From the Pros: 5 Companies With Loyalty Programs That Actually Work

Loyalty programs that really work for customers

We’ve all heard marketing strategists and brand managers wax poetic about the merits of Starbucks and Panera Bread when it comes to the loyalty game. There’s no denying the power of those programs, but plenty of other brands are using simple-to-understand systems to create majorly engaging moments. Who’s making the biggest splash right now? Here, we take a look at five companies with their eyes on the prize.

DSW Rewards

DSW thrives on an almost weekly rotation of products that drives repeat visits and purchases, so the shoe behemoth didn’t have to twist too many arms to join its now-beloved rewards program. The system itself is fairly straightforward: Customers earn points for every purchase, and those points eventually turn into $10 reward certificates. Though the system isn’t breaking a ton of ground, the brand is doing something right; as of 2012, nearly 90 percent of its sales came from program members.

Why It Works

A high level of dedication to its ever-evolving product line certainly doesn’t hurt, but the real win is how easy DSW makes it to earn rewards. Customers get 10 points per dollar on full-priced merchandise – and half of that on clearance items – and it only takes 1,500 points to score one of those certificates. If you think that much access is ultimately asking for a major financial hit, consider this: More than 20 million members currently shop through the rewards system, and the brand constantly drives unplanned purchases through double-points events and special offers. Plus, DSW is able to use data from the loyalty program to inform shopping behaviors and trends, and that allows the company to tailor its experience to how customers are already behaving.

Amazon Prime

Think of this one as a loyalty program in disguise. The much-lauded Amazon Prime doesn’t come with earning potential – that’s strictly the domain of the company’s credit cards – but it bundles cheaper shipping, exclusive deals and a whole host of free movies and television shows into one annual cost. The result, of course, is greater consumer allegiance to the brand as a whole, especially when you factor in the member-only free access to Amazon- and HBO-produced content.

Why It Works

Though customers have to pay for access to the benefits, Prime’s potential savings well exceed the price of admission within a month or two of use. It also appeals to two distinct customer bases – those who order physical items from the site and those who use streaming services – while encouraging crossover purchases between both. In other words, the free two-day shipping incentivizes streaming customers to buy tangible goods, and the free streaming gives ordering customers a reason to favor Amazon over Netflix or Hulu. It’s an almost flawless way to keep customers locked into the brand for literally everything.

Sephora Beauty Insider

Like DSW, Sephora gets a little boost from inherent customer excitement about the beauty and fragrance industry as a whole. One peek at the droves of self-described beauty gurus on YouTube proves that this is a market capable of handling more than its fair share of saturation.

Where Sephora out-competes department stores and other dedicated beauty retailers, however, is with a loyalty program that strives to create engaging, long-lasing connections between the brand and its fans. Beauty Insider is based on the standard earn-to-redeem system, but its rewards are anything but basic; customers can choose from limited-edition products and makeup sets that are completely exclusive to members and often designed specifically for Sephora. Plus, the brand’s members-only newsletters offer an extremely editorial edge to the entire affair: proof that creative is just as crucial as purchase drivers when it comes to achieving customer loyalty.

Why It Works

First and foremost, Sephora understands how its customer base functions. Though some shoppers certainly buy anything and everything, plenty stick to their specific loves: makeup, fragrance and body care with several levels of sub-interest attached to each. To appeal to that behavior, Beauty Insider eschews the one-size-fits-all approach for a system that allows members to choose their own rewards and earn season-specific product offerings. The result is increased passion about not only the program but also the brand itself.

Target REDcard

REDcard may hover closer to the credit realm, but its benefits far outpace what even a standard loyalty program could achieve. Through a network of store-branded debit and credit cards, customers save five percent on every purchase and get access to extras like free shipping and additional return time. The result benefits the brand as much as it does the customer; in 2013, nearly 17 percent of Target’s sales came from cardholders, and membership encourages a crossover between online and store-only purchases.

Why It Works

Who doesn’t want a discount on purchases they were planning to make anyway? Because Target offers everything under the sun and has an undeniable advantage when it comes to encouraging impulse buys, REDcard gives customers a reason to choose the retailer over similar big-box brands. What’s more, that across-the-board discount goes a long way in shifting overall attitudes about the store. Though Target was already extremely competitive with retailers like Walmart and Meijer, many consumers mistakenly believed it to be the most expensive of the bunch. This additional discount levels that playing field.

Jamba Juice Insider Rewards

If you live near Jamba Juice’s coverage area, you’re certainly aware of its role as the go-to brand for health-conscious juices and smoothies. A points-per-purchase loyalty program was a no brainer, but even the brand itself couldn’t have predicted the success of Insider Rewards when it rolled out in early 2014. Within six months, the program had earned more than a million members, and Jamba Juice executives believe they’ll double that number by early 2015. Talk about a success story.

Why It Works

Insider Rewards is relatively cut and dried, but the program isn’t winning on those details: It’s all about the technology. Rather than force customers to carry a card or interrupt a transaction to ask an employee to add points to their account, Jamba Juice uses a cloud-based system that requires only a phone number for both registration and redemption. What’s more, this method automatically alerts customers when they’ve qualified for a reward and uses behavioral data to tailor those gifts to the individual. It’s a back-end redesign that completely alters the front-end experience. In this golden age of mobile, that’s the way to go.

About the Author

Leave a Comment