The loyalty industry is evolving. While customer loyalty programs have been a common staple of coffee shops and airlines for years, (typically in the form of “free loyalty cards” or credit card rewards), it’s becoming harder and harder for brands to retain customer loyalty with new programs constantly on the rise. Additionally, consumers have begun shifting towards new digital and mobile-first payments, and as a result, loyalty programs have had to pivot their programs to cater to the new trends. A recent study by AC Nielsen shows that 60% of consumers consider loyalty programs an important factor in their buying decisions, with those very same consumers spending 46% more on average with businesses that have loyalty programs. With that in mind, innovative marketers looking to better their loyalty programs are steering their focus more and more towards incorporating new technology with the hopes of increasing not only customer retention, but also engagement.
Here are 4 ways in which forward thinking marketers can utilize new advancements in loyalty programs to stay ahead of the competition:
1. Build cross-channel loyalty
In order to design a loyalty program centered around the idea of powerful rewards and incentives that will encourage frequent visits and increased spending, marketers must first attempt to try and maximize the number of interactions their brand has with consumers on multiple platforms. With 46% of millennials wanting to receive communications from three or more channels (Bond), a good brand should aim to interact with its consumers on all social media platforms rather than just one. One great example of this is Lancôme’s Elite Rewards Program, a loyalty program which allows users to earn points that they can redeem for rewards not just through buying Lancôme products, but by allowing them to post to their social media sites as well.
Not only can users receive 10 points for every dollar they spend on Lancôme products, but they’re able to rack up more points by connecting with the brand’s social media channels (spread across Facebook, Instagram and Twitter), with another 25 points each time a favorite is shared on one of those channels (Loyalty 360). Not only does this type of comprehensive loyalty program provide users with the chance to earn rewards through multiple channels, but it says thank you to consumers as well, motivating them to become brand ambassadors that will continue to help increase their customer base.
2. Leverage digital content
Modern day consumers are avidly social, an era labeled as “always on” consumers (Forbes). They are the types of users to constantly devour online content across multiple channels—whether they’re listening to songs on Pandora on the bus or casually reading the paper on a tablet—these users are immersed in the world of digital content. Brands can then leverage this trend to their benefit by offering digital rewards as a part of their loyalty programs, allowing them to more directly connect with consumers while simultaneously increasing sales, driving engagement and ROI much more seamlessly than ever before. One example of this type of reward in action is Starbucks’ “Song of the Week” in which users are given codes in store that they can then redeem online for a free digital mp3. Offering consumers “instantly gratifying” digital rewards they love then instills a sense of appreciation within the user, creating a lasting bond between themselves and the brand in the process.
3. Gratify Instantly
While loyalty programs are designed with the intention of providing feel good rewards to solidify the emotional bond between consumers and brands, poorly-designed programs may lead to disengaged customers. A study by the firm Colloquy cites the reasons for frustration among users with the loyalty redemption process as: 1. expired points (43%), 2. not enough points to redeem (39%) and, 3. the reward item not being available (37%). Consumers don’t want to wait for an extended period of time to be able to finally redeem their rewards, and would rather be instantly rewarded for their activity; a fact loyalty programs should take into consideration when creating their reward programs. KitKat, for instance, sought to implement this idea by offering $5 Google Play codes to its customers to drive consumer loyalty. Users could claim their prize by going online and entering in the code found on KitKat products in store, giving them the chance to win $5 Google Play codes which could then be used towards purchasing anything from a few songs to a digital movie. Not only was KitKat able to leverage digital gifts with low cost and high perceived value to a large amount of end users instantaneously, but it also managed to instill a sense of gratitude with consumers, making them more likely to be repeat and engaged customers.
4. Create memorable experiences
Marketers looking to create effective, loyalty programs must not only keep an eye out on the types of rewards being offered, but the ways in which end users can redeem them as well. By focusing on creating fun, lasting memories with consumers through unique rewarding experiences, marketers can generate positive brand associations with their consumers, thereby building brand loyalty and driving repeat purchases. Another great example of this phenomenon at work is McDonalds’ “Pay With Lovin’” campaign in which users were randomly invited to pay for their meal with “lovin’”, a feat which could be accomplished through anything from fist-bumping to dancing.
By utilizing this type of behavioral enforcement, known as “intermittent rewards”, McDonalds managed to successfully harness the power of using small, frequent rewards to incentivize consumers and drive engagement, providing them with memorable experiences while simultaneously strengthening brand loyalty and awareness. And with a study from BIA/Kelsey showing that repeat customers spend 67% more than new ones, it’s become more important than ever to increase customer retention and engagement through loyalty programs—namely, through loyalty programs designed with the end consumer’s happiness in mind.
To design a program with the end consumer’s happiness in mind, brands must be proactive in their search to create the best possible redemption process for users. This means being able to design a program in which users can not only redeem their rewards often, but can do so easily or instantaneously, a feat best accomplished through connecting with consumers across multiple digital channels. Through providing the best loyalty rewards and experiences possible, marketers will not only manage to drive repeat visits and increased interaction with their brand, but can also end up turning happy consumers into brand ambassadors that will help to continue to build their fan base for life.