Innovative Approaches to Enhancing Customer Loyalty Programs
A good loyalty program can be the start of a longer-lasting customer relationship. It allows businesses to increase retention and repeat purchases by offering a discount, reward points or an extra benefit.
Another goal of loyalty programmes, such as the tier-based loyalty programs of airlines and hotels, in which members must accrue a specific number of points at each tier in order to move up, is to help companies to force customers to continue spending, so they don’t lose the benefits or reduce churn. As a result, one of the key effects of these personalised and community-oriented loyalty programmes is to reduce customer churn.
Gamification
Gamification is the application of elements from game design (such as the achievement of virtual badges) into non-game contexts, like consumer brand loyalty programmes. The idea is to use a philosopher’s stone to turn beige transactions into entertaining, game-like experiences, and hopefully to create a sense of such involvement that in turn facilitates emotional attachment to the brand.
Starbucks uses game mechanics to encourage more frequent visits by Rewards members, by displaying progress towards reward ‘goals’ (such as free drinks and food) at every step, and providing ‘boutique’ rewards such as surprise birthday gifts for ‘gold’ members.
Customer loyalty schemes must allow individuals to embrace both the intrinsic and extrinsic motivations simultaneously. We would probably be most likely to support a loyal supermarket scheme, for example, if it awarded points not solely on the basis of spending money on plastic packaging and wasteful items, but also on the basis of purchasing environmentally friendly goods, producing a scheme that thereby allowed us to pursue both good and bad habits. Special offers are no doubt incentives for us, but the availability of such schemes is also a motivator of consumption.
Subscription models
These subscription customers are perhaps the best group of people to nurture, for they can become a ‘recurring revenue machine’ as well as acting as critics of the product and the service.
Subscription also reduces the expense of acquiring customers. It’s much more expensive to bring in new customers than to keep existing ones (somewhere between 5 and 10 times as much). So reducing this expense allows your marketing and sales budget to go towards other investment that could contribute to the growth of your company.
Build a value-driven loyalty programme: create a sense of community with regular benefits and rewards to grow your subscriber list – free samples and discount codes, special e-Commerce whitepapers or insights, maybe even an educational video series, or loyalty rewards. Briogeo has a loyalty programme called Hair IQ: every customer gets a quiz to assist with product selection and before you purchase the site gives you 25 per cent off, which is pretty awesome – a personalised product selection that considers your needs. When you sign a subscriber it’s not for just one time. After purchasing you get a unique experience, you feel appreciated, and the things that you are getting from that company specifically has influenced you to give out more referrals, exponentially improving business growth. The right kind of loyalty programme can be the driving force behind your customer retention strategy.
Community building
Driven more by experience and association with a brand than by purely financial benefits, today’s customer loyalty leaves plenty of room for retailers to make members happier by building their loyalty experience around engagement pillars that speak to the values and aspirations of every type of person.
Use UGC to create a community around your brand and use it to inspire engagement with and trust in your brand among skeptical, potentially less reliable customers. Why? Because your customers in this case are providing the credibility and authenticity you need to get that skeptical customer onboard.
Personalise omnichannel experiences. Give customers one unified customer account across channels. Craft brewers might track customer beer preferences through their loyalty platform and gather that data to share with bartenders so they can make personalised recommendations. Luxury fashion retailers might be able to offer early access to limited-edition sneaker releases through their secret tiers.
The unexpected
Point-chasing programmes work well to spur customer spending but, as predictable as grandma’s crepe suzettes, can lose their shine. By injecting a dose of surprise and delight into customer rewards, brands can reignite customer passion and fuel the brand for the long haul.
By way of example, the British beer company BrewDog is one of the pioneers in this space, developing its loyalty programme to keep players engaged via game-like elements, such as challenges and badges. Customers can gain badges such as ‘Drink BrewDog, Kill Carbon’ as they don eco-conscious consumer duties.
Brands often use a loyalty programme, in combination with customer reviews, to learn customer preferences and inform product and merchandising strategies. This can be done by offering rewards for feedback (SurveyMonkey.com or GoogleForms are great tools to do this), and may also involve leveraging more advanced technologies, such as analytics platforms that capture customer purchasing and redemption patterns, to identify trends that, in turn, inform product development and differentiation to keep products exciting for existing customers while honing targeted marketing efforts.
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