5 Ways To Give Loyalty A Lift

March 8, 2019

Loyalty programs should be one of the cornerstones of any effective marketing strategy. Accenture found that “members of loyalty programs generate between 12 and 18 percent [higher] incremental revenue growth per year than non-members.” But not all loyalty programs are created equal. There are capabilities and approaches that make a difference in how effectively you can unlock the revenue growth potential of your loyalty program. So, here are five ways to get more out of your loyalty programs:

1. Make your loyalty rewards speak to the customer’s aspirations, and give your customers an opportunity to signal their interests.

Loyalty offerings have long been restricted to just dollars, points, and the occasional tiered reward program. And while effective, this one-size-fits-all approach to rewards limits your ability to forge personal connections with your consumers. Instead, loyalty rewards should reflect the individual interests of customers. Take a hotel chain. With gold tier status comes a host of benefits—expedited check-ins, room upgrades, free spa treatments. But these perks apply to very different customers. The busy business traveller cares little about a discount on a 90-minute massage, for example. Rather than lumping everything together, the hotel chain should consider tailoring their perks to the interests of the traveler: maybe it’s a priority reservation line, expedited check-in, and complimentary car service for the business traveler on the go; and an exclusive local experience, free nights, and a bottle of champagne upon arrival for the luxury vacationer.

And give your customers a chance to voice their tastes. Customers like choice—82% find choice-of-reward appealing, according to a Nielsen report. By asking your customers about their interests, you increase the effectiveness of your programs and gain valuable insights, all while giving your customers the high-touch experience they crave.

2. Use loyalty rewards to encourage behaviors other than purchase.

Loyalty rewards are most commonly used to encourage a purchase, but they don’t have to be so limited. Loyalty rewards can be used to incentivize customers to take all sorts of actions, like explore new product features or refer a friend. In fact, loyalty programs can be used for operational ends: For example—grocery stores. The surge of after-work shoppers is costly to the business—it requires increased staffing and leads to a poor customer experience. The canny grocery store could, however, use its loyalty program to alleviate this crush by doling out additional rewards to customers who come at off-peak times or order ahead.

3. Use a customer’s past behavior to decide what offer to deliver and when to deliver it.

Typically, rewards programs use location to trigger the delivery of rewards. For example, everytime you’re near a certain restaurant, you get an alert on your app. However, solely relying on location neither takes into account the day of the week nor the time of day. Moreover, it doesn’t take into consideration the customer’s past behaviors and preferences. Maybe the customer only visits the restaurant as a part of their weekly game-day outing for wings and beer. Maybe it’s a weekend-exclusive destination. Offers for these diners outside those windows will likely fall on deaf ears. As McKinsey warned in an October 2017 report on consumer shopping habits, “Getting the timing wrong virtually eliminates the chance for a purchase while potentially annoying the customer.”

4. Test constantly, and don’t assume there’s only one winner.

Take two offers—test them today, and you may have one winner and one dud. But what about three months from now? The winner, thanks to market fatigue, may have lost its punch; whereas the one-time clunker, as it gains awareness and momentum, may now be a star. A one-off test would have failed to capture this reversal.

Plus, it’s important to remember that loyalty programs are not one-size-fits-all—offers and promotions may resonate differently with different segments of your customers. A loyalty program should be flexible enough to serve targeted offers to specific segments.

5. Ramp up incrementally.

This all seems like a lot, but it doesn’t have to be. Establishing a clear process from the start between creative, legal, data, and fulfillment can ensure offers are created and delivered without any holdups, especially if you can automate anything manual or otherwise time-consuming. Templatizing your offers so that they are easily repeatable but also easy to change will further help. The same yearly promotion shouldn’t take the same time to build every year. Lastly, start with a small test sample of customers before deploying to a wider segment. Using a smaller sample size allows you to learn what works and what doesn’t with fewer confounding variables.

Employing these five tips will help your loyalty programs take off. Looking for more tips, feel free to contact us today.