How to Create an Innovative Customer Loyalty Program?

Loyalty programs are very widespread nowadays. More than 90% of companies have some sort of loyalty program. Most of your competitors probably have one in place. To cut through the noise, get your customers' attention and win their loyalty, you have to get beyond points and traditional reward program models. To have a competitive advantage, you have to offer a more creative rewards program than your competition.

How to create an innovative loyalty program?

Our top ideas for running innovative customer loyalty programs include: 

• Personalization
• Loyalty tiers
• VIP loyalty tier
• Creative rewards program name
• Creative currency name
• Innovative loyalty rewards and incentives
• Innovative earning rules
• Gamification
• Loyalty app
• Combining and stacking of promotions
• Reminders and notifications
• Innovative advertising channels
• Paid loyalty membership

For more detailed answers, read on.

1. Personalize your rewards program

You may think that personalization is nothing new, that it's basic. You would be surprised. 22% of loyalty program members say they are very satisfied with the level of personalization they receive in the programs. Only 22%. This means that if you implement the right level of personalization in your loyalty scheme, it can be the competitive advantage you were looking for. The "WOW" factor in your loyalty scheme. Personalization can take many forms:

1. Personalized communication

For example using your customer's name and surname, preferences, special dates, to communicate with them on the right occasions, via their preferred channels.

2. Personalized incentives

For example, offering rewards that are relevant to your loyal customers. If customer A prefers jewellery and customer B prefers cosmetics and your rewards program offers material rewards, you should offer jewellery to customer A and cosmetics to customer B.

3. Personalized earning rules

Depending on the customer segment you may need to set up different rules. For example, for customers over 60, only rewards for purchases might be relevant (and they may prefer simple earning rules), but millenials might be interested in earning rewards for social media activity and other types of brand engagement. You can differentiate the rules for different segments or just personalize the messaging about the program while keeping the rules the same.

2. Add loyalty tiers

People are much more motivated to participate in a customer loyalty program when they see a clear goal. And if they see that it’s within reach. That’s why dividing your rewards program into levels is a great idea to keep your customers excited. Then each customer is always close to getting some loyalty reward. What’s also motivating is that they can see what’s at the very end – the Holy Grail of sorts. Typically, it’s entering a VIP tier or Premium Group of loyal customers.

Keeping that in mind, it’s important to introduce the entire reward program structure and send it over to every customer with the invitation to join. 

3. Introduce an exclusive loyalty tier

By offering an exclusive loyalty tier that has special benefits, you can motivate your customers to move up the loyalty ladder and to engage with your rewards program. You offer them not only the rewards, but the experience. Best loyalty programs offer innovative perks to the VIP tier.

You could differentiate the VIP tier by, for example:

• The rewards available – offering some rewards only to the VIP tier.
• The rewards worth – offering higher discount levels for the VIP tier.
• The earning rules – giving 1 point for a certain $ amount spent for the bottom tier, 1.5 points for the same $ amount for the middle level, and 2 points for the VIP tier.
• Expiry dates – for example, VIP clients could have longer expiry dates for their rewards. 
• How you treat the VIP customers – table with a view? Free delivery and free returns? 365 days return policy? Packing for a gift for each of their orders? A thank you card with their name on it in every package you send to them? Skipping the waiting line? Extra cookies with their coffee? Special assistance while shopping? Extra-soft towels, flowers, and a bottle of champagne in their hotel room? Spoil them and they will keep coming back to you.

4. Come up with creative rewards program name

Do not call your scheme simply "XYZ loyalty program". Come up with something more memorable and interesting! Examples from best loyalty programs and their names:

• ‍Domino's Pizza – Piece of the Pie Rewards‍
• E.L.F – The Beaty Squad‍
• Sephora – Beauty Insider‍
• Ulta – Ultamate Rewards‍
• Adidas – 3Stripes

Remember! Your rewards program should become an extension of your brand, not just be tacked onto your website. Align your loyalty program’s values with your brand objectives for increased effectiveness.

5. Add a branded currency name

If your customer loyalty program offers points, you can name them differently. Try to find something that will be in line with your brand, your products, your rewards program name.

• If you sell wine, you can name your points "corks."
• If you sell books, you can name your points "pages."
• If you are selling fashion, you can name your points "buttons."
• If you are offering a mobile app for runners, you can call them "steps."

Here are some examples of creative loyalty points names:

• Starbucks rewards program calls their points "stars."
• Frequent flyer programs often call them "miles."

Create a clear connection between your brand, program name, as well as the name of your points and how they are displayed. This will create a cohesive customer experience, and show them that your rewards program is part of your brand community experience, not an afterthought.

6. Offer innovative rewards and incentives

Rewards are one of the biggest motivators for customers to join a loyalty program. Offering interesting and creative loyalty rewards can differentiate your customer loyalty program from your competitors' customer loyalty programs. It might also help you to generate buzz around your company if the benefits are buzz-worthy.

Apart from the usual points, material prizes, stamps, and punch cards, here are some more innovative ideas for customer rewards:

1. Gift cards – you can offer gift cards as a reward in your rewards program. It motivates your customers to come back to your store and purchase more items from you. You can set an expiry date for the gift card credit to make the offer more urgent.

2. Discount vouchers – you can offer discount coupons as a reward. Your customers could earn the discount voucher if they meet certain criteria (for example, enter a higher loyalty tier) or they could exchange their points for it (you could offer it as a possible reward in your rewards catalog). You can personalize the voucher codes and messages you send with them, creating a more personalized experience for your customers versus just adding points to their accounts. Sending over a voucher opens a communication line with your customers.

The power of coupons and gift cards lies in their innovativeness, flexibility, and tracking possibilities. They can be tailored to the needs of a particular customer, wrapped into a personalized message, and finally, tracked throughout their entire lifecycle.

3. Giveaway entries – you could offer giveaway entry for your loyal customers as a prize. You could let them exchange their points for the entry (this is how Urban Outfitters do it), give it away as a prize when they reach certain milestones (their birthday, next loyalty tier reached, special occasions) or create an "instant win" campaign where every X person wins something if they subscribe to the loyalty scheme.‍

4. Event entrances – you could offer entrance to exclusive events as a prize. It could be an event you organize: a gala, special dinner, showcase of your pre-premiere products or an event organized by a third party: a match, theatre premiere, concert.

5. Mystery gifts – you can also go for a more creative rewards scheme, in which you put perks of completely different type and value, from products, cash benefits and experiences like a parachute jump or a quad ride in Egypt or something even crazier like a 100000$ in cash. Customers can then receive their surprise gift in their post box when they receive enough points to get qualified for the reward value level but they will not know what they will receive or what is available at all. If you swap the prizes available every month, it will be a very "mysterious" experience for them. Those loyal members who have received their rewards might post it on social media. There is a big chance for creating some buzz around the program and get people more engaged in participating.

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7. Try to personalize loyalty rewards

If you know your customers, for example, if your employees have close contact with your customers (that often happens if you sell services), you could offer completely personalized rewards based on what your customers really like.

Imagine you have a luxurious hair salon. You could allow your hairdressers to offer returning clients cosmetics they use usually on them as a reward. If you buy some more hair cosmetics to have on stock, you could allow to give away one product to each loyal customer around Christmas time. Your hair stylists would know which products they use on the customers.

A more automated scenario: if you have a fashion e-shop where your customers buy products, you could give to the loyalty club members a gift around Christmas based on their purchases in the last year. If you define well the categories and mark which products are "commodities" that the users could benefit from having more of, you could check if they bought any of them and offer them another set as a gift. Or, even better, if you have any data on their preferences, you could program the campaign to give a gift to the customer from their preferred category, in their size and randomize the assignment of the reward within a certain per customer budget.

8. Partner with other brands

Partner with another brand to make the loyalty scheme more widespread and to offer more exciting rewards. You can expand your rewards catalogue or make your point redeemable at more (your and your partner's) establishments to make it more interesting for your rewards program members.

9. Experiment with charity rewards

One innovative reward is donation to a charity. A customer is more likely to continue shopping with you over your competitors if they feel that their purchases are helping to make a difference. You can make this reward optional (customer can choose it from a reward catalogue or choose whether their purchase will support this cause or not) or obligatory (all purchases give X% to the charity cause or the reward is given to the customers regardless of their will). CSR got recently a lot of buzz and millenials prefer to support brands that are donating to charities and contributing to good causes.

A good example of a charity rewards program that works is TOMS One for One. In TOMS, with every purchase, customers earn the non-monetary incentive of creating change through various initiatives like the One For One shoe donation and profit-sharing with causes like the Wildlife Conservation Society. TOMS makes their customers feel they make a difference with their purchases, making them feel good about spending money at TOMS.

10. Add buzz-worthy rewards

Consider adding to your rewards collection perks that will bring buzz and press coverage. This will help you to promote your loyalty program and get more customers to join it. Here are some ideas of storytelling-worthy benefits:

• A date with the company's owner.
• A chance to invent a sandwich and have it on the menu for a week.
• A chance to hit the company owner (this is an extreme one but is based on a real-life example, the owner of AlleyCat Comics, Nicholas Idell, lets customers who’ve earned the most loyalty points punch him the gut).
• A high dollar item or a high prize offered in a giveaway for the loyalty program members.
• An opportunity to do something out of the ordinary with notable figures in your organization (parachute jump with the company owner?)
• An opportunity to take part in an exciting event, like 30s shopping experience when the customers are allowed to take anything they wish from the shop, within 30s.
• An exciting contest the loyalty members can participate in.
• Giveaway with instant win, for example every 100th person joining the loyalty program wins something.

11. Add innovative earning rules

Besides innovative prizes, you can also have innovative earning rules. You can reward more than just the purchases. A couple of ideas on what you can reward:

• Visits in your store – if you have geofencing in place and a mobile app for your loyalty program, you could reward visiting your store, even if the customer does not buy anything, to encourage the customers to come to your establishment. The more visits to your store they have, the bigger chances they will eventually purchase something.
• Quizzes – you could make a fun quiz and encourage participation in it by offering prizes for participants.
• Surveys – you can reward participation in surveys. This will give you the data you need to make your products better, to further personalize your customer interactions, or to change up your loyalty program rules. Ask anything you want, offer an incentive, and collect the data.
• Social media activity and engagement with your brand.
• Leaving a review on your website or social media channels.
• Sharing their pictures using your products (UGC – User Generated Content) that you could use on your channels.
• Referring other customers.

A good example of innovative earning rules is the Marriott Rewards program. Marriott's guests can earn loyalty points just by posting about their stay on Twitter, checking in on Facebook, or posting a picture on Instagram using a predefined hashtag.

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12. Give gamification a try

Members who engage with game mechanics enjoy participating almost twice as much. 8 in 10 members engage with these mechanics when present.

The biggest challenge of all innovative and standard loyalty programs is to keep customers involved after achieving a certain level. There is a risk that your client will redeem a reward (or not) and then forget about moving forward. All best customer loyalty programs are like a gamified journey with a unique narrative in the background that keeps clients informed about where they are at the moment and where the road is going to take them next. 

Customers should be kept up-to-date about their progress to the top of a loyalty ladder and the distance separating them from the next reward. You can do it, for example, by sending personalized e-mails informing your loyalty program members about their progress. A simple graphic inside an email gamifies the customer experience and gives the motivation to move forward to the next loyalty level. Ultimately, the point of every game is to finish it, right?

13. Combine promotions

To make your program more innovative and in line with your other activities, you can combine types of promotions and stack the discounts. A couple of examples of promotion combining:

• ‍Giveaway with loyalty points – launch a giveaway where the prize is loyalty points.
• ‍Loyalty program with giveaway – offer entry in a giveaway as a perk in your loyalty scheme.
• ‍Referral program with loyalty points – give loyalty points as a reward for customer referrals.
• ‍Gift cards with a loyalty program – offer gift cards as a perk in your loyalty scheme.
• ‍Discount coupons with a loyalty program – offer discount coupons as a perk in your loyalty scheme.

14. Create a loyalty mobile app 

It might not be a new idea, but if you do not have one and you want to upgrade your loyalty program, it might be a good idea to create a mobile app for it. Data suggests that 75% of consumers would engage more with customer loyalty programs that make rewards mobile-friendly. This includes points, discount codes, vouchers, and gift cards. One of the pioneers in the sphere of mobile loyalty programs was Starbucks that allowed the exchange of ‘stars’ for coffees and other products and all that via phone. 

Learn more: How to succeed with a mobile loyalty app?

15. Keep members in the loop

Remind your customers about:

• Expiring rewards.
• Ways to earn rewards they have not used yet (for example social media activity).
• The benefits waiting for them if they earn X points more.
• Available perks and discounts.
• Any special events, double-point days, giveaways they should participate in.

16. Use non-standard advertising channels

Use innovative advertising channels for your loyalty program like, for example:

• Smartwatch
• TikTok
• Gaming platforms
• Youtube

By advertising on non-traditional marketing platforms, you may get more customers engaged with your loyalty program.

17. Run a paid loyalty program

It might be counterintuitive but to make your program exclusive and to make sure you are investing in the right customer segment, you can make your loyalty program paid. It will help you discourage fraud because it is not easy to create more than one account. It will also help you to make sure the program participants are REALLY loyal to your brand.

Some examples of paid customer loyalty programs that work:

• Zooplus – to benefit from 3% discount off all orders, customers have to pay to participate in the loyalty program. The fee is different, depending on how long they want to be part of the loyalty scheme.
• Wizz Discount Club – to benefit from discounted flights, customers have to pay a yearly fee to participate in the Club.
• Amazon Prime – customers have to pay to get Prime member benefits. 

Learn more: Can you buy loyalty with paid memberships?

Summary

Creating an innovative rewards program is quite a challenge! However, there are many ways it can be accomplished. From creative loyalty program names and currency names to innovative perks and earning rules, there is a lot to be customized and personalized in a loyalty scheme. An important factor to consider when planning an innovative rewards program is the rewards program software that will support it. It needs to be flexible and allow for customizations and personalization. Preferably, your rewards program software should be API-first for flexibility and Headless for omni-channel distribution at ease.

If you are looking for a best-of-breed customer loyalty platform, Voucherify is an API-first, Headless Promotion Engine that can power not only personalized customer loyalty programs but also in-cart promotions,  discount coupons, gift cards, referral programs and giveaways. Voucherify rewards program software is a holistic solution for all marketing promotions that allows for promotion combining and stacking.

Learn more: Explore Voucherify's Open Source Loyalty Accelerator

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