exclusive perks include executive lounge access, premium WiFi, room guarantee, and more.
Invite them to try your new products and ask for feedback
So, how do you incentivize loyalty? Show your customers that you appreciate their feedback. You can reward customers by offering them exclusive access to new product launches before they are available to the general public. This makes them feel valued and appreciated for their loyalty.
Then, encourage customers to provide feedback on the new products they try. You can also incentivize feedback with rewards, such as discount coupons or loyalty points.
Select a segment of your most loyal or engaged customers to participate in the product testing. These could be members of a loyalty program, frequent buyers, or customers who provide regular feedback.
Provide free samples or beta versions of the new products. Ensure that the products are of a quality that you are comfortable receiving feedback on.
Offer discounts when they reach a spending target
Define clear spending thresholds that customers need to reach within a specific time frame (e.g., $500 within a calendar year). Once customers reach the spending target, provide them with a discount code or automatically apply the discount to their next purchase.
Some programs convert spending into points. For example, earn 1 point for every dollar spent. Upon reaching a certain number of points, customers receive a discount.
These programs often have multiple tiers. Higher spending unlocks greater discounts or additional perks. For example, you could encourage members to spend $500 to reach Gold status and get 15% off on future purchases.
This strategy encourages customers to make additional purchases to reach the target. It often leads to higher average transaction values as customers try to maximize their spending.
Provide early access to product launches and sales events
Early access to product launches and sales events can make your loyal customers feel valued and part of an exclusive group. This special treatment enhances their overall customer experience.
With early access, customers can purchase new products or take advantage of sales before anyone else. They have the opportunity to buy limited-edition or high-demand products.
Moreover, excited customers are likely to talk about their exclusive access and boost word-of-mouth marketing.
One example is the Ulta Beauty Rewards membership program. Diamond members receive early access to new product launches on top of exclusive offers, gifts, and other benefits.
Offer cash back or store credit
Cashback and store credit are tangible and immediate benefits that encourage continued spending and engagement with your brand.
Cash back rewards involve giving customers a certain percentage of their purchase amount back. For example, a 5% cash back means that for every $100 spent, the customer gets $5 back.
With store credit, customers earn points for every purchase they make. For example, a $1 spent might equal 1 point. Points can be redeemed for store credit, which can be used to purchase products within the store.
For example, Nordstrom has a loyalty program known as The Nordy Club where members can earn a point for every dollar spent.
When members reach certain spending thresholds, they receive “Nordstrom Notes,” which are essentially discounts or store credits that can be used on future purchases. For example, earning 2,000 points gives you a $20 Nordstrom Note.
Extend enhanced customer service
You can also provide priority services such as faster shipping, priority access to customer support, and other perks to loyal customers.
For example, providing faster shipping options means that loyal customers receive their purchases more quickly. This can be appealing for time-sensitive needs or for customers who frequently shop online.
On the other hand, priority access to customer support can help ensure that loyal customers can resolve their concerns more quickly.
For example, Amazon Prime members receive benefits such as “No-rush shipping,” which gives them rewards for future orders. Another perk is free same-day delivery on selected zip codes.
Consistently providing priority services reinforces your brand’s dedication to customer satisfaction.
Final Thoughts
Loyalty rewards encourage your customers to continue doing business with your brand. These incentives can motivate them to make more frequent purchases, build a stronger emotional connection with your business, and share their positive experiences with others.
If you’re interested in running a giveaway to reward loyal customers, you can try out UpViral! Other businesses have used the platform to reach their goals, such as generating leads, making more sales, or boosting brand awareness.
