Merchant Rewards Programs: Easy Ways to Boost Customer Loyalty

In today's busy market, businesses are always looking for ways to keep their customers coming back. One great way to do this is by using merchant rewards programs. These programs give customers special deals and rewards for shopping with a business regularly. This not only makes customers happy but also helps businesses build strong relationships with them.

A good merchant rewards program can really make a difference. It can make customers more satisfied, encourage them to shop more often, and help the business grow. Whether you run a small local store or a big retail chain, knowing how to use these programs can be a big help.

In this blog, we’ll talk about what merchant rewards programs are, the key parts that make them work, the benefits they offer, and the different types of programs you can use. We’ll also look at a real-life example of how one business used a rewards program to get great results.

Did you know? 80% of consumers say they’re more likely to do business with a company that offers personalized experiences. So, let’s get started and learn how merchant rewards programs can help you keep your customers happy and boost your business!

What are merchant rewards programs ?

Merchant rewards programs are loyalty programs offered by businesses to incentivize customers to make repeat purchases. These programs reward customers for their loyalty and encourage them to choose a particular merchant over competitors.

Merchant rewards programs typically work by offering points or discounts for every purchase made. These points can then be redeemed for future purchases or other rewards.

These programs are beneficial for merchants as they can help increase customer retention, encourage higher spending, and provide valuable customer data for marketing purposes.

Overall, merchant rewards programs are a valuable tool for businesses looking to build customer loyalty and increase sales.

Key components of merchant rewards programs

Merchant rewards programs typically consist of several key components:

Membership or Loyalty Card: Sometimes, customers may receive a membership card in the form of a plastic card or a card created in the digital space, which they can use to track the accumulation of points and access additional bonuses for easy redemption.
Tiered Reward Levels: The variations in the number of memberships could be because some offer the options of the number of times or amount spent by a certain customer, and the more a customer spends; he gets to the next level to enjoy more privileges.
Special Promotions and Offers: Special promotions or bonus points or lucky bouts are provided by the merchants to encourage purchases or to respond to particular trends, giving people a feeling of fun and a distinct segment kind of affair.
Personalized Offers: A few examples of applying customer data include: increasing the relevance of the offers or rewards aimed directly at the customer by referencing a particular trip and the preferences shown by this customer during the previous trip.
Mobile App or Online Portal: Most of them provide their customers with account login information where they apply point tracking for its convenience in addition to rewards and other contents.
Communication Channels: Finally, merchants regularly inform the customers about the rewards they have or new offers available and this is done through emails, SMS or notifications within the application where necessary so as to keep the customer engaged.
Customer Support: A separate customer support mechanism makes it possible for customers to contact the company for clarification on anything regarding the rewards program or to even report any issue they may come across with while using the program.
Feedback Mechanism: Sometimes, even merchants require customers to give their feedback on the rewards program that is likely to be modified to rectify areas perceived as lacking by the customers, further showing that the program is progressive.

Benefits of merchant rewards programs

Merchant rewards programs offer several benefits to businesses:

Increased customer loyalty and retention: Since incentive programs aim to increase ticket sales, these programs are useful in building the long-term loyalty of such customers.
Improved customer engagement and satisfaction: As we know, rewards programs are a nice addition for organizations as it makes options for customers not just a simple purchasing process but makes it more of an enjoyable experience.
Boost in sales and revenue: One of the major benefits realized from the use of rewards programs is that they would help persuade customers to spend more or to buy more products to be able to claim for their rewards, hence, more sales and more revenues.
Competitive advantage in the market: Having a reward program can create a gap between a business and competitors since all customers like to get something in return for their purchase.
Data insights and marketing opportunities: Money-saving programs also offer retailers a wealth of information on customer habits and interests arising from their use of the cards, information that can be leveraged to better target promotional campaigns and offers.
Word-of-mouth and referral marketing: Customer satisfaction helps gain new consumers in that happy consumers spread the word about the product to other consumers, therefore becoming a selling point in its own right.

Types of merchant rewards programs

Merchant rewards programs can help businesses keep customers happy and encourage them to shop more often. Here’s a simple guide to different types of merchant rewards programs:

1. Loyalty points programs

In loyalty points programs, customers earn points every time they make a purchase. They can collect these points and later use them for discounts, free items, or other rewards. For example, if you earn 1 point for every dollar spent, you can save up those points and trade them in for something special. This makes customers want to keep coming back to earn more points.

Walgreens Balance Rewards: Walgreens offers a loyalty program called Balance Rewards, which rewards customers with points for purchases made at Walgreens stores, which can be redeemed for discounts on future purchases.

2. Discount programs

Discount programs are those that allow the customer to be provided with a specific percentage or quantity that they can be allowed to deduct on the total amount of money they are attending to spend. These may include things like the end of the year sales, we introduce new membership sales and first-time buyer sales. For instance, a store may give a free cup of coffee to anyone who purchases a pastry from the store. Such programs are simple to comprehend and prompt instant acquisition of the good or service by new consumers, as well as re-purchasing by prior users.

3. Cashback programs

Cashback programs are something that provide customers a part of what they spent back after they have made the purchase. It could be cash, store credit, or a gift card as a form of payment depending on the individual’s preference. For instance, if a business or an organization provides 5% cashback on all the purchases, the purchased amount can be paid back anytime in the future. It may be cut across as something that customers appreciate since they understand the kind of benefit that they are receiving, and it is given to them right there and then.

The Rakuten Cashback App is a smart and simple platform that helps you earn cashback on your online and in-store purchases. This app is easy to use, making it simple to save money while shopping for your favorite brands and products.

4. Referral programs

Referral programs reward customers for bringing in new shoppers. Customers get benefits like discounts, points, or cash for each new person they refer who makes a purchase. For example, you might get $10 off your next purchase for every friend you refer who buys something. This helps businesses grow by using word-of-mouth recommendations.

Airbnb: Provides travel credits to both the referrer and the referred friend when the friend books a trip. The credit appears on the checkout page for the referrer's next booking. If the credit hasn't appeared yet, it means the friend's trip is pending or didn't qualify.

5. Tiered rewards programs

Tiered rewards programs offer different rewards based on how much a customer spends. The more you spend, the higher your tier and the better your rewards. For instance, there could be Bronze, Silver, and Gold levels, with Gold members getting the best perks. This encourages customers to spend more to reach higher tiers and get better rewards.

Hilton Honors: Members can move up through different tiers (Silver, Gold, Diamond) by staying more nights, with each tier offering better perks like free Wi-Fi, room upgrades, and bonus points

6. Partnership programs

Partnership programs involve two businesses teaming up to offer joint rewards to customers. For example, a coffee shop might partner with a bookstore to give customers discounts at the bookstore when they buy coffee regularly. These programs add extra value for customers and help both businesses reach new people.

Case study: Walrus Ice Cream - driving sales with loyalty and rewards programs

Walrus Ice Cream, a popular local ice cream shop, faced the challenge of expanding their customer loyalty to boost recurring business. Despite their established reputation, they needed innovative ways to keep customers returning more frequently.

Challenge

Expanding Customer Loyalty: As a beloved local spot, Walrus Ice Cream was looking to enhance customer loyalty and increase the frequency of visits by providing more value to their patrons.

Solution

To tackle this challenge, Walrus Ice Cream implemented Customer Engagement suite. This comprehensive solution includes:

Rewards Programs: Offering points and rewards for repeat purchases to incentivize frequent visits.
Promotions: Implementing targeted promotional campaigns tailored to customer preferences and purchase history.
Feedback Tools: Integrating customer feedback mechanisms to improve service and offerings based on real user experiences.
Database Management: Creating a robust database of patrons that enables targeted benefits and fosters stronger connections through personalized engagement.

Results

Increased revenue: Walrus Ice Cream experienced a remarkable 28% increase in total revenue within the first year.
High redemption rates: 15% of customers redeemed promotional coupons, indicating effective campaign targeting and customer interest.
Boost in gift card sales: Digital gift card sales represented 4% of overall sales, highlighting a successful expansion into new revenue streams.
Expanded customer database: The customer base grew significantly to over 3,000, enhancing the potential for future marketing and loyalty strategies.

Conclusion

Merchant rewards programs are a powerful tool for any business looking to build strong relationships with its customers. By understanding what these programs are and the key components that make them effective, businesses can create rewarding experiences that keep customers coming back.

The benefits of merchant rewards programs are clear: they boost customer loyalty, increase sales, and help businesses grow. With various types of rewards programs to choose from, each business can find the one that best fits their needs and goals.

The case study shows a real-life example of how a well-designed rewards program can lead to great success. By applying these insights, any business can enhance its customer engagement and drive long-term growth.

In short, merchant rewards programs are an essential strategy for any business aiming to thrive in today’s competitive market. Start planning your rewards program today and watch your customer satisfaction and business success soar!