Different Types of Customer Loyalty Programs

Along with reward programs, there are other different methods of retaining customers. Four different types of successful customer loyalty programs are: membership programs, reward programs, creating a community, and creating a specialized business.

1.      Membership Program: membership programs are a great way to retain customers as most programs provide special incentives to those involved. Customers usually purchase a membership to gain access to a company’s products or services. In order to continue using or purchasing these amenities, members will continue to pay for their membership weekly, monthly, or even yearly. Here are a few examples of membership programs: gym membership, Costco, library card, and interactive online video games (Xbox live).

2.      Reward Program: reward programs provide customer incentives from collecting reward points and are earned according to the amount of business you do. In most cases, reward programs are implemented through point cards, where members gain points from each purchase made. You are able to redeem your points whenever you would like and in return most businesses will provide you with store credit to continue purchasing product. Reward programs are valuable because they drive customer satisfaction by giving you a reason to continue doing business with a company. Here are a few examples of reward programs: Air Miles, Shoppers Optimum, Scene Card and PC points.

3.      Community and Specialized Business: creating a community or a specialized business are informal types of customer loyalty programs. They are not applicable to every type of business and may only be targeted towards particular customers.

a.      In a community, businesses create personal relationships you. This relationship is vital for businesses to retain loyal customers. An example of a community type of loyalty program is Michaels the Arts and Craft store. Michael’s partners and supports various not-for-profit charities such as Crafting for the Cure- a charity that supports children with cancer. They also offer different crafting and cake decorating classes that are taught in store. From these programs and classes, the company is able to retain customers by being actively involved within the community.

b.      A specialized business is a business that focuses on a particular service or product. Unlike the other types of programs, specialized businesses are not so much a traditional loyalty program, however are effective when retaining and creating loyal customers. This method consists of having a specific product that is essential to the customer and must be replaced or updated every so often. An example of a specialized business is Norton Anti-Virus. The company serves to protect computers and hard-drives by providing anti-virus software. The exception is that the software has an expiry date at which it must be re-purchased and renewed at the end of its usage. However because of the increase in internet usage in businesses and everyday life, more customers are looking towards regularly installing these programs to protect their computers against any hazardous viruses. Therefore the company is able to retain customers as their product will always be needed.