Many small-scale businesses have demonstrated an incredible turnaround to become renowned multinational big enterprises taking advantage of loyalty programs’ super appealing power. While the most loyalty program’s primary goal is to retain customers – getting them excited and compelling them to keep coming to spend their money for your business, many companies have accrued billions of dollars while making their customers happy. 

More than advertising, loyalty marketing programs have fetched more profits in hundreds of millions for several multinationals in these recent years. Generally, we’ve all known that airlines amass a shocking amount of money from their distinguished loyalty programs for a long time.  Incremental Marketing has worked with clients such as Qantas and Emirates, both of which are in the same scenario.

For instance, in 2019, American Airlines generated more than US$3.1billion from a loyalty program called AAdvantage program points sales. United MileagePlus yielded US$2.3billion, and Delta SkyMiles amassed over US$3 billion. 

Meanwhile, not only airlines make as much money from loyalty marketing, other businesses, including chain grocery stores, beauty and fashion companies, online marketplaces, and more, have generated billions of dollars through effective loyalty and rewards programs. Gone are the days that companies use a loyalty program to attract customers to generate a little extra cash. Presently, loyalty marketing has become a lifeline for many companies as they now depend on it for survival. 

Now, knowing how much your business can generate from loyalty programs, let’s learn the techniques to know ‘HOW’ you can navigate through to generate millions of dollars using that loyalty program you think is not working. 

First, you need to note that many loyalty programs fail because the organizers did not get it right from the start. Hence we have the mandate to discuss how to create a loyalty program that can generate billions for your business.Conclusion Of The Contract, Handshake

Essential tips to make your loyalty program generate money

1. Identify your customers’ ultimate needs

You cannot generate a lot of money program that doesn’t serve the needs of your customers. Nobody wants to spend either a small or huge amount of money on a program that doesn’t add anything to them. So, you need to ensure that you make your customers’ needs the center of your loyalty program. 

Your loyalty program should offer something unique to your customers. as a business owner, you must always think about what your customers want the most. You must know what brings them into your business and what they want to derive from your products or services after all. 

Depending on your customers’ research results, you may want to offer discounts, free meals, invite-only events, weekly emails updating them about your next new offer, and more. 

2. Choose an attractive rewards system

The following are three examples of great loyalty programs that have generated millions of dollars for the company:

  • Points-based loyalty program 

This type of loyalty program is the most common because customers find it more straightforward to understand, and it is easier to operate for companies. This type of program makes customers earn points as they buy and get those points as credit for their next purchase. A points-based loyalty program makes it easier for customers to track their progress via loyalty cards, mobile apps, or online accounts.

  • Tier-based loyalty programs 

Though this type of program also involves earning points but it different from the points-based. Tier-based programs are in levels. Customers will unlock another level to enjoy better benefits opportunities after making specified points at a level. This system encourages customers to spend more money to advance to the next level.  

  • Mission-driven loyalty programs 

With this program, companies integrate their loyalty and rewards programs with their business goals and mission. This type of program works better for companies that have a social mission. Ask Ben & Jerry’s; they will tell you that a mission-driven loyalty program can generate hundreds of millions if you get it right. 

3. Motivate your customers to join the program 

After you have created a robust customer-oriented loyalty program, the work doesn’t end there. You need to motivate your loyal customers to sign up and use the perks. Generally, most customers refrain from joining new platforms, so you would have to use enticing rewards to get them interested.

Where the Big Money comes from

To better understand the money-making strategies for loyalty programs, let’s consider a few companies as a case study to learn how they practically generate millions of dollars through effective loyalty programs.
Money, Dollars, Success, Business

United Airlines 

United generates big cash from their loyalty programs by selling miles to third parties. In 2019, the company generated over $3.7 billion from selling miles to third parties. You wonder how this happens; let’s go through a real-life example. 

Firstly, you need to know that loyalty programs must be independent to be useable for collateral. With this independence, United Airlines record all the money that moves around within the company. As expected, this money is not new to the company. The new cash comes when a customer buys miles from the company instead of earning the miles by flying. 

A passenger flew United Airlines from LAX to Newark. He bought the ticket for $133.30. Based on the former system, the passenger was supposed to earn 2,454 miles for that flight. But presently, United Airlines awards miles to customers based on how much they spend instead of how far you fly. That made the passenger earned a little lesser. Yet, he got five times the base fare which rounded up to a whopping 555 miles. 

Out of those miles, United Airplanes paid MileagePlus Holding about a penny per mile. On a rough estimate, United paid MileagePlus Holdings $5.55 to award the passenger his miles, but the money could have been more than that if the ticket’s value was higher than that. Technically, this money seems funny. It seems United is only moving its cash from its left pocket to the right. 

Now, big money comes from the remaining 71%, which the company generates from selling miles to third parties. How does that work? It’s simple. If you have gotten a United Airlines credit card from Chase, it’s a juicy money source for United. Chase would have to pay United Airlines for every mile you earn. 

Interestingly, if a customer has any ultimate Chase credit card, it’s another opportunity for United. Anytime the customer transfers points to United Airlines, Chase would have to United for access. It doesn’t end there. If a customer earns miles from shopping, the vendor will pay United every time a vendor awards miles to any customer that buys via the credit card. 

The loyalty program gives more to the company than retaining customers for further patronage. We can mention how companies like Amazon, Starbucks, Swarovski, Sephora, Gilt, EB Games, and other multinationals practically make their billions through successful loyalty programs. No wonder banks are now ready to lend big money to companies using their loyalty program as collateral.