It is said that change is the only constant, and that is true for brands, too. Brands need to constantly evolve with rapidly changing demands, as customers today are spoiled for choices and can leave a brand if it fails to match rising expectations. Today, an average customer furiously hops between different websites and checks out multiple brands based on different factors before a final decision is made. In comparison, many loyalty programs are static in nature and are outdated in today’s fast-paced digital economy.
If companies can design and execute loyalty programs effectively, it can help the business with improving customer retention and increase business revenues significantly. For example, a Deloitte consumer loyalty study conducted last year highlights that 50% of respondents were more likely to recommend a retailer if they were a member of its loyalty program. More importantly, the Deloitte study mentions that while rewards remained a key piece of the retail loyalty program initiative, they could no longer remain static. More than 80% of customers desired customized ways to earn and redeem benefits.
Holistic Loyalty Approaches For Value Enhancement
The evolving customer expectations require brands to create differentiated and personalized customer loyalty experiences. Historically, loyalty programs have been focused squarely on transactions. Think about your favorite airline mileage, hotel or retail loyalty program. Chances are that it is a simple, one-size-fits-all, points-for-transactions program. However, the loyalty of customers can be measured, encouraged and nurtured in a variety of ways. Accordingly, loyalty programs must evolve to adopt a multi-dimensional strategy.
Besides encouraging customers by giving discounts or points at the time of purchase, consider engaging customers in a variety of ways—for example, rewarding them for posting or following on social media platforms, taking surveys, reading blogs, referring friends and more. This not only keeps customers engaged but also gets brands additional attention and marketing. Some brands are also personalizing their programs by giving customers unique gifts or merchandise that are available only to loyal customers, such as a unique gadget or signed memorabilia by a celebrity.
Rewarding customers for specific purchase behavior is another highly effective strategy \. For example, if your website flashes, “Get additional 500 bonus points if you make three purchases this month,” it will encourage your customer to keep coming back. By encouraging customers at multiple touchpoints, brands can succeed in creating more engagement and, subsequently, greater loyalty.
If we look at some of the most successful loyalty programs, we can see examples of how a holistic approach to loyalty has yielded good results. One of the world’s most popular sporting brands, Nike, offers loyal Nike members access to exclusive rewards, perks and personalized experiences. Nike also makes its loyal customers feel special by giving gifts for birthdays and anniversaries. This system has yielded impressive results among their customers.
In my own experience, as well, holistic loyalty programs have always yielded good results. Take Stride Rite, a company we recently worked with, and their targeted loyalty program for parents called “Little Loyals” Beyond transactional reward points, the brand created an emotional connection with customers by offering loyalty members points for special occasions like birthdays/anniversaries, early access to exclusive collections and VIP events access.
Combining Strategy, Data And Technology For Loyalty Success
Loyalty programs can only be orchestrated effectively if the strategy, data and technology work in complete synchronization with each other. As a best practice, brands should take a strategic view of their loyalty program initiatives and work toward creating a unified view of the customer. For example, while transactional loyalty will help in encouraging and converting new customers to repeat their purchases, behavioral loyalty and engagement-based loyalty programs can help in improving customer trust in your brand. Each loyalty program has its own benefits, and these elements work best when used in combination with each other.
I also recommend that organizations focus on making their loyalty program unique and customized in design to the specific needs of the company. Have your data analytics team analyze all relevant points (past purchase data, demographics, profiles, etc.) for creating a tailored loyalty initiative.
To improve effectiveness, machine-learning algorithms can be used to segment different customers into actionable clusters such as deal seekers, high spenders or occasional browsers. Depending on the insights obtained, loyalty program campaigns can be set up for different categories of customers. This helps in creating personalized loyalty programs, which can form the foundation for creating strong customer-brand relationships.
In my experience, creating sustainable loyalty is more like a journey than a destination. Irrespective of your loyalty program journey and maturity, brands that have understood this fact and have proactively and constantly evolved and adapted their loyalty programs have seen huge success.
Source: Forbes.com
