Is Your Customer Loyalty Program Setting You Up For Success?
A well-conceived and executed customer loyalty program can build loyalty, boost brand advocacy and even increase average spend - so why are so many companies failing to deliver?
A well-conceived and executed customer loyalty program can build loyalty, boost brand advocacy and even increase average spend – so why are so many companies failing to deliver?
Practically every chain store in the U.S. has some type of customer loyalty or rewards program, as does every recognized brand in travel and hospitality. As such, every year, the number of American consumers signing up to loyalty or rewards programs increases, yet as a percentage of the population, the number of active members across these programs remains flat.
More members, fewer users
Data published on January 30 by Bond Brand Loyalty, reveals the average American is a member of 14.8 different programs, yet is only an active user of 6.7. The agency, which publishes an in-depth brand loyalty report annually, surveyed 22,000 Americans about 200 loyalty programs and discovered that the only type of program to achieve even a 50% satisfaction rate was for cinema – by comparison, the hotel sector managed just a 37% satisfaction rate.
Yet, when a loyalty program does meet customer expectations, the uplift is huge, with 73% of consumers saying they advocate brands with a good loyalty program and 79% admitting that the strength of a program is what keeps them loyal to a specific brand.
What’s with the disconnect?
There are two reasons and the first is customer experience. In their haste to acquire customers and attract attention to their brand, many organizations, especially in retail, forget about a program’s customer journey. Every step that increases effort or causes frustration will detract from satisfaction, even if the rewards on offer are hugely desirable.
Keep it simple
This is what Target’s Executive Vice President, Chief Marketing and Digital Officer Rick Gomez realized. The company had allowed its approach to loyalty to spin out of control with a host of different programs and numerous, often competing, channels.
“We were trying to show our guests we appreciate them, but we made it hard for them to navigate through everything,” Gomez explained during a presentation at NRF 2020 Vision. The new system, Target Circle, rolls everything into a single app that offers all members the same benefits as well as personalized offers based on their transaction history.
Indeed, when Bond Brand Loyalty asked consumers to rate the elements of a program that are most likely to increase their satisfaction levels, 73% of responses were about experience, whether it be ease and enjoyment of use, clarity of communication or alignment with what the brand stands for.
Use your data
However, to deliver on customer experience, companies must first get to grips with data and make it work for them. Without data, there can be no deeper customer understanding, and without understanding the experience is always going to be sub-par.
“It’s imperative that we brands create deeper and more meaningful connections with our customers each and every day,” explained Reebok Vice President, Marketing and Digital Brand Commerce, Matthew Blonder, of its approach to creating a new loyalty program. “Our goal is to increase customer engagement.”
Like Target Circle, Reebok Unlocked is intuitive to use and offers promotions and rewards for members for interactions with the brand beyond simply making a transaction. And crucially, it was developed from the ground up using data insights. Before launch,Reebok conducted qualitative and quantitative testing to identify any potential friction points; and now that it is up and running, the new data being generated is helping the brand create even more offers and features tied to the program that they know intuitively will chime with customers.
“Because of the data available to us and our ability to communicate in a meaningful way with our customers, we are able to move 5,000 folks from one tier [of the program] to the next every single week,” Blonder revealed.
An unfair advantage
Retailers have an advantage over other business sectors due to the amount of actionable transactional data flowing through their organizations on an hourly basis. Therefore, they should be able to build a rewards program that aligns with customer expectations or at least consumer trends.
For other sectors, such as travel and hospitality where even a frequent customer may only interact once to five times per year, building a rewards program can prove more challenging, yet is even more crucial. Being able to maintain a connection and create more interactions with consumers between brand experiences is only going to provide more valuable insights.
Pool your data resources
It was for this reason that global hotel chain Accor rolled all of its brands into one new program – Accor Live Limitless (ALL) – and then also reached out to a host of partners around the world, from gyms to sports stadia, to increase benefits and increase the number of interactions.
All of the data from these varying sources is pooled and by leveraging AI it has created and continues to grow what it claims is a new type of program that makes a new type of personalized connection with customers.
“Everyone knows personalization should be at the heart of what you do,” explained Ian Di Tullio, senior vice president Accor Hotels. “It’s beyond profiling. It should now be inferred. Customers expect personalization in real time within the confines of GDPR. But you can’t do anything until you connect your data, get a single customer view and deliver an omnichannel experience.”