Customer Loyalty Programs that Work

By | February 12, 2013

Customers today are the savviest we’ve ever dealt with. They comparison shop, not just for cheaper prices, but for quickest rewards, best service, and greatest value as well. So it makes perfect sense they would shop for customer loyalty programs that really work.
In fact, a big debate is happening among retailers whether loyalty programs work or just provide customers the opportunity to game the system. According to LoyaltyOne’s research, the average American household belongs to 18 customer loyalty programs but participates in only 8. Why don’t they participate in all of them actively? It’s a matter of value and ease of use.

So how do we engage the savvy customer?

It’s more than the dollars back

Reward programs are as ubiquitous as airbags in a car. They are quickly taken for granted or forgotten about. All programs offer a discount or an accumulated freebie. Savvy loyalty programs go beyond pricing to offer perks. Perks such as complimentary wi-fi, a loyalty line (for quicker ordering), or an opportunity to preview new items have an impact on customers beyond just getting something a bit cheaper.

Make levels attainable

When I speak on goal setting, I always recommend having goals with reach but within reach. The same goes for customer loyalty programs. In other words, the advanced levels have to be attainable or the customer will lose interest. If you require 20 purchases to get the “freebie,” on all but the most loyal customers of your products, the desired impact will be lost. One restaurant with which I am familiar has a graduated loyalty program to keep customers interested. On the fourth purchase you receive this reward, on the eighth something bigger, on the 12th a bigger item, and on the 16th purchase you get the top reward. It keeps the customer involved along the way, and it then becomes a mission to reach the top level like a video game. Do you know the right pacing for your reward levels?

Have cross-promotional partners

What is the business in town that is complementary for your customers? For example, grocery stores share rewards and promotions with gas stations. Customers in these cross-promotional programs quickly realize by gaining more points faster they can create bigger rewards in these businesses.  Cross-promotions can work for fellow small businesses, retailers located in close proximity, or as a thank you to another business, such as a bank giving away free tickets to an amusement park that is a business client. The loyal consumer benefits, the financial client benefits, and the bank has a loyalty program with some buzz.

Appeal to your customers’ technology level

My mother was a green stamp collector and coupon clipper in the prime of her purchasing power. I still remember as a kid pasting green stamps into books for purchasing products at the redemption centers. She still gets a newspaper and clips coupons. That is her preferred level of technology.

Many of today’s consumers want to have an app and the ability to track their points online. I am able to do this with my US Airways status and frequent flyer miles I get from my flights and loyalty program credit card.

What is the technology comfort level of your customers? If you are offering stamp cards to customers who want electronic loyalty programs, they will not be very well engaged. By the same token, if you are trying to convince my mother’s generation to get an app on a phone she only uses for emergencies, that program will not be effective. Know your customers’ technological comfort zone and deliver your loyalty program at their level for maximum effectiveness and ease of use.



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