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.

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.

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.

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.

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: