What Makes Successful Customer Loyalty Programs?
In a world where acquiring new customers is at least 5 times more expensive than keeping existing ones, a 57% increase in customer loyalty program spending registered in 2017 doesn’t really come as a surprise. Consider building a rewards app, too? Here’s what successful mobile customer loyalty programs have in common.
Successful loyalty programs examples (and lessons to be learnt)
First, there’s a bit of advice from r-stylelab.com: leave printed loyalty cards and leaflets behind. Old-school tricks won’t help you retain modern consumers who spend 5 hours a day on mobile devices (with apps accounting for 92% of the mobile time), ignore Facebook ads and love VR shopping. The fact that the average US family holds membership of 29 loyalty programs and participates in only 12 of those speaks for itself. A customer loyalty app, on the contrary, will surely resonate with Gen Z and Millennial consumers (who officially overtook Boomers as the largest buying power).
My Starbucks Rewards (Starbucks)
Often cited as the best customer loyalty program out there, My Starbucks Rewards helped the coffee company increase annual revenue to $ 5.71 billion (2016) and has evolved into an 11 million user community. In 2011 Rewards was launched on both iOS and Android nationwide and went on to process over 42 million payment transactions within a year.
Here’s what made the app an instant success:
- Simplicity. The functionality of the early My Starbucks app largely mimicked the company’s traditional loyalty card system. Starbucks made use of its POS equipment and enhanced the app with the QR code recognition technology, thus enabling customers to pay for drinks and snacks with their mobile phones and receive bonuses (stars) for every purchase;
- Continuous engagement. Whenever a customer opens his Starbucks app, he is greeted with limited time bonus offers, news and a star account statement. The app also features a map of Starbucks nearest locations, allows users to place an order before they reach the store, recalls past orders and has a sleek recommendation engine suggesting products that may pair well with your favorite ice latte;
- Flexible rewards system. Since Starbucks sells products and merchandise outside its retail locations, the app also tracks purchases made in partner stores and awards users accordingly.
The company continues to improve their loyalty program (which currently has three tiers including the Gold status) and has recently switched its star system from transaction- to dollar-based. In the first quarter of 2017, Starbucks loyalty card payments accounted for 40% of the company’s US revenue.
Piece of the Pie (Domino’s Pizza)
Domino’s is no stranger to innovation. The pizza company became one of the first brands to try Amazon Dash “Easy Order” buttons, enable emoji-triggered orders on Twitter and make use of mobile payments. They went on to let customers order their favorite pizzas by simply starting the Domino’s mobile app!
In order to secure their place in the competitive market (FYI, Americans spend as much as $ 36 billion at pizza restaurants every year), the company brought their Piece of the Pie program to desktop, mobile and tablets. By going digital, Domino’s achieved continuous growth and increased sales by 81% (with mobile driving 48% of the company’s total online sales).
Domino’s recipe for success is fairly simple:
- Simplify bonus earning process ($ 10 account for 10 bonus points; 60 points can be redeemed for a free pizza);
- Fuel impulse buys (a customer is more likely to place a quick order via a mobile app and redeem points if you keep him informed on latest campaigns and special offers);
- Offer perks (Domino’s loyalty program users are always given perks like double bonus points, complementary products, prize money or…the company’s shares).
Key features of a successful customer loyalty application
Marketing aside, what features would encourage customers to download, install and actually use your rewards app?
Pavel Vaskou, Head of iOS App Development Unit at R-Style Lab, has recently worked on the Addzer project. Addzer is a SaaS solution targeted at small cafés and restaurant chains that are new to loyalty marketing or cannot afford to develop a custom loyalty app. The application (available on the App Store and Google Play) rewards customers with bonus points for purchases made at catering facilities that enroll in the program, as well as bonuses off the orders placed by the users they’d referred the system to.
Based on his experience and successful mobile loyalty programs examples, Pavel has identified the features of a customer loyalty app that provide value to both businesses and users:
- Web-based admin console (enabling companies to add content and manage user profiles/locations);
- User profile (supporting login/registration via social media accounts);
- Social features (including comments, reviews, ratings and social sharing);
- Mobile payments (you can pull an early Starbucks and implement the QR code recognition technology or integrate your app with popular mobile payment systems like Google Wallet, Apple Pay or PayPal);
- Promo code and campaign management modules (9 out of 10 customers will return to a company that issues promo codes and coupons).
Going back to Addzer, it’s fair to say the app is not one of a kind. Applications like Belly, LevelUp and Perka also allow small businesses to set up corporate profiles, create promo campaigns and award points to loyal customers.
Does it make sense to develop a customer loyalty app from scratch?
It depends. There are several factors to consider, such as the type of products and services you offer; programs that provide instant benefits – for example, bonus points which can be redeemed on a daily basis, – tend to perform better than tourism and hospitality rewards solutions. Also, there’s custom design and the opportunity to create a powerful brand identity. Finally, a custom app is tailored to meet your company’s needs. Today you might be totally satisfied with a third-party rewards program; the next day you decide to engage customers through beacon-triggered notifications, and it turns out your current app does not support the feature. Don’t jump to conclusions; consult a reliable mobile and custom web application development company instead!
How much does it cost to develop a customer loyalty app?
According to Pavel Vaskou, it will take you approximately 6 thousand man-hours to create a fully functional app like My Starbucks Rewards or Addzer. The estimate covers the development and deployment of native iOS/Android mobile apps (2 thousand man-hours), server-side development (3 thousand man-hours), design and QA (all the rest). Multiply the numbers by the median developer hourly rate ($ 150-165 for US, $ 70 for EU and UK and $ 25-35 for Eastern Europe). Now you know what to expect.
Provided you conduct market research, write comprehensive software requirements and address a mobile vendor who’s worked on similar projects before, you can always reduce mobile development costs, though. Think big – and success will follow!