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How to become successful with your loyalty program?

Blog post Published   23 March 2016

What´s the point of loyalty programs and what value do they provide to customers? Unfortunately, the majority of loyalty programs rarely lead to increased loyalty since the benefits are too generic and not relevant to the customers’ needs.

Are there different types of loyalty? The answer is yes, but I have chosen to focus on the two most prevalent types. One is “motivated loyalty”, where the relationship is based on some form of reward. The second one is “genuine loyalty”, where the customer has a strong connection to the brand and appreciates the benefits of the company’s services.

A really good example of genuine loyalty is Apple who does not need a loyalty program. Apple has chosen to build loyal customers by offering stylish, user-friendly and sustainable products. And in addition to that, offer an outstanding experience when using Apple’s clean design and interface. Therefore, their customers are loyal regardless of how the price stand compared to their competitors’.

Most loyalty programs are often based on motivated loyalty. As a member of a loyalty program you receive some kind of benefit. It can be a voucher from the supermarket, bonus points when you fly etc.

It almost seems like motivated loyalty today is all about discounts, free products or to earn virtual currencies. Sometimes we think this form of reward systems are fantastic and in other cases we question why we are members at all.

A while back I started to count the discount that I received from a loyalty club I was a member of. It turned out to be a bonus check of 100 SEK when I purchased for 6000 SEK during one year. For me, it was an easy decision to terminate the membership.

I’m not excited about the voucher checks from the supermarket either. On the other hand, I enjoy to get a free hotel night for every 10 nights I buy. It feels like a genuine offer that offers me real value.

In order to develop loyalty programs based on value and relevance we need to:

Implement simple bonus systems: systems which are intuitive and easy to understand are also the most efficient. Consider charging for VIP benefits, where for example free shipping can be a benefit for the most loyal customers. One way of making sure the customers don’t forget about the loyalty program is to give more bonus points when the customer purchases more and to give other benefits than bonus points as incentives.

Integrate loyalty into the entire experience: integrate the loyalty program with the customer experience and in the interactions with the customer in all channels, mobile, web etc. to enhance it and make it part of the purchasing experience.

Use customer data: build differentiated models for different customer types and coordinate offers throughout the channels and business units.

Define value for the customer: value is not only about counting dimes and cents it’s about finding other value adding aspects and services that you can offer. If you use your customer journeys and customer life cycles you will find services that are relatively cheap to give away but gives the customer a great sense of added value.

Build partnerships: by mapping the customer journey you might be able to find suitable partners to work that complete your offer and add value to it.

What do you think about loyalty programs? How can they improve? Please share your opinion and contact me at frosen@recoordinate.com

My name is Feyven Rosen and I work with business development at Recoordinate.

If you want to know more about how we Recoordinate develop loyalty programs to help companies create value and relevance to their customers? Visit our website www.recoordinate.com or contact us at info@recoordinate.com

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