For consumers, the digital landscape creates countless offers for everything we might want and need to spend money on. Consumers have seemingly infinite options for purchasing clothing, groceries, electronics, and even intangible goods like streaming platforms and online services. This plethora of options adds convenience and ease to our daily lives.
However, for companies, the digital landscape is highly saturated and competitive. This has led to a growing battle for customer attention, and perhaps more importantly, customer retention. One way companies are forging customer retention is through loyalty programs and enticing offers.
These programs keep customers engaged with a company’s promotions and reward their spending. Often comprising several loyalty-building strategies, these programs have come a long way from the early days of brand loyalty cards. Digital capabilities like data collection, AI personalization, and gamification have drastically changed loyalty offers.
The Evolution of Loyalty Programs
For a long time, loyalty programs were fairly simple. They often involved a punch or stamp card, with each purchase leading to a free one in the future. Others offered a discount, such as 10% off each purchase, each time a customer returned. As technology has evolved, it has created more possibilities for rewarding customer loyalty, primarily thanks to data collection, AI, and gamification.
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Data Collection
When customers join loyalty programs, companies collect data about them to present better offers and perks to each customer. Common types of data collected include name, age, location, purchase history, reward redemptions, and website or app activity. This data allows companies to segment their audiences to create messages that will be more meaningful to specific groups.
AI Personalization
AI takes the data collected and uses it in sophisticated ways to create a personalized experience for each customer. It can identify patterns in people’s behaviors to predict the types of products and offers that a customer is most likely to engage with. AI uses these predictions to suggest relevant offers to customers to keep the company in their minds and drive actions, like new purchases and larger orders.
Gamification
Through point systems, badges, challenges, milestones, leaderboards, and tiered rewards, companies can captivate customers or users in new ways to keep them engaged. These game-like elements drive engagement, motivating users to earn rewards and climb leaderboards.
These capabilities have led to more sophisticated reward programs and innovative strategies for attracting loyal users, often paired with first-time user incentives to further incentivize them to sign up.
Strategies Brands Are Using to Attract New Users
Encouraging customers to buy from a company and become loyal involves crafting an offer that appeals to new customers or users the first time they purchase from a company and in subsequent engagements. Common strategies employed to achieve this include sign-up bonuses, referral rewards, and exclusive deals.
Sign-Up Bonuses
One popular method to encourage customers to join a loyalty program is to offer sign-up bonuses. In addition to sharing all the perks of the loyalty programs, sign-up bonuses make the deal more attention-grabbing and worthwhile to shoppers.
A sign-up bonus might include a discount code for a first purchase or reward points that can be put toward future purchases. In entertainment and gaming, brands may offer free play options, such as free spins at an online casino. But with competition mounting in industries like online gambling, some companies are going beyond free spins with offers like a package comprising $200 free money.
Gamification and Engagement-Based Rewards
Reward programs that resemble games increase interest, making engaging with a loyalty program fun, rewarding, and appealing to new and existing users alike. Reward programs are often points-based, allowing users to collect points to redeem for future purchases and other discounts or offers.
Some reward systems add different levels or tiers to their loyalty programs. Customers get increasing benefits with each tier, such as getting more points with each purchase or higher discounts. Gamifying reward systems can include activities beyond engagement to keep people coming back, like getting reward points for providing feedback to the company or sharing a review on the website.
Subscription Discounts and Free Trials
Offering subscription discounts and free trials can attract new users for online service providers and businesses with a subscription model. New users who are uncertain about a service can test it through a free trial before committing financially. We commonly see this with popular streaming sites like Netflix and Disney+, but you’ll also see it used for software like Microsoft Office and even on retail platforms that offer a subscription model, like Amazon Prime.
Exclusive Offers
Sharing that reward members get exclusive offers, like early access to new products, additional content, or other VIP perks, increases the interest among new users to join a loyalty program. It does this by using the idea of scarcity, heightening our desire to access something and increasing its perceived value. Exclusive offers are an effective strategy to encourage consumer engagement.
Referral Rewards
Referral rewards not only foster customer loyalty but also drive word-of-mouth marketing, which remains a powerful way for companies to gain brand awareness and grow a positive reputation. By offering referral rewards to existing customers, companies can attract new customers in a more impactful way because it comes paired with social proof—evidence that others not only use the brand’s product or service but like it so much they’re sharing it with others.
Wrap-Up
Rewarding new customers is an opportunity to create a more engaged customer who returns to the company again, driving profits and a positive brand reputation. The digital landscape offers many ways to reward customers, but it also increases competition. Crafting a specialized reward system is a key way to set a company apart and ensure long-term success, making loyalty a critical marketing element.
