What makes a loyalty program work? Making friends and influencing people

Making friends and influencing peopleGo grab your wallet.  Now open it.

Pull out a membership card that relates to a loyalty program (we know there’s at least one in there).  Ponder this thought; what is it about your relationship with that brand that you allow them to take up valuable wallet space?

You’re obviously a loyal customer and that didn’t happen by accident.  But we both know a piece of plastic isn’t the reason.  So what is?

What’s in it for me? The most important aspects for a customer when it comes to loyalty programs are instant discounts, followed by points’ accumulations that are redeemable for products and experiences.  But if it takes 10 million points to get a toothbrush then it’s not realistic or rewarding.  This is otherwise known as ‘point’s divisibility’ – the redeeming opportunities offered as the result of a transaction.  In order to be impactful, a loyalty program requires an incentive structure for its members that offers worthwhile and attainable goals.

Something out of the blue. Businesses know when their customers’ birthdays are.  Consider the impact of receiving an unexpected gift as a reward for doing nothing but getting older.  You’d be stoked right?  2 out of 3 people rate the third most important factor for a loyalty program as ‘surprises without redemption’.  This is an often underutilised strategy because programs are generally structured as earn and burn schemes.  But ‘surprise and delights’ pay for themselves.  They have been proven to maintain interest, increase activity during down times and most importantly, they make a customer feel special.

The power of personalisation. Given consumers have access to more choice than ever; relevancy and personalisation are increasingly more important.  A one-message-for-all mentality doesn’t work anymore. Data captured about program members should be utilised to deliver marketing campaigns that give customers what they want.  This may not be the easiest solution, but it’s certainly not out of reach.  And done properly, customer satisfaction and uplift of offers can increase by more than 80%.

It’s easy enough to implement a loyalty program, but the brands that use them to truly look after their customers that are the ones that are doing it right.  Their focus is on building trust, advocacy and engagement as much as spend and number of transactions.

After all, loyalty is a two way street.


Sources:  Loyalty 360⁰, Inc.com, BRW, First Point Research, The Retail Value Chain

Image credit:  Shutterstock