Does Your Loyalty Program Center on Customers?

Nancy Berg
by Nancy Berg 29 Jul, 2016

A well-designed loyalty program that provides value to the customer will drive results. In today's world, it's no surprise then that digital marketers are prioritizing loyalty programs, with 57 percent developing plans for increased loyalty budgets in 2017.


However, as loyalty programs continue to evolve, companies must reimagine what will differentiate their program to provide a best in class solution. In the past, loyalty programs often centered on simply generating more transactions, visits, spend or similar metrics, which is obviously important. In an overcrowded marketplace where consumers have many options to choose from, however, brands today are better served by ensuring their "loyalty program" is part of a broader customer strategy-touching all aspects of their brand by placing the customer in the center of the experience.


Loyalty programs are not a short-term promotion that you can easily turn on and off; rather, they are a developed strategy capable of driving powerful connections, even strong emotional bonds, between companies and high-value and high potential value shoppers. 


To do so, businesses require a loyalty program that:


1. Centers on the customer experience 

When shoppers sign up for a loyalty program, they expect to be treated differently. This can be interpreted as many things, such as additional savings, increased communications, special offers, etc., and it's important that you recognize these differences to ensure what you are providing is valued. No matter how loyalty is rewarded, companies should prioritize their customers' unique demographic and geographic footprints. Offering shoppers a free cup of coffee is great, but thinking through what other components of your strategy will make your customers feel valued is even better. The latter approach ensures that customers themselves, not their purchases, dictate your investment. 


Your communication strategy needs to reflect your shoppers' preferences as well. In addition to content, the channel you communicate through and the volume of communications is equally as important. Loyalty programs demand the modularity and communicative flexibility to be highly segmented and meet a wide variety of customer needs.


2. Engages consumers at key milestones

Key company milestones are an important time to introduce customers to a loyalty program because you have an interested audience. This can help a loyalty program feel less obtrusive, more exciting and in a shopper's best interest to join.


Milestones will look different across industries, or even among different companies within the same vertical but taking advantage of these special opportunities, like the back to school season or popular holidays, will encourage consumers to participate.


3. Works across all departments

In terms of finances and efficiencies, loyalty programs suffer when siloed across multiple departments. Your customers view your brand as one enterprise. For instance, loyalty programs bridge both marketing and customer experience efforts, and it's in the best interest of both teams to work together to produce a single, stronger loyalty strategy. Plus, internal redundancies are a major profit drainer.


Likewise, personnel within any department should be knowledgeable and enthusiastic about a loyalty program. They are great advocates for your brand and they can represent the value proposition in every interaction. This extends all the way from the c-suite to associates on the store floor. 


4. Uses data to improve over time

Companies can certainly develop a limited-time program to test a loyalty program's effectiveness, but the ultimate goal should be a long-term program capable of building and retaining customer loyalty to your brand for a lifetime.


To do so, companies must capture customer data and learn more about shopper behaviors and needs. As businesses come to better understand the value each customer segment provides they can customize future marketing efforts, drive personalization and relevance, and continuously develop new customer experience enhancements. This will help consumers feel the added value of a loyalty program and, again, positions the customer experience at the center of all loyalty decisions.


In an age where customer loyalty is so bottom-line critical (the cost of acquiring a new shopper can be five times as much as retaining an existing one), loyalty programs are a trusted strategy to building long-term relationships with consumers. What's more, with two-thirds of consumers who are part of a loyalty program saying they are more likely to recommend a brand with a good loyalty program, investing in a top-notch loyalty program inspires additional revenue improvements as well.


Brands looking to truly engage and motivate customers today must take their loyalty programs one step further and prioritize the customer experience and shopper's unique needs. Brands that fail to do so will miss out, especially as we head into major shopping seasons like Black Friday, and risk losing precious business to competitors.


Nancy Berg is the VP of client services and partnerships at Kobie Marketing, industry leaders in customer reward programs and loyalty marketing solutions.