Great loyalty schemes: six core principles

Brands that craft excellent loyalty programmes know that they are all about the customer – not the business.

The benefits of long-term customer loyalty are self-evident. But, without providing the rewards and relationships that people want, that loyalty just isn’t going to happen.

Effective loyalty programmes focus on the wants and needs of individual programme members, and then align them to the sales goals of the business (rather than the other way around).

Businesses that want to provide a great experience and rewarding loyalty programme to their customers should focus on these six core principles.

Know the scheme’s purpose

Exceptional loyalty programmes are established with a clear intent. They create a solid base of customers who benefit from having a lasting relationship with the brand.

Loyalty programmes only succeed when they explore what the customer wants, and make the effort to provide it.

A loyalty programme isn’t just an incentive scheme.

the goal is to support and encourage the customer

The main goal isn’t to nudge the customer into buying something they wouldn’t usually go for (and may not buy again). The goal is to support and encourage the customer in their personal goals and ambitions.

Without this purpose, loyalty schemes can be too generic. They try to please sectors rather than individuals, and they fail because people just don’t see the appeal.

Effective use of data analytics

With enough data, businesses can start to use predictive analytics to aide product and service development.

Using data provided by mobiles and in-store beacons, for example, retailers can use real-time data to surprise and delight their customers with instant offers and rewards that are of genuine interest to them. 

using data to give them the right incentive in store is really effective

We know from our own research that when people buy clothes, they want to try them on first, and they’re more likely to be incentivised by rewards that drive them into stores. Using data to give them the right incentive in store is really effective.

Data analytics provides brands with a way to get to know their consumers as individuals – with their own tastes and quirks. It offers more opportunities to upsell, and makes being a member of a loyalty programme more rewarding for customers.

Personalise communication and rewards

Customers provide businesses with data with every purchase and interaction. Loyalty programme members yield even more data.

customers have no problem sharing their data with brands, but they regard it as an exchange

Our research has shown that customers have no problem sharing their data with brands, but they regard it as an exchange.

What do they get in return for their data? In total, 88% of UK respondents said that retailers could use their data for marketing purposes if they also fed that data into their loyalty rewards system.

People don’t want the generic rewards that a focus group thinks a man or woman of 25 would like, they want products and experiences crafted for them.

They want to see that the brand is listening to what they want.

Provide high-quality rewards and exceptional levels of service

While there is a place for discounts and deals, simply discounting often fails to get the results brands want.

If your loyalty programme focuses on “how much money I can save?”, that’s a race to the bottom.

Instead, the best schemes foster an emotional connection between the consumer and the brand, and provide real value.

the best schemes foster an emotional connection between the consumer and the brand

They do this through providing high-quality services that sit above the regular good customer service that all customers expect.  

Our research found that offers and promotions were important to 86% of respondents, while 81% found the quality and quantity of the rewards on offer of equal importance.

Gamification elements – like achievements and competitions were seen as the least important elements of loyalty schemes by most people – showing that customers don’t want a gold star for being loyal, they want brands to give something back.

Offer tiered rewards

Loyalty schemes can still be successful when they treat all members the same but there needs to be a way to differentiate high-value customers if brands want to recognise the extra investment these people make in the brand.

High-value customers, while often the hardest to please, are exceptionally loyal

High-value customers, while often the hardest to please, have strong emotional ties to their favourite brands and are exceptionally loyal – often taking the time to advocate for the brand.

There’s not huge potential for growth with these customers, so some brands overlook them – focusing on increasing the spend and loyalty of others.

These customers can’t be taken for granted. They need to be adequately rewarded for their continued loyalty or the brand risks losing touch with them completely.

Focus on ease of access and redemption

Effective loyalty programmes make it easy for members to redeem benefits and claim rewards. They don’t make the sign-up process cumbersome, or force people to log-in to multiple websites just to claim the correct codes to use at checkout.

People either won’t bother to sign-up at all, or simply never claim their rewards if the process is too convoluted. This renders the scheme a pointless investment, and only serves to annoy the people trying to use it.

Providing an easy to use loyalty scheme is one of the most powerful things a brand can do to make loyalty schemes successful.

The benefits of following these six principles are to create a deep, meaningful connection with your customers that encourage real loyalty, not simply repeat buying. 

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