Every company across nearly every industry in the world is looking to enhance customer loyalty. From banks to retailers, to restaurants to healthcare institutions, and beyond; all have the goal of retaining their customers and motivating high-value behaviors.
How can you break through the noise and deliver a differentiated loyalty experience?
Whether you’re thinking about building a loyalty program, in the process of creating a new one or revamping an existing one; follow the six steps below to enhance your loyalty strategy!
Implement a loyalty/rewards program with a clear value proposition
Loyalty programs provide the perfect vehicle for boosting customer retention, and unlocking first-party data critical to ensuring you’re playing within the boundaries of data privacy (hey marketers: your loyalty program can make your data privacy team happy). However, that doesn’t mean simply implementing a program will lead to success. Your brand is unique, and your loyalty program should be built to reflect that. Take the time to set a vision of what you want your program to accomplish. Too many brands focus on incentivizing short-term customer behaviors when loyalty programs need to continuously drive customer behavior from the moment they sign-up to all points across their individual customer lifecycle. Map out your goals for the program, and define what success looks like. Develop a clear value proposition and use your program as a platform to showcase what’s unique and special about your brand.
Redesign your program to align customer and brand interests
Starbucks, Sephora, Marriott — all these brands have recently redesigned their loyalty strategies. The time is now to begin thinking about doing the same. As the loyalty market becomes more and more crowded you’re no longer competing against other companies in your space, but every other brand your customer interacts with. Sorry to say, but the program you created over the last few years isn’t that special. So where do you go from here?
The root of the problem starts with the overemphasis on short-term benefits for the brand, rather than on creating a long-term, two-way relationship with the customer. Think along the lines of what a customer wants: more opportunities to spend their points, a seamless experience across all channels, special treatment when interacting with customer service, and among other things, to be surprised and rewarded with special benefits along their journey. Now think about what’s best for your brand: increasing average basket/order size, driving greater customer frequency, positive membership growth, etc. Determine where both sides connect and structure your program to align customers ‘wants and needs’ with the best interests of your brand.
Unlock loyalty data to understand customer behavior
Loyalty programs capture a wealth of information about customer preferences and behaviors. The best part: customers willingly give up information about themselves, with the expectation that brands provide a more personalized experience. Equipped with relevant and accurate customer data provides you with an arsenal of information, enabling your team to enhance every aspect of your marketing strategy. Messaging campaigns across email, push, SMS, etc. can be smarter and more tailored to individual customers. Online experiences can provide relevant product recommendations, and loyalty points and offers can be applied to transactions to incentivize more frequent and larger purchases. In-store associates and customer service agents can utilize customer information to deliver the type of white-glove VIP treatment that make customers feel truly valued.
Unlocking your loyalty data allows you to open up your entire marketing strategy, and keep customers engaged throughout a variety of channels. The more data collected and activated, the more personalized and powerful your program will be.
Align your entire organization around your program
Have you purchased Starbucks recently? If so, you’ll notice that even their cups are promoting their rewards program. Often cited as the gold standard for loyalty programs, Starbucks has woven their program into the very fabric of their company. Go into their app and you can see your number of stars and campaigns you’re eligible for, check your email to find out how you can earn 50 bonus stars this weekend, take a look at your phone to find a push notification announcing tomorrow’s 2 o’clock happy hour, the list goes on and on.
The point of the Starbucks example is that you can’t create a loyalty program siloed from the rest of your marketing technology and business infrastructure. To drive loyalty program participation and membership rates, you need to follow a similar path as Starbucks to ensure that organizational goals are aligned around the program. Messaging, customer service, in-store staff, websites, and everywhere in-between needs to promote and seamlessly integrate your program into the brand experience.
Appeal to long-term customer emotions
We mentioned it above, but it’s important to note that loyalty programs foundationally built to solely motivate short-term behaviors are destined to fail. Look at the majority of loyalty programs out there today; you earn a certain amount of points or make a specific number of purchases, and you get some kind of reward. It’s the evolution of the classic “Buy 9, Get your 10th free” punch card approach. While this approach might capture customer interest for a month or two, just remember that your customers happen to be members of a number of different loyalty programs, meaning the less emotional energy they have for your brand. Especially if you’re continuing to put the same proverbial carrot on the same stick. Forrester reported that US online adults belong to an average of 3.7 loyalty programs, but that only 44% of them say the programs make them feel more loyal to a brand, making it quite clear that loyalty programs need to be doing more to appeal to their customers.
Rectify this approach by thinking of how your loyalty program can appeal to long-term customer emotions. What can your brand do that leaves a lasting impression on your customers? It could be a special reward for reaching the gold tier, access to an exclusive event, or maybe an exceptional in-store or customer service experience. By blending tactics that illicit short-term customer behaviors, such as making an additional purchase or adding an extra item to their basket, with long-term strategies like access to special events and early access to new products you can construct an engaging and differentiated experience. The point of a loyalty program isn’t to provide a reward for earning a certain number of points, it’s about building a unique experience across all your channels to foster short and long-term customer emotions.
Clearly broadcast any and all changes to your program
We’ve discussed building short and long-term loyalty, the importance of customer data and aligning the entire organization around your program, but just as important to enhancing your loyalty strategy is clearly broadcasting and communicating to customers any and all changes that you’ve made to your program. Just take a look at what happened to Nordstrom when they didn’t effectively communicate their changes to their program.
Yes, you will face some backlash about changes, but being transparent with your customers is critical in ensuring they continue to participate in your program. As we mentioned above, even some of the industry gold standards change their program, and at some point you will too. Just make sure to communicate these changes proactively and effectively with your customers (check out our blog post on how to prevent and mitigate backlash from loyalty program changes for more strategies).
It’s difficult to create a loyalty program that rewards customers in a meaningful way, while also not solely motivating them with discounts. However, the benefits of getting your strategy right can lead to unprecedented success, especially considering the cost of acquiring a new customer can be up to five times more expensive than retaining an existing one (QSR Magazine). Take a look at industry leaders like Starbucks, Sephora, Chipotle and others to determine what strategies they’ve implemented that could also flourish when leveraged by your organization. Then find your value proposition, and define what makes your loyalty program different from all the rest. Utilize what’s unique about your brand as the foundation of your loyalty strategy and engage and interact with customers throughout their journey.
If you’re looking for help, contact us to understand how SessionM can unlock critical first-party data, manage cross-channel campaigns, deploy closed-loop offers, and build differentiated loyalty program constructs.