How to Build a Mobile-Based Loyalty Program?

Alex Danchenko

Co-founder, Reteno

September 23, 2022

Loyal customers are some of the most important assets a business can have. The numbers prove it. Forbes reports that “existing customers are 50% more likely to try new products and they spend 31% more, on average than new customers” and “increasing customer retention rates by 5% increases profits by 25% to 95%”.

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 customer retention. It is designed to increase repeat business 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 points systems differ and can reward all kinds of interactions. 

The key benefits of customer loyalty programs are:

  • Better 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.

The first study for the Journal of the Academy of Marketing Science looked at 1,816 companies in the retail, entertainment, hospitality, telecommunication and information, and food and beverages sectors.

Availability of a loyalty program in different businesses

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

The second study for the International Journal of Research in Marketing analyzed 358 retail brands across 27 different countries.

The impact of the loyalty program on sales

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.

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 the functionality it’s designed for. But some elements should be considered essential.

Here is the recipe for a good program: 

  • Rewards - Almost any loyalty program includes rewards for customers, whether in the form of discounts, free products, gifts, or something else. 
  • Exclusive 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 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 customer, 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 Customers

Have separate strategies, if not separate points programs, for different types of users you want to engage: 

  • New customers - When a user opens the 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 customers - 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 will you be able to understand which offers will entice people the most. 

Attach Emotion

Emotion-based rewards programs target customers’ hearts instead of their minds. Here are a few examples of what customers 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 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

Customers want businesses to improve continuously, which applies to products/services as well as any other business initiative. 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 loyalty programs that have done it right. 

Starbucks Rewards

Starbucks

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

Walgreens

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

Sephora

At first glance, Sephora’s Beauty Insider program is like any other - customers 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

Uber Rewards members get 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

Amazon Prime is a membership program, but there are still lessons from it that we can apply to 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

Ben & Jerry’s

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 makes sense for your business, 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.

Kseniia Petrina

|

August 25, 2022

Learn how to reach your marketing goals with well-timed, eye-catching in-app messages

Anna Zabudska

|

September 13, 2022

Figure out how to monetize your application effectively with popular methods and strategies

Ready to Gain Real
Competitive Advantage?
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.