Facts about Loyalty Programs, Types, and Their Definition

Do you know about loyalty programs? What is the true meaning of a loyalty program? So, in essence, a loyalty program is a way for businesses to make customers feel at home and come back again by providing rewards. Check out more details in the following article!

What is a Loyalty Program?

Have you ever felt special because you got a discount or attractive gift from your favorite brand? Well, that's a form of loyalty program, a smart strategy that businesses use to build closer relationships with their customers.

The basic idea is simple, namely the more often you shop, the more benefits you get. Loyalty programs are actually not just about gifts or discounts.

More than that, this is a way for businesses to encourage loyal customers to keep shopping and at the same time keep them away from the temptation of competitors. Through this program, customers feel appreciated for every transaction they make. This feeling of being appreciated is often the reason someone keeps coming back for more.

Why is Loyalty Program Important?

For example, there are two shops offering similar products at almost the same price. However, one shop gives points every time you shop, which can later be exchanged for free shopping vouchers.

Naturally, you will choose that shop more often, right? This is where the power of loyalty programs lies. This program is also a way for companies to understand their customers better. 

When you register for a loyalty program, you usually provide information, such as shopping preferences, habits, and contact data. This information allows companies to create a more personalized and relevant impression.

In addition, loyalty programs not only benefit customers, but also provide great benefits for businesses. When customers feel satisfied and loyal, they are more likely to recommend the brand to others. Interestingly, this kind of recommendation is more effective and much more cost-effective than conventional marketing.

How Does Loyalty Program Work?

Each program has a different mechanism, but the core concept is almost the same, namely providing rewards for customer transactions or interactions. Some programs are points-based, where you collect points every time you shop, then exchange them for discounts or free products. 

There are also level-based programs, where customers earn greater benefits when they reach certain levels. Not only does it keep old customers, loyalty programs also have great potential to attract new customers. 

How to? When loyal customers share positive reviews, potential customers feel more confident about trying the brand. Well, many companies are now integrating referral systems into their loyalty programs. So, customers get additional prizes when they successfully invite other people to join.

In essence, if you have a culinary business, understanding this concept can be a big step in making customers more loyal. Apart from that, there are other interesting facts about this loyalty program, you know! Come on, take a look at five interesting facts about loyalty programs that will make you more confident in implementing them in business!

1. Effective Ways to Increase Customer Retention

The first fact is that a loyalty program is a strategy that makes customers feel more at home. With this program, customers feel appreciated because for every transaction they can get a reward. 

For example, by collecting points which can later be exchanged for discounts or attractive prizes. Programs like this not only make customers return more often, but also create an emotional connection. 

Customers no longer just come, eat, then leave. They have a reason to continue to be connected with your business. 

A real example of an effective loyalty program is ESB Loop. Through a points collection system, customers can move up a tier and get special benefits. So, each of their visits feels more valuable.

2. Helping Businesses Compete in the Market

In the midst of intense business competition, you need a strategy that makes your culinary business different from others. 

Customer loyalty programs could be the answer. This program is not just about providing rewards. More than that, you can understand customer habits. With this data, you will know what they like and need. 

Read Also: 7 Ways to Increase Customer Loyalty, So Your F&B Business Soars!

3. Suitable for various business scales

Many people think that loyalty programs are only suitable for big businesses. In fact, all types of businesses can apply this program, including small restaurants. 

Digital technology now makes everything easier and more affordable. Customers just register, collect points, and enjoy rewards. Apart from that, restaurants can also take advantage of active and dormant customer features. 

4. Increasing Sales Through Customer Recommendations

One interesting fact about loyalty programs is their ability to increase sales through recommendations. Loyal customers not only buy your products, but also help with free promotions by recommending them to friends or family. 

The more they recommend, the greater the chance of your business being known more widely. 

5. Long Term Investment

The final fact is that loyalty programs are not just a temporary marketing trick. So, this is a long-term investment to maintain business stability. 

With this program, you build long-term, mutually beneficial relationships.

Satisfied customers will keep coming back and even bring in more new customers. 

Apart from that, the loyalty program helps you deal with fluctuating market situations. For example, during a pandemic, loyal customers can be the savior of your business.

This is where technology plays an important role, because with With an integrated system, you can manage your loyalty program easily. Customers can also enjoy it more practically, such as ordering food online or making reservations.

Read Also: Want to have loyal customers? Try implementing this in your culinary business

Types of Loyalty Programs

Oh yes, interestingly, this program comes in various forms, and each type has its own charm. So, if you're curious, let's discuss the types of loyalty programs that can make your shopping experience more special!

1. Point-Based Program

Imagine every time you shop, points are collected. Over time, these points can be exchanged for discounts, free products, or even special vouchers. 

This type is a favorite of many people because the method is simple and the benefits are real. 

You just need to make transactions as usual, then watch your points continue to increase. 

This program is suitable for those of you who like to collect things and enjoy the results later. 

For example, you can enjoy big discounts when points are accumulated at the end of the month. Exciting, right?

2. Tiered Program

If you like challenges, this program could be your favorite. The system divides customers into several levels, or in cool terms tiers. The more often you shop, the higher the level you reach. 

Each level offers different benefits. At the initial level, maybe you only get a small discount. But once you move up to a higher level, you can enjoy exclusive access to the newest products or bigger discounts. This type makes you feel appreciated because your efforts and loyalty are recognized in real terms.

3. Paid Loyalty Program or Special Membership

Imagine you pay a membership fee to enjoy special facilities. At first glance, it may seem daunting at first, but the benefits offered usually far outweigh the costs. Programs like this are often implemented by online shopping platforms or streaming services. 

Customers who join usually get priority service, exclusive discounts, or early access to new products. If the benefits match your needs, this small investment will definitely feel very worthwhile.

4. Cashback Program

Who doesn't like cash back? In this program, every time you shop, some of the money you spend will be returned, usually in the form of credit for your next purchase. 

This kind of incentive makes customers return more often for transactions. Apart from saving money, you also feel that shopping becomes more profitable. Suitable for those of you who like to look for more value in every transaction.

5. Coalition Program

Imagine being able to collect points from various stores or brands at once. This is the main concept of the coalition program. Through this program, you can shop in various places, but still get integrated points. 

These points can be exchanged at any of the stores in their network. For example, you buy coffee at shop A, but the points can be used for shopping discounts at clothing shop B. Exciting and flexible, right?

Hidden Benefits of Loyalty Programs

Apart from attracting customers, loyalty programs also have other benefits that are often not realized. One of them is customer data. With this program, you can collect information about their shopping habits. 

This data is invaluable for understanding what they like and how to improve the service. For example, you can find out what menu items are ordered most often, what the restaurant's peak hours are, or which customers often return. 

From here, you can create a more effective and efficient business strategy. Don't wait long! Visit ESB Loop today and make loyalty programs your main weapon to win customers' hearts.