Customer loyalty has long been the holy grail for businesses. As Amazon has proven through its Prime program, a loyal customer can be a very lucrative customer, but the formula for driving repeat purchases can often seem elusive. As confounding as that may be, an examination of successful subscription loyalty programs reveals a few traits that help certain programs to pull away from the pack.
Amazon Prime is the current gold standard for loyalty programs — not to mention the envy of and a potential threat to many retailers across the country.
Like FreeShipping.com before it, Prime’s sole aim when it launched in 2005 was to solve the biggest pain point for online shoppers: shipping costs. To do so, both programs focused on leveraging a free shipping benefit into a major sales and loyalty driver. As mountains of data can show, their moves were extremely savvy. According to a June 2016 study from Walker Sands, free shipping deals still drive consumers’ online purchase decisions:
- 88% of consumers say a free shipping offer would make them more likely to shop online, a 10% jump from 2014 figures
- Free shipping is the top incentive for consumers at all purchase frequency levels, from once a year to multiple times every week.
Given that, it’s easy to see why online shoppers would be attracted to a program like Amazon Prime. If you give them something they really want time and time again, they’ll come back to shop with you time and time again. Indeed, knowing that they have unlimited access to free 2-day shipping is a major reason why, according to one estimate, Prime members spend over twice as much at Amazon as non-Prime customers do — and why there are now over 60 million members.
Another key to a successful customer loyalty program is offering benefits that provide ongoing discounts, money-saving opportunities or free products. Gone are the days when a business can simply offer sign-up bonuses and occasional coupons as a way to differentiate itself from the competition. According to a recent survey, consumers have clear goals when they join loyalty programs:
- 57% of customers want to save money, typically via discounts on products
- 38% want to receive rewards that they can then redeem for, say, free food or a free flight
- 6% want to earn some type of elite status
- 6% join for “other” reasons, such as social recognition
Wyndham Hotels’ rewards program, which was recently named the top hotel loyalty program in the world by U.S. News & World Report, has succeeded in fulfilling all of these member expectations.
Since restructuring its program in May 2015 to simplify the redemption process — which now lets members redeem any room at any Wyndham-owned hotel for any date, with no blackouts, for 15,000 points — it’s seen a huge boost in popularity. From May 2015 to April 2016, Wyndham Rewards added 5 million new members, which boosted its overall membership to 44 million and resulted in a 70% jump in property redemptions. Hotel-stay redemptions increased from 55% in 2013 to 75% in 2015.
Wyndham didn’t stop at simplifying the process, though. It also expanded Wyndham Rewards’ benefits, enhancing its value to members. Creating membership levels (Blue, Gold, Platinum and Diamond) made it more inviting; practically anyone could qualify for popular perks, which encouraged more people to sign up (and thereby agree to receive ongoing communiqués from the program).
For example, members reach Blue-level status just by enrolling, and they automatically get free Wi-Fi and monetary credits toward local experiences, which can include tours, cooking classes or even something as crazy as indoor skydiving. At higher levels, which frequent visitors can easily attain, Wyndham offers more perks, such as preferred rooms, free car-rental upgrades and other desirable travel extras.
As Amazon Prime, Wyndham Rewards and other popular loyalty programs demonstrate, customers respond positively to incentives that give them relevant, worthwhile reasons to keep coming back. Better yet, the more perks you offer them, the more they’ll frequent your brand. The foundation for building customer loyalty isn’t as complicated as some people might think: It’s a simple matter of gathering and analyzing the data and then giving people exactly what they tell you they want.
Check out The Ultimate Guide to Loyalty Programs.
Michael Iannucci
Michael Iannucci is our Executive Vice President, Business Development & Client Management. He has over 15 years of experience at top loyalty marketing and subscription commerce companies, where he held leadership positions in sales, business development, and account management.