What should a good loyalty program look like?

Less than half of consumers feel their loyalty program offers them ‘good benefits’. Businesses often focus too much on maximising returns and forget about the customer, writes James Forbes.

Here are three key pointers when thinking about loyalty programs to generate more interest and engagement among your customers, while at the same time gathering critical data to ensure the loyalty program is generating maximum returns to the business.

1. Link your loyalty database with other systems that collect and hold customer information

The ability to collect customer data is a core benefit of any loyalty program. Typical data could include what the customer purchased, as well as the location and frequency of purchase. Over time the data you hold will detail the preferences of individual customers, what kinds of promotions they are likely to respond to, even what days they prefer to visit your venue. Building such a rich customer profile will support the tailoring of marketing messages, both in your venue and through other channels such as email.

Program benefits don’t have to be a monetary rewards or discounts, often membership perks are preferable.

2. Make the loyalty card meaningful

One of the reasons that the ‘buy ten get one free’ card works for cafés is because people may well stop by daily, and so every two weeks they’ll get a free coffee. However, it is unlikely that this approach would work for, say, a car dealership!

To get value from a loyalty program businesses need to drive frequent and habitual usage, which will benefit both the customer as well as the organisation. As obvious as that sounds, it’s a message that’s often lost, with rewards accruing too slowly or benefits being of limited value to be of interest to the customer.

Program benefits don’t have to be a monetary rewards or discounts, often membership perks are preferable.

Make use of the data

Too many organisations launch a loyalty program, and then fail to do anything with the data that they’ve collected. There are some great case studies about overseas supermarkets such as Tesco and Sainsbury’s in the UK using their loyalty program to determine everything from what products to stock, right through to using the data to be able to offer a free TV and movie service where customers view targeted ads in exchange for signing up.

In the end, it is that investment into analytics that determines the success of a loyalty card. A successful one is one the business has drawn meaningful insights from, and then used to offer customers compelling products and services.

Complex data analytics strategies are something that many small and medium businesses are still wary of investing in for fear of the expense and technical challenges they can pose. However, a good partner can help these businesses set themselves up for advanced analytics, and with loyalty programs becoming a major presence in consumer wallets across all kinds of retail, it’s going to be a significant competitive advantage against those that can’t offer compelling loyalty programs.

James Forbes is head of digital and marketing at information management consultancy InfoReady. This is an extract from an article that featured in the January 2015 issue of Marketing (www.marketingmag.com.au).

Comments (1)

Highly descriptive post, I enjoyed that bit. Will there be a part 2?

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