Whilst much marketing activity aims to acquire new customers for your business, loyalty programmes are all about customer retention. It’s often said that it’s the second sale that’s the hardest. Loyalty programmes are a great way to encourage a customer or client to return time and again. The customer value increases with each purchase of a product or service, and this additional revenue can be used to offset the cost of setting up the programme.
Types of loyalty programme
- Money saving – a reduction in price at point of purchase, as with the Tesco Clubcard
- Points collection – to be redeemed for vouchers or products in the future, as with Sainsbury’s Nectar card
- Cashback scheme – filling a cash pot by meeting conditions – as with Asda Rewards
- Buy N of your product and get the next free – popular in coffee shop chains
- Tiered loyalty schemes – where you move up programme levels receiving greater rewards as you progress
- Referral based – for example Refer a Friend schemes
- Reward based – for example free delivery or promotions on specific items, only for loyalty members
- Content-based – access to additional content for loyalty programme members
Loyalty programmes may be paid-for or free to access, depending on the objectives you wish to achieve with your programme. They may also include more than one of the types listed above.