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Best Loyalty Rewards and Programmes for Your Retail Store

30 April 2024

As an entrepreneur preparing to launch a new retail venture or a small business owner who has recently opened your doors it’s not too early to begin planning for rewards programmes to help turn one-time customers into life-long clients.

Loyalty programmes are just one method of instilling a sense of community in your customers that will incentivise them to keep coming back. We’ll take a deeper look into the subject throughout this article.

Andrea Landi

Understanding the Importance of Customer Loyalty

Customer loyalty means creating an emotional and ongoing relationship between your customers and your brand. Creating a sense of loyalty in your customers will help keep them engaged, making purchases at your retail store rather than going to see competitors.

With a successful customer loyalty programme, your clients will feel a bond through the personalised offers and messaging, like birthday promotions or special offers only available to clients taking part in your programmes, such as free shipping. With a successful campaign you can create brand ambassadors.

Types of Loyalty and Rewards Programmes

As a new retailer, you have numerous choices of different loyalty or rewards programmes you can offer your clients. Some of the best customer loyalty programmes include:

  • A points-based loyalty programme. For each pound spent, a customer earns points. After they earn a given number of points, the client may receive a certain percentage off of their next purchase or an in-store credit of a certain amount. While this is great to get people to sign up, it is a system that may lead to a certain lack of engagement over time, as it requires a lot of purchases to be made before seeing a return.
  • Cashback incentives. Similar to point-based systems, the difference is that rather than gaining points, which are rather ambiguous, they earn  a percentage of all eligible sales to be spent at a later time. These are also simple to put in place, but often require a minimum amount to be spent before being able to claim the cash back. Again, this is great to get people to sign up, but it isn’t a programme that will easily differentiate your retail store or provide customers with instant gratification.
  • Tiered membership system. This can add a bit of gamification. Not only are customers rewarded for their sales, but as the amount they spend with the retailer increases, they will access new tiers offering better rewards. Using milestones as achievements and status, customers are incentivised to spend more and more. While this is a great reward system for marketing to high-value customers, your lower-tier spenders are going to be less incentivised to join.

Leveraging Digital Loyalty Platforms

Your retail loyalty programmes won’t have the maximum effect without a platform that helps you parse the data your clients provide, such as dates of birth, age and sex, purchasing habits, and more. Creating a database of your customers will enable you to personalise your offer and create targeted campaigns that will actually interest your core clients.

To manage such a wealth of data, today you have a host of options for Loyalty Management Software.

  • LoyaltyLion is the leading LMS for Shopify stores. They’re one of the only Shopify platforms solely focussed on rewards systems.
  • Emarsys utilises the SAP environment to create a platform that focuses on customer lifecycle management, AI powered insights and especially cross-channel and omnichannel integration.
  • Xoxoday helps to automate rewards where multiple currencies or regions are at play.
  • Kangaroo offers a 30-day free trial to test out their loyalty programme features. 

These are just a few examples of a very long list. Take the time to research the options that are available to provide the benefits which are most in-line with your requirements as a retailer.

Creating a Seamless Omni-Channel Experience

In our connected ecosystem your company must offer an experience that goes beyond your physical store, especially if you run social media channels for marketing or an online store. You can connect with your customers in a way that will keep you fresh in their minds and it’s a powerful tool for collecting data.

This means you need the online and offline profiles to be completely linked to create a holistic customer profile, whether they are using a smartphone app, online store, or physical location. Send notifications about upcoming promotions or provide a loyalty card that they can access directly through your app for use online or in-store, where users can benefit from points no matter where they make purchases. Wherever your customers purchase your products, they can enjoy a free, seamless customer loyalty experience and all the same rewards and benefits.

Personalisation in Loyalty Programmes

Having tons of user data is great, but not worth much unless you’re able to take advantage of it! With an omni-channel experience that unites your customer profile with the purchases they make across all platforms, you can provide personalised rewards that are more likely to entice your customers, with discounts and special offers for members of your business rewards card.

For example, if you are offering a discount on baby products, by looking at recent purchases, you can get a good idea of who will most likely be incentivised to make a purchase, such as new parents who have already made purchases for diapers or formula. By keeping track of where your customers spend the most, you can deduce what your rewards and discounts should be based on to get clients in store, where there is always the possibility of cross-selling products.

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Incorporating Gamification

We covered how creating a tiered rewards system can incorporate an element of gamification in your loyalty programme, but it doesn’t have to stop there. Gamification, making something mundane fun and even competitive, is a great way to increase customer engagement in your company.

There are a lot of ways to introduce game-like systems, from digital or physical scratch cards or prize wheels to treasure hunts and collectibles. You can even create a leaderboard or a prize drawing and ask customers to create social media posts around your brand to drive online engagement.

Making a free system based on fun and compelling elements, you can increase interactions and differentiate your retail store.

Strategic Partnerships and Cross-Promotions

While loyalty programmes can be a boon for your business, you don’t have to go it alone. Shared loyalty programmes between two or more businesses have seen a rise in recent years. When creating a shared loyalty programme, you have to keep in mind the benefit that both (or all) brands and businesses will be able to enjoy.

Sharing a rewards system usually means that whether a customer buys from you or another participating company, they accumulate points that can be exchanged for discounts at any location. The customer information and buying habits can be shared in order for every store to access the information and benefit from a profile that may help them better target the client for marketing purposes.

You should share some commonalities with the other brands, but you don’t necessarily want to create a cross-promotional partnership with a direct competitor to your company. Think synergistically. If your physical location is in a pedestrian shopping area, it may make sense to join forces with other local businesses or retailers in order to form a coalition with perks that can drive traffic from one shop to another in the manner of cross-marketing.

Measuring the Success of Loyalty Programmes

While a loyalty programme can help drive engagement, you won’t really know how effective it is unless you monitor and measure the performance. There are a few Key Performance Indicators (KPIs) that you should keep an eye on.

  • Number of loyalty programme members, i.e., the number of customers on file.
  • Point issuance ratio: the percentage of total sales that qualify for points. For example, if every pound is eligible to receive a point, and £1,000 in sales yielded 700 points issued, then 70% (700/1000 * 100) of sales came from clients taking part in your programme.
  • Redemption rate. Are the clients redeeming their rewards? This will tell you if your rewards are relevant and useful to customers.
  • Retention and churn. Are your customers buying regularly and when was the last purchase? How often are new clients being added?
  • Customer Lifetime Value. This is how much a customers spend with you over time.

You should regularly keep an eye on these KPIs to ascertain if your loyalty programme is working or if changes are necessary.

Budgeting for Loyalty Programmes

Budgeting for a loyalty programme can be complex, especially as a new retail shop owner without historic data. You’ll need to be concerned with the costs of managing a database, the platform you choose to work with, the cost of developing an application or the required technical staff, as well as the cost of the rewards.

It’s important you prioritise the aspects of the loyalty programme that are most likely to impact your goals. Then, measure the return on your investment to decide if it’s worth reinvesting to grow your programme.

When tracking your ROI, use the KPIs we discussed earlier to ensure you are hitting your goals and analyse the data regularly to see how it evolves over time.

Customer loyalty programmes can help your business. Create an interesting, interactive, omnichannel system that encourages clients to engage with your brand. Implement elements of gamification to make them even more likely to engage and share.

No matter what you decide, consider what your goals are, whether that means growing your customer database or retaining the clients you do have. Design a programme you think will speak to your customers and continue to monitor your KPIs.


What are the advantages of Customer Loyalty Programmes

Customer loyalty programmes are a way to create a lasting relationship. By offering unique benefits, such as free shipping or seasonal promotions, your clients enjoy an advantage simply by being a member. Your retail store in return gets useful customer data and hopefully a higher Customer Lifetime Value.

What is gamification?

Gamification is the process of turning something mundane into something interesting and/or competitive. By offering a fun and interesting experience, you provide clients with the ability to interact with your brand even when they aren’t actively shopping.

How can I improve customer engagement?

Gamification is key. Create fun and interesting events, such as collecting limited-time products, or having customers share an Instagram Story about your brand in order to have a chance to win something exclusive. The more interesting ways you offer clients to interact with your brand, the better the engagement will be.

What are some of the KPIs that measure the success of a Loyalty Programme?

In order to verify your customer rewards and loyalty programmes are offering a good return on investment, keep track of your overall number of loyalty programme members, what percentage of the sales you make are made by members and how often they are claiming the rewards you offer.

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