Creating an irresistible loyalty program for your app
For app marketers, understanding the mechanics and benefits of loyalty and rewards programs is more than just a nice-to-have—it's a necessity in a market where user attention is a prized currency. These initiatives aren't add-ons; they're strategic tools designed to boost user engagement and app stickiness.
Whether you're aiming to keep your users engaged longer, increase app usage, or enhance overall user experience, fine-tuning an effective retention strategy can prove to be as tricky as trying to solve a puzzle with ever-changing pieces. We’ve curated all the essential insights in one place to get started with building a loyalty program that can become a foundational element of your mobile app retention strategy.
What is a loyalty program?
A loyalty program, also known as a rewards program or loyalty scheme, is a program that rewards and appreciates customers for their ongoing engagement and purchases. These rewards could include anything from free or faster shipping to points that can be redeemed for products, discounts, or other incentives at certain milestones. Unlike paid subscription memberships, loyalty and rewards programs automatically bestow benefits upon valued customers.
Consumer loyalty programs have traditionally been a cornerstone in the retail sector, where they have proven highly effective in enhancing revenue and building customer loyalty. However, the core concept of rewarding continuous customer engagement can be leveraged by any app vertical. The principles and mechanisms of retail loyalty programs can be tailored to fit the unique needs and dynamics of different sectors, offering a versatile approach to fostering high retention rates while driving in-app purchases (IAPs).
Types of loyalty programs
Each loyalty program has its unique characteristics and use cases. Here are eight types of loyalty programs to consider:
- Loyalty points: Customers earn points for each purchase, which can be redeemed for discounts, products, or services.
- Tiered loyalty program: Different levels of rewards are offered based on customer spending or engagement levels. Higher tiers provide greater rewards.
- Cashback rewards: Customers receive a certain percentage of their purchase value back as a rebate or credit for future purchases.
- Loyalty punch cards: Also known as frequency marketing, customers are rewarded after a certain number of visits (app sessions) or purchases.
- Referral programs: Rewards existing customers for referring new customers to the business, often with discounts or free products for both parties.
- Value-based loyalty programs: Aligns rewards with customer values, such as donating a portion of purchases to a charity or cause.
- Partner loyalty programs: Collaborates with other businesses, offering a wider range of rewards, oftentimes within the umbrella of a single brand, to expand customer benefits beyond a single company's offerings.
What are the benefits of loyalty programs?
Not only is it cheaper to retain an existing customer than it is to obtain a new one, but studies have proven a direct correlation between a company’s retention rates and revenue. Brand loyalty programs, in particular, have been proven to significantly impact retention. Statistics reveal a compelling narrative: 79% of consumers state that loyalty programs impact their decision to continue engaging with a brand.
We can see the benefits reflected across the case studies of app marketers focused on retention growth. For example, IDP Education increased its D7 retention by 10% and simultaneously saw a 25% growth in monthly active users (MAUs).
Ultimately, these loyalty rewards programs incentivize repeat business and encourage customers to spend more over a longer period of time. Plus, it turns your customer base into advocates for the brand.
Loyalty programs examples
There is a lot to be learned from top loyalty programs such as those of Starbucks, Sephora, and Cinemark. These reward programs have become beacons in the retention marketing world for good reason.
Perhaps less spoken about, but just as noteworthy, here are a few examples of loyalty programs and features across mobile app verticals:
How to create a loyalty program for your mobile app
So what can we learn from successful loyalty programs? Best in class loyalty programs:
- Offer real value to the user.
- Clearly outline how the rewards system works.
- Don’t require a huge investment from the user before rewards are made available.****
To create a loyalty scheme, you’ll first need to name your program. Take a look at some existing loyalty program names for inspiration:
|Loyalty program name
|World of Hyatt
|Crown & Anchor® Society
Each of these names is short and witty, with most featuring the name of the brand.
Next, you’ll need to consider realistic KPIs for your initiative. According to Annex Cloud, common mistakes that prevent brands from achieving the maximum possible return from their loyalty programs include not setting clear enough goals or basing goals off of the wrong metrics, focusing on getting more users signed up rather than the right users, and not communicating the value of the loyalty program to users.
Having established your goals, you’ll have context to better analyze the data that you have on current app users. Resulting insights will help you determine which segment(s) will be the right fit for your rewards program. Hint: You can complete this step with Adjust data! Seek out users who have:
- Frequent sessions.
- Long session length.
- High in-app spend.
Then, deep dive the events most often connected with these users to find which rewards will best suit your loyal customers. As a starting point, according to Statista, the top four rewards within loyalty programs, ranked by consumers, are:
- Personalized offers and/or discounts.
- Exclusive offers.
- Loyalty points to be redeemed as the user chooses.
- Lower pricing.
Now, on to the most important step: Develop loyalty marketing campaigns to communicate this value to users. Test, learn, then test again. Keep in mind that what works at one point in time may change, as do consumer behaviors and expectations. Adapt your loyalty program as needed to keep it fresh and relevant. Above all else, prioritize making your loyal users feel truly valued and appreciated.
Be the first to know. Subscribe for monthly app insights.