Many organisations struggle to extract maximum value from their loyalty programs but Loyalty Now says the investment is well worth it when the program is set up and run correctly.
Too many companies treat rewards programs as short-term prospects designed to get quick sales, according to Loyalty Now chief revenue officer, Christopher Carroll.
“Instead, it’s important to focus on the loyalty aspect of a program because loyalty is the key factor that will drive repeat business from customers, rather than short-lived discounts or promotions. This makes it imperative for organisations to understand their customers and make their loyalty programs relevant, compelling, and easy to interact with,” he said.
Loyalty programs can generate revenue and profits in the following five ways:
1. Make it personal
People are more likely to respond to loyalty and rewards programs that resonate with them more personally. In fact, 87% of consumers are open to brands monitoring details of their activity if it leads to more personalised rewards. Therefore, it’s important to have a mechanism to track data around purchasing trends and behaviour so offers are compelling enough to drive engagement.
2. Make it clear
Complex loyalty programs tend to have low engagement because people don’t understand what’s in it for them. Organisations need to invest in communicating their rewards programs and simplifying them so that consumers can better grasp the value.
3. Make it authentic
Loyalty happens when customers trust the business, therefore it’s essential to run authentic and valuable programs that do what they say they will. For example, if the organisation offers a loyalty reward that includes charitable donations, it’s important to be transparent around how much will be donated to the charity and in what timeframe. This will allow customers to feel confident that their loyalty is genuinely being rewarded instead of simply mined for data.
4. Make it worthwhile
Three quarters of people are more likely to make another purchase after receiving an incentive, while two-thirds of consumers make specific spending choices to maximise their loyalty benefits. This can mean moving beyond standard programs that offer one free product after the fifth purchase (or similar) and towards offering rewards that include experiences, charitable donations, or access to an entire ecosystem of providers that offer redeemable rewards.
5. Make it easier to engage
Presenting physical cards or even typing in loyalty codes at the point of purchase creates friction in the transaction process, which can reduce the likelihood that a customer will engage. Low swipe rates can mean that consumers don’t get value from the program, and neither will the merchant or program operator. A card-linked platform links the customer’s rewards to their credit or debit card so every time they transact, the purchase is automatically recorded and applied to their rewards. The customer no longer needs to proactively remember to carry a loyalty card, scan a QR code, or enter a code at the point of purchase.