In an era marked by 222% higher customer acquisition costs (CAC) than we’ve seen in the last ten years, converting existing customers into repeat buyers is a boon for businesses.
Existing customers are not only easier (and 6 to 7 times cheaper) to sell to than first-time browsers, but they also spend up to 67% more per purchase, which can help brands quickly move the needle on marketing ROI.
When it comes to keeping customers coming back, subscriber experiences and loyalty programs are two of the most effective ways to encourage repeat customers to spend more and save more — and they work even better together.
Loyalty programs incentivize repeat purchases, while subscriptions remove friction from the shopping experience. When these kinds of programs are seamlessly integrated into one holistic offer, customers stick around for the enhanced value and convenience — which adds up to more recurring revenue and customer lifetime value (LTV) for brands.
The best ways to combine loyalty programs with subscriptions
Like subscription offers, loyalty programs come in all shapes and sizes. The first step to finding the winning combination is understanding what makes your customers tick.
Some value propositions will resonate more with certain customer segments than others. In this case, the pain points and value adds that matter most to your repeat customers should be the north star.
While there’s no one-size-fits-all approach to integrating subscriptions with loyalty programs, there’s plenty of inspiration to glean from the brands getting it right.
Here are five powerful ways to take loyalty programs to the next level with subscriptions.
1. Referral Programs
Tapping into the tried and true power of social proof, referral rewards programs leverage word-of-mouth recommendations to show appreciation to their loyal brand advocates and the new customers they bring on.
When 84% of consumers trust personal product recommendations from friends and family the most, referral rewards can do double duty to simultaneously boost customer acquisition and LTV.
For inspiration, look no further than OLLY who combines their subscriber experience with a generous referral program to not only incentivize shoppers’ commitment to their own health and wellness, but also promote a healthy lifestyle to their loved ones.
On top of 15% off every subscription order, OLLY gives customers 20% off for referring a friend — and newly referred customers automatically get 20% off, whether they place a one-time order or enroll in subscriptions.
For those looking to boost subscriber enrollment, referral rewards are a golden opportunity to encourage your best customers to grow your subscriber base for you. Automatically rewarding subscriber referrals and incentivizing new signups with auto-applied discounts takes the friction out of loyalty point redemption, which makes the membership experience more worthwhile — and keeps customers coming back over time.
2. Points-based loyalty programs
Perhaps the most popular among shoppers and brands alike, points-based loyalty programs reward customers with points for each purchase to redeem on freebies, exclusive experiences, or discounts — creating plenty of valuable crossover opportunities with the subscriber experience.
For an example of how this can look in practice, Tula Skincare offers loyalty points for every online purchase — but they encourage subscription signups with 300 bonus loyalty points on new auto-delivery orders.
On top of turning subscription enrollment into a shortcut for rapidly earning loyalty points, brands can use their loyalty program to drive retention by letting subscribers redeem points on upcoming subscription orders — or even offering additional bonus points for subscription milestones like the fifth recurring order.
3. Tiered and gamified loyalty programs
Tiered loyalty programs rank members into groups based on number of purchases or other brand engagement metrics. The higher the tier, the better the rewards — so gamifying the experience gives customers a clear goal to ascend the ranks.
G FUEL is an example of how a brand can gamify their loyalty program by rewarding more loyalty points for more valuable forms of engagement — like offering one point per dollar on each purchase, ten points for social media engagement, and 300 points for referring friends.
Studies show that 39% of shoppers have made an unplanned purchase solely to earn more loyalty points, so using subscription purchases as a qualifying factor for membership rankings is a great way to convert loyal customers into subscribers, and encourage additional repeat purchases each month.
4. Paid membership programs
Ideal for customers who value exclusivity and rare experiences, paid membership programs offer customers ongoing benefits — like exclusive product pricing, free shipping, early access to promotions, or priority customer support — for a recurring or one-time participation fee.
Flaviar Black uses a paid membership program to appeal to spirits enthusiasts with limited product releases, special member pricing, and first dibs on premium and rare items.
Research has found that paid loyalty programs can increase purchasing likelihood by 60% — but that’s only half the battle when a clunky shopping experience causes 70% of shoppers to abandon the checkout experience.
Integrating the subscriber experience is how brands can capitalize on that increased likelihood of purchase — while delivering a smoother checkout experience that keeps customers sticking around to maximize the benefits of their membership.
5. Value-based loyalty programs for charitable causes
Rather than directly rewarding customers, value-based loyalty programs build an emotional connection with shoppers by letting participants “gift” a percentage of their purchase or an equivalent product to a good cause.
On top of a robust rewards program, PetValu combines value-based loyalty with their subscriber experience by promising to donate $20 worth of food to feed future Dog Guides.
Value-based offers are compelling in their own right, but they’re even more effective as an exclusive benefit for subscribers — and knowing that their repeat purchases are making a difference in the world can be the difference that encourages one-time buyers to enroll.
How to cross-promote subscriptions and loyalty programs for optimal retention and LTV
A strong cross-promotional strategy for subscriptions and loyalty programs will increase awareness, educate customers about each experience, and convince repeat buyers to take advantage of the offers available to them.
Making it easy to understand the benefits is the first step to growing your most valuable customer segment — the subscription loyalty program customer — and a landing page breaking down “what’s in it for them” is the perfect place to start.
Beyond addressing FAQs, a graphic or visual outlining which perks come with the loyalty program, subscriptions, or both, is the most understandable way to communicate your value proposition and ensure customers have all the information they need to take advantage of your offers.
When customers know how to maximize the benefits of their subscriptions and loyalty programs, they’re more likely to stick around. Taking every opportunity to cross-sell both throughout the shopping experience by highlighting bonus points earned — and opportunities to cash them in — is mission critical for engagement and retention long-term.
For example, U Beauty encourages subscribers to stay loyal with a CTA to redeem points on upcoming subscription orders. By letting their loyalty and subscription programs feed into each other, they encourage brand loyalty and honor their subscribers with the best value.
Transactional emails for the subscriber experience offer more prime real estate to promote your loyalty program, and vice versa, to a captive audience that’s likely to be interested in the benefits of being a subscription loyalty program customer.
Rewarding your best customers is a win-win that pays off in LTV
With consumers cautiously optimistic about spending — and raising the bar on who they’ll do business with in general — the brands that stand the test of time will be the ones leveraging emotional connections and convenience to create long-term customer relationships that offset CAC with better LTV.
To that end, combining subscriptions with your loyalty program is the answer.
Seamless integrations like Ordergroove x Friendbuy make it easy to offer subscriber-exclusive referral rewards to both advocates and newly referred friends, with rewards automatically applied to upcoming orders for hassle-free redemption.
Curious how Friendbuy's integrations can help you build loyalty with your most valuable customer segment? We’d love to chat.
