8 Considerations for you Loyalty Marketing Program

Dec 2, 2021

8 Considerations for you Loyalty Marketing Program

Are you looking to optimize your customer loyalty program? Smart move.

Customer loyalty programs can be a pivotal revenue driver with a high ROI potential.

According to statistics, 82% of companies report that customer retention is cheaper than acquisition, and 65% of most companies’ business comes from existing customers. If that’s not enough motivation to implement a standout loyalty scheme, consider this. Roughly 75% of customers prefer brands that offer rewards.

Loyalty marketing programs are the key to unlocking high levels of customer retention. But, this is no secret. Chances are, most of your serious competitors have already implemented a customer loyalty scheme.

To stand out from the pack and make your customer loyalty scheme really work for your brand, you have to make it attractive. If your loyalty program doesn’t offer compelling customer rewards, you’ll forfeit its power—and your market share.

What’s more, the best loyalty programs don’t just offer attractive customer rewards. They also tap into consumer psychology, values, and behavior.

Do you want to supercharge your loyalty marketing program? Read on to find out some of the most effective methods for creating an attractive loyalty scheme.

1. Make Your Customers Feel Valued With Tiered Loyalty Marketing Programs

At the surface level, loyalty marketing programs increase customer engagement and retention through customer rewards.

But it’s not just monetary rewards that drive customer retention. Loyalty marketing programs also work on an emotional level.

Consumers might be initially drawn to a customer loyalty program by its practical benefits. However, that’s not necessarily what makes them stay.

The real power of loyalty marketing programs lies in their ability to make customers feel truly valued. Most consumers want to feel that the brands they support appreciate their business.

Why Tiered Loyalty Marketing Programs Convey Appreciation

Loyalty marketing programs offer a valuable opportunity to communicate appreciation to customers. Appreciation is one of the most powerful factors in triggering the “big L” in loyalty.

Tiered loyalty marketing programs are one of the most effective methods for conveying appreciation.

Tiered loyalty marketing programs categorize members into groups according to specific metrics. Each tier unlocks certain benefits, rewards, or services. The value of these customer rewards typically increases as customers progress up the tiers.

Not only does this make customers feel appreciated for their loyalty. It also provides a long-lasting benefits structure.

Tiered Loyalty Marketing Programs Offer Long-Term Value for Customers

Conventional “earn and burn” loyalty programs usually operate on a flat points system. Customers earn points based on purchases and then cash them in.

This unidimensional model can encourage signups and initial repeat purchases. But, it doesn’t give customers much to work towards. A tiered loyalty scheme motivates members to keep moving up the ladder, unlocking better rewards and increased recognition.

Because higher tier levels come with more valuable benefits, tiered programs offer more powerful incentives for continued engagement. Members are more likely to stick to your brand because they know they’re accessing exclusive benefits that aren’t available to most customers.

This gives customers something they can really sink their teeth into and engage with for years into the future. Consequently, tiered programs allow brands to build a foundation for long-term brand/customer relationships. And, these relationships go deeper than typical.

Tiered programs can inspire emotional level relationships. When members achieve a special rank or status, they feel recognized by your brand. At the same time, unlocking incremental benefits triggers gratification and anticipation.

Unlike purely points-based systems, tiered benefits models allow long-time customers to retain their benefits over time. Instead of having to start from scratch once they’ve redeemed their points, they lock in their membership value.

A Tiered Loyalty Program Is Perfect if You Don’t Want to Implement Points

As we said above, most generic customer loyalty programs operate solely on points. If you want to take your loyalty scheme beyond the pure points model, tiered programs are an ideal answer.

Non-points loyalty schemes can be particularly effective for luxury target markets, where consumers might view points as “cheap”.

Tiered Loyalty Programs Are Your Best Defense Against the Competition

As we mentioned earlier, there’s a good chance that most of your competitors have implemented a loyalty program. How can you make yours more attractive? Once again, tiered loyalty programs can be the answer.

Because tiered programs allow customers to keep their benefits, this can be highly beneficial for customer retention.

Here’s a hypothetical example of how this might play out.

Let’s say your competition has implemented a pure points-based rewards system where customers receive points for every purchase.

You, on the other hand, have a tiered program where customers move up tiers, unlocking new benefits, such as free shipping, extended returns, early access, etc.

When shopping with your competition, consumers won’t experience any development in their benefits. They might be able to enjoy discounts related to the amount they spend, but they won’t have any motivation beyond this.

With your program, customers will be able to advance to higher benefit tiers. Over time, they’ll be able to unlock increasingly attractive rewards. At some point, these rewards will outweigh the potential savings they can gain by converting accumulated points with a competitor.

If you retain the customer—and offer the right rewards—at some point, their benefits tier will make shopping with you a no-brainer.

2. Reward More Than Just Purchases

If you want to make your loyalty program more attractive, another top tip is to reward more than just purchases.

Loyalty programs are inherently attractive. But, consumers can feel cynical about customer loyalty programs.

If you only reward purchases, your loyalty program can come across as very transactional. Customers can easily feel like your rewards are only there to lure them into spending more money with your brand.

Ultimately, this is a primary goal of most customer loyalty programs. But it isn’t the only goal. Customer loyalty programs should also establish increased trust and communicate appreciation.

Members shouldn’t just feel like they’re rewarded for spending. They should feel like their engagement with your brand brings them closer into the fold, and, in the process, unlocks certain privileges.

The way to achieve this is by rewarding behavior that goes beyond purchases. For instance, you can assign rewards for things like:

  • Sharing content related to your brand on social media
  • Leaving reviews
  • Subscribing to your blog or newsletter
  • Engaging on your mobile app

You can also assign rewards for purchases, but this doesn’t have to be the sole focus of your loyalty program.

3. Offer a Referral Program

Research reveals that 70% of consumers are more likely to recommend a brand or company if it offers an attractive loyalty program. But here’s the rub. Stats also show that the average US consumer belongs to over 16 customer loyalty programs.

So how can you make your loyalty program stand out?

One of the most attractive incentives you can offer is referral rewards. Referral rewards can be a big motivating factor for customers to join your program.

At the same time, referral programs can be a powerful way to attract new customers. Stats show that 28% of millennials won’t try a product if someone they know doesn’t recommend it. Word of mouth is also the driving factor behind 20%-50% of purchasing decisions.

4. Think of a Compelling Sign-up Incentive

Having a compelling sign-up incentive is a vital part of any loyalty scheme.

It doesn’t matter how great your loyalty program is—if you can’t get customers to sign up, all your efforts will be for naught.

As we mentioned earlier, some customers are wary of loyalty programs. They might assume your loyalty scheme is just a ploy to get them to hand over more of their hard-earned cash. Or, they may even be worried that loyalty programs are akin to pyramid schemes.

The easiest way to get past these concerns is to offer an initial incentive that’s impossible to resist. An attractive discount on their purchase is always a winner.

Stats show that the majority of consumers are loyal to only 1-5 brands. A strong sign-up incentive can position you to win a spot in consumers’ hearts.

5. Have a Clear Rewards System

If you want to draw customers into your loyalty program it’s also essential to have a clear rewards system. Customers need to know what they’ll receive when they sign up.

They also need to know what actions they must to take to advance through your program. If customers can’t easily understand the benefits of your loyalty program, they’ll be less likely to sign up and less motivated to participate.

6. Gamify Your Customer Loyalty Program

Here’s a hard fact. If your customer loyalty program is boring, it won’t do much to stop customer attrition.

Yes, it might incentivize some extra sales in the early part of your brand/customer relationship. But, once the initial attraction of your rewards wear off, what’s left to keep customers invested in your loyalty program?

Some of the gamification methods you can use include:

  • Progress bars
  • Social sharing
  • Badges
  • Awards
  • Certifications
  • Leaderboards
  • Checklists
  • Progress-at-a-glance dashboards

Holding contests within your loyalty program can also help keep members engaged and incentivized.

7. Surprise Your Loyal Customers

Doing something customers like but didn’t expect is a sure way to overdeliver.

Have you ever received a gift from someone when it wasn’t Christmas or your birthday? Chances are it made you feel pretty special.

Surprise loyalty rewards can trigger the same feelings in customers. And speaking of birthdays, this is a perfect time to dish out a surprise loyalty reward. Most customers won’t see it coming, but it adds a personal touch.

Most of us know that we’ll receive gifts on our birthday from loved ones, but we don’t necessarily assume that we’ll get something from a brand. If you send your loyal customers gifts in the form of rewards on their birthday, you’ll stand out from all the other brands in their inbox that didn’t send them anything or recognize their birthday.

8. Don’t Disappoint Your Loyalty Program Members

Finally, don’t disappoint your loyalty program members. This should be an absolute priority.

If customers aren’t able to enjoy the rewards they anticipated and worked towards, this can trigger frustration, distrust, anger, and disappointment. At best, it can disincentivize customers from actively participating in your customer loyalty program further. At worst it can erode trust and can make the customer question the integrity of your brand.

How Loyalty Program Members Can Get Disappointed

Disappointment around loyalty rewards can happen in a number of ways. One of the most common sources of disappointment is around expired points.

For instance, picture a senior customer who has been saving up points and does not realize they have an expiry date. After a year, they try to redeem their points, only to be told that most of their points are expired. The excitement and expectation they had is fast going to turn into annoyance and disillusionment.

What another example? Let’s say a frequent flier has been racking up points with a certain airline. After months of tailoring their booking decisions around the loyalty program, they get blocked from using their points by unavailability of seats or flights.

What brands often don’t realize is that customers have been actively working towards a certain goal within their loyalty program. If the customer is met with disappointment upon reaching that goal, it will feel to them like they have wasted time and money and invested their loyalty in a brand that pretends to care about them but doesn’t.

How to Prevent Dissatisfaction

When its rubber hits the road, it’s essential that you fulfill customer expectations. One way to set yourself up for success is by making the fine print bold print. For instance, if loyalty points expire, make this clearly known to customers. You can also send out personalized reminders about point expiration dates.

Often, customer disappointment happens silently, and brands aren’t even aware of the district they’ve triggered. To help identify potential disappointment triggers, set up customer satisfaction surveys within your loyalty program. Ask members if they are happy with the program, if they suffered any disappointments, and whether they have suggestions for improvement.

This can not only help you identify common sources of dissatisfaction, but it can also uncover new ways to incentivize referral program signups and participation.

Finally, have a protocol in place for re-establishing trust levels in dissatisfied loyalty program members. For instance, do you offer a points-based rewards system that has expiry limits? If so, consider creating an avenue whereby customer service agents can re-activate expired points for members who weren’t aware of the expiry limit.

Part of your customer service training can also include a module on how to handle loyalty program members who have suffered different scenarios of disappointment.

Implement a Data-Driven Loyalty Marketing Program With Kobie

Loyalty marketing programs are a pivotal strategy for increasing customer retention and triggering ongoing customer engagement. But, to achieve results you need to go beyond a basic, set-and-forget loyalty program.

If you really want to win over customers and draw them into your program, you need to ensure that they’re appropriately incentivized at all the right moments.

Here at Kobie, we know that the best loyalty solutions are backed by a sound, data-driven strategy. Are you questioning if your program is working to its full potential?

We can help. Our strategic toolkit reveals how your programs compare to competitors’. It also uncovers what drives your customers’ behaviors, and how to trigger meaningful engagement and long-term brand loyalty.

Do you want to maximize your loyalty program? Reach out to discuss how we can meet your needs.