How to Build a Mobile-Based Loyalty Program?

True loyalty is gained gradually over time due to experiences with excellent products, services, content, and aftercare. But there is one trick to speed it up - a loyalty program. This article will cover the basics (definition, elements to include, tips, etc.) and provide examples of the best customer loyalty programs for some inspiration.

What Is a Customer Loyalty Program?

A loyalty program is a mobile marketing strategy aimed at increasing customer retention. It is designed to increase repeat deals by recognizing and rewarding customers who purchase or engage with the brand. Typically, if a customer makes purchases on a recurring basis, it graduates them to higher levels of loyalty and lends better perks. However, the point systems differ and can reward all kinds of interactions. 

The key benefits of customer loyalty programs are:

• Better customer engagement
• Higher customer lifetime value
• Lower attrition rate
• Improved brand affinity
• More brand advocates
• Access to first-party data

If you’re skeptical about the impact of loyalty programs, two large-scale academic studies published in top marketing journals can address these concerns.

Researchers found that loyalty programs with tiers or earning mechanisms can provide significant increases in sales and gross profits. 

Half of the companies reported a positive impact on sales. What’s more interesting is that researchers also found a more positive effect from basic loyal program variants ‒ the ones that offer direct and immediate rewards.

The main types of mobile loyalty programs

There are several ways in which you can reward your loyal clients.

Points-based solutions

Everybody is aware of such programs when users collect points and then exchange them for freebies, cashback, and other benefits. Businesses provide users with different methods of earning points: placing orders, sharing content on social media, having a birthday, fulfilling certain tasks, or playing games.  

Tiered loyalty programs

Such a system involves rewarding users depending on their ranks in your loyalty mobile app. The bonus size may reflect, for example, the volume or frequency of purchases (everything you wish and is applicable to your business). In other words, the higher users’ tier, the more exclusive and better rewards they get within their digital loyalty cards.

Paid program

In order to take part in a loyalty program, customers have to pay (usually, there is a fixed fee). A McKinsey survey showed that 62% of clients were ready to pay more for the brand’s products after joining a paid loyalty program.

However, you have to prove the value of your program because no one wants to donate money to a business. So, follow a few key rules:

• Find benefits that clearly outweigh the membership fee;
• Develop additional personalized advantages. For instance, members-only content;
• Provide users with sustainable and regular interaction.

Value-based loyalty program

This option is about donations as a percentage of purchases for charity or important events. In this case, clients don’t actually receive rewards: they get involved in making society better. Loyal customers tend to participate in this.

You can launch a hybrid loyalty program: let the customer choose between donating and receiving rewards.

The simplest and most affordable option is paper and/or digital loyalty cards. Advanced solutions involves gathering customer data and using some marketing tools:

• Sending out emails, SMS, and push notifications with promotions, special offers, and promo codes;
• Collecting information about clients’ behavior (for example, visits and purchases);
• Creating a customer journey within the reward structure;
• Having a CRM system to get an instant access to the database with clients’ information;
• Developing a loyalty application so that users can monitor their rewards.       

Reteno will help you implement such things.

If you aren’t sure which type of mobile loyalty apps to develop, maybe, it’s worth asking your clients by running a survey.

Key Elements of a Successful Mobile Loyalty Program

Customer loyalty programs can be and look like anything you want; your only limitation is your mobile application and its functionality. But some elements should be considered essential.

Here is the recipe for a good reward program: 

• Rewards ‒ Almost any loyalty program includes rewards for customers, whether in the form of discounts, free products, gifts, or something else. 
• Exclusive, personalized offers ‒ It can be access to a secret product or a closed event, the order-ahead (skip the line) option, previews, promotions, free standard shipping, or an option of deferred payment. 
• Recurring deals ‒ Try to offer incentives on a repeated basis. For example, offer a discount on a product every day during a certain time or for one day a week. 
• Reciprocation ‒ Ensure that your customers get real value, and so does your business. In other words, make it a win-win.
• Being “on brand” ‒ The program should add to your company’s personality and reinforce your brand messaging.

Building a mobile loyalty program is a major undertaking. But it’s rarely built from the ground up. Your existing technology stack can offer several effortless integrations - for example; you can deploy your point-of-sale, scheduling systems, and CRM to track loyalty membership and purchase history.

When building on top of existing backend systems, mobile will still be the way you provide the LP service. So, always put your best team (or your best partners) on your mobile app.

How to Build an Effective Mobile Loyalty Program

Some programs fail to achieve results for the businesses that run them for various reasons, including lack of strategy, poor understanding of their customers, or an inconvenient rewards system.

But you can act proactively and build a loyalty rewards program that has all the right elements from the start. 

Design a Creative System

Creativity is often the real secret to building an assortment of rewards and incentives that everyone will be excited to earn. Don’t be mistaken ‒ customers are interested in getting high-value rewards. Rewards in the form of near money can communicate your true appreciation and recognition for customers’ dedication to the brand. 

But people have seen it all before. If you want them to sign up for another program, offer something they don’t necessarily expect. Are you a sportswear brand? Start an endurance challenge or give out camping packages in national parks. 

Offer Different Deals to New Customers, Power Users, and Dormant Clients

If you don’t separate points programs, have separate strategies for different types of users you want to engage: 

• New customers ‒ When a user opens the loyalty mobile app for the first time, insert the option to join the program into the welcome series. 
• Power users ‒ Reserve the biggest rewards for your highly transactive power users. 
• Dormant clients ‒ Use the background information you already know about them to craft the perfect offer.

Personalize

Here is why personalization works - consumers love being made to feel special and associate personalized brand interactions with positive experiences.

Data is the lifeblood of any personalized program. So, gather all your data sources and tailor your approach based on “persistent identities” for the customers. In other words, build customer profiles and understand client behaviors and preferences. Only then you will be able to understand which offers will entice people the most. 

Attach Emotion

Emotion-based reward programs target customers’ hearts instead of their minds. Here are a few examples of what clients can feel:

• Attachment ‒ Create this with a tiered structure that acknowledges your best customers
• Interest ‒ Add various forms of gamification
• Nostalgia ‒ Offer products that have been discontinued exclusively to program members 
• Anticipation ‒ Tease that the next time the user makes a purchase of a certain value, they’ll unlock a new level of benefits
• Surprise ‒ Send them a gift “just because”

Deliver Rewards in Real Time

Yes, we’ve just talked about the potential value of creating anticipation. But this point refers to something else. 

This tip is about giving the reward as soon as it’s unlocked. For example, you can bring the rewards experience into the process of making a purchase by offering free delivery. Thus, maximize the chances of a successful purchase and offer a reward at the same time. If you have real-time data about the customer’s location and can tailor the shipping perk to this, even better. 

Make It Easy

Customers want high-value, low-hassle mobile loyalty programs. Think really low effort. The best loyalty programs take mere moments from your customer’s day, especially the signup process. If it takes more than a few minutes to join the program, you’ll probably lose them. 

Before the user joins, they don’t understand the value, but they can clearly understand when something inconveniences them. That puts your program at a high risk of churn. Consider creating loyalty cards that can be integrated into a mobile wallet for Apple Pay or Google Pay transactions.

Optimize

In order to engage customers, you should develop continuously by improving products/services and launching different business initiatives. As for your customer programs, you can meet growing customer expectations by identifying which variables impact your loyalty KPIs and doubling down on whatever works best.

Brilliant Customer Loyalty Program Examples 

Here are our picks for mobile loyalty programs that have done it right.

Starbucks Rewards

The Starbucks Rewards program adds a certain number of loyalty points for each purchase. The more loyalty stars you earn, the closer you are to free drinks, food, and merchandise. 

But there is an interesting condition - you have to order on your mobile device. This encourages more people to use the app and allows Starbucks to collect behavioral analytics on each customer (favorite drinks, habits, etc.).

Walgreens’ Balance Rewards

This is an example of a loyalty program that combines traditional point-earning for making purchases and an innovative community-based program. Walgreens doesn’t simply incentivize shopping. The company also rewards users for making healthy choices - quitting smoking and drinking, exercising, or doing routine tests. 

Sephora’s Beauty Insider

At first glance, Sephora’s Beauty Insider program is like any other ‒ loyal customers regularly earn points through purchases and redeem them for rewards. Users can go to the Rewards Bazaar and choose samples or exclusive merchandise. 

The Beauty Insider Community is where it gets more interesting. It’s a space where users can share tips, advice, and all the new products, adding an emotional element and strengthening customers’ relationships with the brand.

Uber Rewards

Uber Rewards members collect points ‒ Uber Cash Rewards - for the money they spend on rides and UberEats orders. These points get them priority pickup and flexible cancellation. The higher the tier, the more extra time, flexibility, and control the user can enjoy. In other words, the more they spend, the better the customer experience.

Amazon Prime

Amazon Prime is a membership program, but there are still lessons from it that we can apply to mobile loyalty programs. It ultimately paved the way for premium loyalty programs. Instead of giving discounts on the commodities and service people would buy anyway, Amazon offers exclusive experiences and products ‒ faster delivery, streaming, reading benefits, and more.

Ben & Jerry’s Flavor Fanatics

A more classic brand loyalty example is the Flavor Fanatics rewards program. Loyalty members get discounts, free cones, and scoops of secret flavors. But there is a social aspect to it. If someone buys one of Ben & Jerry’s advocacy-themed flavors - Save Our Swirled! for the global climate movement and I Dough, I Dough for marriage equality - the company makes a donation.

Let’s Summarize

What is the loyalty program that caught your attention the most? You can take notes from every program that comes your way and adapt certain elements for your audiences. Accept that there is no perfect recipe for a successful loyalty program because every business is different, and they have a special relationship with their clients. 

The tips we provided you are broad enough to give you room for creativity. Before implementing any idea, ask yourself whether it helps business growth, the type of customers you want to attract, and your goals.

Communicating effectively across your rewards program is key to getting more buys, signups, and other types of user engagement. Let us at Reteno help you! Without services, you’ll gain insights into your customer base and learn how to personalize your program accordingly. Our tools and expertise will help you take your campaigns to the next level and keep your users engaged, happy, and loyal.