What are the best loyalty programs? Why are those rewards schemes the most attractive for the customers? List of customer-best programs and the reasons why.
Best loyalty programs and the nitty-gritty of their success.
Do you feel stuck trying to design your loyalty program? Are you worried about the standard “cash back”? Do you find yourself short on time and ready to cut corners to get your program out asap? Or maybe you already have an existing loyalty program that did not bring the expected results?
We will be completely honest with you.
The best loyalty scheme for your business does not come out-of-the-box.
You, your business and your audience are unique. To design your perfect loyalty program, you need to lay the groundwork for it. User research, trying, testing, iterating are usually the base for the best loyalty programs.
We have something up our sleeve that we can share with you to make this painful research process a little bit easier. We have for you a quick analysis of the best (according to customer-facing, money-saving websites, not marketing blogs) loyalty programs of 2010-2020. We have listed the reasons why the customers love it (a good list of features you should take into consideration when planning your best loyalty program!).
We will show you how top e-commerce companies are using different types of loyalty programs to drive more sales, improve customer retention, and build stronger relationships with customers.
Let’s jump straight to them:
#1 Best Loyalty Program: Kaya Smiles
Kaya is an Indian beauty clinic which mainly offers dermatologic treatments in India and Middle East but also sells beauty products in Kaya Skin Bar retail outlets.
Their loyalty program, Kaya Smiles, is praised for:
- Simple and well-explained rules (FAQ, smiles calculator).
- Valuable, non-monetary, holistic benefits for the clients.
- Different levels of membership to attract customers to spend more at the clinic to reach higher membership level (37% of customers will pay extra for an enhanced tier of membership!).
- Dedicated helpline (support with the redemption of the benefits).
Easy and smooth user experience, no unnecessary complications, all clearly explained. All that makes Kaya Smiles one of the best loyalty programs up to date.
Kaya Smiles loyalty program has supported Kaya in establishing the brand, especially in the UAE, where the skin care sector competition is very fierce. They have created the brand image focused on customer care, transparency and customer centricity - ingredients needed to establish one of the best loyalty program in the cosmetic industry.
In the time of digital transformation, Kaya’s loyalty program has also evolved - they released Kaya Ambassadors Program.
The key was to implement a solution that incentivized brand endorsement and advocacy. This laid the foundations for the Kaya Ambassadors Program – an online gamified value-exchange platform.
The key features of the Kaya Ambassador online platform are as follows:
1. Information is made fun and digestible to cater to the shrinking attention spans. Mini-tasks are assigned to the Ambassadors in the form of “Missions”.
2. The completed missions give customers value and also create value to the brand. The whole journey is gamified with points.
3. Points for missions depend on the effort required for completion. For example: a. Social Media Share – 500 Points b. Writing a review – 1000 Points c. Know more about a solution with a quiz – 1500 Points.
4. The accumulated points can be used to redeem attractive rewards. The rewards are varied to keep customers interested over time.
5. A sense of competition is created via a Leader board where users can see how they are doing as compared to others and can step up to ensure that they compete for the high-value, more aspirational rewards.
6. The key elements of the gamification campaign were tailored in accordance with the target audience. Unnecessary badges and levels would have only complicated the mechanics and diverted focus from the primary objective. So just rewards, points, challenges and leader boards were retained.
Results of the Kaya Ambassadors best loyalty program:
After 12 months of the Ambassadors program running, Kaya has seen 20% of their highest-value loyal customers signing up.
You will find the gamification program highlights below:
1. Close to 50% of users advocated Kaya on their Social Media timelines. This was a big win especially considering a post on a user’s timeline is seen by at least 25% of his/her friends. So this increased the minimum estimated reach of authentic advocacy of the brand.
2. There has been a 12X growth in online reviews on both Google Maps and on Kaya Clinic’s Facebook page. Close to 10 reviews were generated per clinic and with over 100 clinics in all, this surge in online presence has acted as a big boost to the brand’s organic search ranking.
3. Around 3% of the highest value customers also created user generated content ,such as photos and videos, available for use on owned and paid media. These are trusted far more than branded content and deploying consumer testimonials on websites and Facebook ads have been proven to deliver higher click rates and dwell time.
4. Surveys and feedback from participants about the engagement model have also been positive, with 86% saying that the program was more informative than the website and 89% stating that they would be willing to participate in a similar program again.
5. Only 52% of the participants stated that their main incentive to participate were rewards and 47% stated that they got useful information from the program. This proves again that when customers get value over and above the basic solutions offered by a brand, the overwhelming instinct is to return value by advocacy and endorsement. The challenge for any brand is to be able to leverage it the right way, and Kaya managed to pull it off.
Kiko Milano, another beauty company, whose loyalty program we have reverse-engineered this year, has a very similar program and achieved quite comparable results to Kaya but on the European market.
#2 Best Loyalty Program: Best Sephora – Beauty Insider loyalty card program:
Sephora is a large American retailer, present worldwide, that sells cosmetics online and in-store.
Their specialised Beauty Insider reward system, enables different customers to choose benefits that suit them best. Members earn one point for each dollar they spend. These points are redeemable for standard rewards like gift cards. However, the program also offers exclusive products or perks to its members. Some examples of these are limited edition products, in-store beauty tutorials, as well as a variety of products in different sizes that are not available to the public.
Sephora’s Beauty Insider program has grown wildly popular. The program boasts more than 17 million loyal members (as of 2019) that make up as much as 80% of Sephora’s annual sales.
Why do customers love it?
- It is something more than just monetary perks.
- Customers have access to limited edition products (which makes customers feel special).
- Customers can choose how to use the points they collect.
- Customers have access to tutorials, free make-overs – education on the products helps with decision on purchase.
By the way, we've prepared a blog post about how to set up a loyalty program identical to Sephora’s with the use of Voucherify platform.
#3 Best Loyalty Program: My Starbucks
Starbucks, after their slowdown due to recession around 2012, has slowly came back to the top thanks to its innovative loyalty program, My Starbucks Rewards.
Why has My Starbucks Rewards loyalty program rocketed Starbucks sales?:
1. Offering payment options via a mobile app made it easier for the customers to consume Starbucks products.
2. Implementing mobile pre-ordering has enabled customers to grab their order really fast, without waiting in the queue.
3. Having the loyalty scheme on the mobile app ensured that it is always within the reach of customers (which was, in the time when Starbucks started the program, an innovation).
4. Personalized offers have created a great customer experience offering to customers their favourite products and teasing them to make the purchase.
5. Incorporating elements of gamification into the loyalty program customer rewards has made it more engaging for their customers.
6. Allowing the customers to earn rewards when they invite friends to join increases brand awareness and user acquisition within the loyalty program.
Starbucks’ loyalty program has not only brought additional revenue to the company. Their loyalty program tracks customer buying behaviour which Starbucks converts into usable data that allows them to modify their products according to the current demand.
#4 Best Loyalty Program: MAC Lover
Shell had a loyalty program that was offering customers discounts for buying cups/t-shirts branded with Shell logo. BP rewards outperformed the loyalty program of Shell because they gave away discounts on fuel, redeemable at any time.
What is the point of a loyalty program if the consumers are not interested in the rewards?
That’s exactly the issue that cosmetics company MAC tackled with their online, tier-based loyalty program. From the beginning of customer journey, MAC makes sure that customers see the value their program brings. Becoming a basic member is absolutely free and gives valuable perks. This marketing strategy infuses brand loyalty amongst the users.
Tier-based customer loyalty offers are structured as follows:
Seduced — Tier One: This is the basic level which everyone has access to, without the need to purchase anything from MAC initially. Members can enjoy annual gift, sample products, and access to limited edition products simply for being a member. Members can also choose their favourite eye shadow, lip gloss or lipstick for a complimentary gift provided that they return six empty containers.
Devoted — Tier Two: By spending $150 annually, on top of all the advantages of tier one, members get expedited shipping and pre-access to new collections.
Obsessed — Tier Three: This is the highest class of the membership and it can be unlocked after a consumer spends $500. It gives the access to exclusive limited editions, improved samples, the opportunity to shop before anyone else, a couple of makeup applications and expedited shipping on top of all benefits already covered by tier one and two.
MAC starts building customer loyalty straight from the first experience with the brand.
#5 Best Loyalty Program: Target REDcard
Simply works.The Target REDcard loyalty card offers a multitude of benefits:
The Target REDcard loyalty card offers a multitude of benefits:
- When you shop in-store or online at Target.com, you save 5%.
- If you do your shopping online using this card, shipping is free for most items.
- You get access to a longer return policy.
Why it works?
Target is a shop for price-conscious customers and the card has a very simple benefit: 5% off for every purchase, free shipping for online shopping and a longer return policy. Three benefits, but these are the ones that the customers care about most. Easy, stress-free and cheap shopping.
#6 Best Loyalty Program: BP rewards
The petrol giant BP, as mentioned already, has its own rewards program, called BP Driver Rewards. As a member of the program, when you purchase fuel at BP, you’ll earn rewards.
You earn 10¢ off per gallon for every $100 you spend on BP fuel.
Easy and straightforward loyalty program that gives drivers rewards on the most demanded product from the store - fuel. It is redeemable at any time, does not have any expiration date and makes customers choose their petrol station wisely.
#7 Best Loyalty Program: Tesco Clubcard
Similar to Target but targeting European, instead of US customers, Tesco Clubcard offers 1-3% discount (if you keep your points without cashing out for longer, by swapping them for a “boost” token, they will get 3x the face value so 3%).
Besides Tesco stores and online shopping, points can also be collected via participating partners such as E.ON.
These points can be redeemed on days out, restaurants, cinemas, travel, and other activities.
Why is this claimed to be one of the best loyalty programs among retail stores?
Same as Target - the audience is mainly price-conscious and the best way to keep them is to provide them immediate benefits. Tesco brought the loyalty scheme to the next level by adding the “boost” tokens - they motivate the customers not to cash out all their rewards on the next shopping, which makes them stay with the brand for longer.
#8 Best Loyalty program: Nordstrom’s Nordy Club:
Nordstrom Inc. is an American chain of luxury department stores, also operating in Canada. Nordstrom used to have a loyalty program butt was not performing as well as the company would want it to… so, after some user research, they have rebranded it to Nordy Club and revamped it a bit.
- They have made it super-easy to understand the value it brings (explanatory videos, website and easy-to-understand redemption process).
- Well-explained loyalty program tiers.
- Non-monetary perks that make customers feel special, like early access to sales and members-only access to new brands and discounts or the experiential rewards they offer - free alterations, free curbside pickup and access to beauty and style workshops.
Perks rather than points make it much more rewarding than the previous program and led it to become one of the best programs in 2019.
Summary - what makes loyalty program the best?
Today, the most successful customer-loyalty programs are engaging and retaining customers by building an emotional connection to the brand and making participation in the program effortless.
Free or automatic membership, easy to understand rules, gamified experience, personalized experience, valuable rewards (often non-monetary) that make members feel special and appreciated are some of the key elements that make a successful loyalty program.
To reach the best outcomes, you should:
- Devote some time to research and analysis of what your customers want. You need to run some tests, measure the results and adjust your loyalty program features based on the collected data.
- Adapt your loyalty scheme rules on demand - it is crucial to have a loyalty program management system that has easily modifiable validation rules and does not need much IT development in case you want to change settings.
- Measure - your loyalty program management system should provide data instantly, preferably in well-organized reports to help you find the best strategy for your business.
Voucherify is a promotion management software that can support you with all the above-mentioned features and more.
To learn more, visit our features page.