The goal of customer loyalty marketing is to encourage customers to stick with a brand and spread the word about it. Any program that rewards customers for their interactions or purchases is fundamentally a value exchange.

Loyalty programs have different reward structures, depending on the type of program. This means that you must first understand what motivates your customers to buy before creating a loyalty program. When it comes to loyalty programs, it’s common for companies to design them with their own goals in mind rather than the goals of their customers. Identify the structure that best serves your customers’ needs from the following options:

What kinds of loyalty programs are most common?

• Points programs
• Tiered programs
• Cashback programs
• Premium programs

Points programs

Customers can accrue points for a variety of actions by enrolling in a points program. It’s possible to redeem these points for prizes. In order to collect opt-ins using points programs, there is a low barrier of entry because they are free to join.

It’s easy to automate points programs. You can tailor your customers’ incentives to their specific interests and requirements by analyzing their browsing and purchasing habits.

Tiered programs

More exclusive benefits are offered to participants in tiered programs as they reach higher levels of achievement. It’s easier for customers to justify additional purchases if they feel appreciated and valued. Providing incentives for customers in lower tiers also helps them spend more.

Your members can be segmented into the appropriate tiers and rewards can be delivered with the help of automation technology. Your employees will appreciate the quick gratification, and you won’t be adding to their workload in the process.

Cashback programs

Cashback programs, like point programs, have a low entry barrier to participation. Users in this model receive the same “cash back” in the form of a retailer-specific coupon or credit. Cashback programs are among the simplest to maintain, especially when they are automatic. Amounts due for cashback can be calculated using automation technologies before being processed and disbursed automatically.

Premium programs

The most effective way to increase the loyalty of high-value customers is to implement premium loyalty programs. Members of these programs pay a fee to gain access to a variety of exclusive benefits.

Compared to members of point and cashback programs, who are 30% more likely to spend more, a McKinsey study found that premium program members were 60% more likely to spend more on your brand. Customers with a limited budget may be unable to afford their pay-to-play business model.

It’s critical to understand your customers’ needs and wants before creating a loyalty program, and then tailoring your program to meet those needs.