Marketers constantly waffle about whether loyalty programs are effective at retaining shoppers and improving the customer experience. Notable loyalty programs like Target’s boom and bust, with new iterations emerging nearly every quarter. Given the ongoing need for new versions of many prominent rewards programs, some marketers might wonder if investing in loyalty programs is even worth it.
The answer? Good loyalty programs work. Bad programs don’t.
Today’s consumers want it all at the touch of a button — and they know they can usually get it. Customer demands are heightened along every aspect of the brand experience, including loyalty programs. If companies want to attract and retain loyal customers in a highly crowded and connected shopping landscape, they have to upgrade their loyalty strategies to meet evolving consumer expectations. Simply put, a great program provides a seamless experience across all touchpoints and will drive growth. If you’re just focusing on points, you’re just getting started – points alone won’t cut it.
If your brand is in the midst of a loyalty revamp, here’s what you need to keep in mind:
Communicate the value of your program
Gone are the days of the simple punch card. A strong branding strategy will make or break your loyalty program, and that starts with the name. Make it clear what your rewards program offers and why customers — new or existing — should join it. What will your customers get from membership? Status? Exclusive content? A more personalized experience? Whatever the value is, convey it clearly in your name.
For example, Hilton Honors associates its program with prestige and status, while Sephora Beauty Insider represents exclusivity and exciting content. My Best Buy® is personalized, while its predecessor, Best Buy Reward Zone™, was all about rewards. Remember: Price is the lowest bar now. You have to offer more than just good prices to compete, and you’ve got to communicate the value clearly.
Convenience is king
Regardless of what you’re offering customers, your loyalty program should deliver a more convenient, streamlined customer experience.
Kobie Marketing’s recent study on the state of loyalty in the age of the connected consumer shows that one in four shoppers won’t join a loyalty program if it requires too many purchases to earn and redeem points. Additionally, 26 percent of customers won’t join a loyalty program if it asks for too much information or takes too long to register.
In other words, no one wants to put forth undue effort to join and engage with your loyalty program. Rather, your loyalty program should make your brand experience even more seamless for customers.
Think about the Starbucks Rewards program: Besides racking up points for free drinks, customers use the program largely because it makes their lives easier — they order drinks ahead through the app and skip the morning coffee line. Amazon’s Prime membership, while not a traditional loyalty program, offers convenience at its core, promising free and fast shipping to any member.
Surprise and delight — beyond just low prices
It’s not a surprise that price will always be top of mind for most consumers. The report also reveals that price is the most significant factor when it comes to what drives brand loyalty, with 35 percent of all respondents ranking it as most important.
And while this means loyalty programs should emphasize traditional discounts and rewards, it doesn’t mean it’s that easy. Get creative and engage throughout the entire customer journey: Instead of always offering simple discounts, consider offering free products that shoppers pick themselves or other personalized rewards. By surprising and delighting customers with exclusive gifts, you’ll provide more excitement and engagement for shoppers than a mere cash discount or dollars-off rewards. This means, brands need to think beyond the point of sales and focus on the full loyalty experience.
In the age of the connected consumer, expectations are higher across the board. The same strategies that worked for brands a decade ago won’t work today. It’s more important than ever to view loyalty outside just the point of sale to truly create a lifestyle connection with consumers. If you can use your loyalty program to make your customer experience easy, meaningful and relevant, you’ll stand out in a market that’s more crowded than ever.
Loyalty and customer experience have come a long way. Read more about the evolution of loyalty here.