Customer Loyalty Programs: The Present and the Future

An APAC News Network dissertation analyses threadbare the dynamics of customer loyalty programs and prophesies the road ahead

By Rajneesh De, Consulting Editor, APAC News Network

Making your loyalty program more valuable and energetic

Devise Outstanding Rewards:

Loyalty programs must offer perks and rewards that are very attractive and alluring to the customers. You must ensure that monetary rewards enhance your brand experience too compelling customers to move to your brand and then stick with it. You can use incentives like customized products, exclusives services and merchandise to motivate your customers to engage and interact with your brand.

Emotionally Connect Customers:

If you can connect your customer to your brand, there is a higher probability that he/she will remain in your loyalty program. Customers are loyal to a loyalty program if he feels

The brand cares about him/her
The brand cares about the surrounding environment
The brand understands him/her
The brand resonates within his peer group
The brand makes him/her feel special

Going Beyond Transactions:

If the loyalty programs focus only on transactions, then chances are that they will not create the desired connects with the customers. Instead the loyalty program should engage the customer with activities other than mere transaction. Ask customers for digital feedbacks, share your social media posts, write reviews, download apps could be some of these engagement activities.

Optimize Loyalty Programs Digitally:

This is now imperative in this era of digital transformation especially on mobile. Please ensure customers have comfortable and easy to use experience of your loyalty programs on mobiles. Integrate smoothly with all mobile specific features like WhatsApp and Messenger so that customers can share them freely. The loyalty program also needs to be more interactive.

Create a Feel-Good Factor:

The importance of this got particularly emphasized during the pandemic. Brands that stood for some causes or associated with philanthropic missions and charities generated enough goodwill amongst customers. This was true even if the customers have not benefited directly from the loyalty programs.

Getting More out of your Loyalty Programs and Making them Purposeful

Focused Study of Customer Profile:

Profile and map the customers based on following parameters

How much do they buy?
Which products do they buy?
How frequently do they buy?
How much do they buy from your competitors?
How do they pay you?
How much profitable are these customers?

Segregate & Prioritize Target Customers:

Based on an extensive customer study, prioritize your customers in different categories. The evaluation criteria could depend on

Volume of Purchases by the Customer
Customer Profitability
Customer Payment Patterns
Ability to Purchase More
Loyalty Duration

Align Goals with CRM:

Set your goals for the loyalty program from the beginning based on CRM data. A customer who purchases on average X times a year, set a goal of 1.1X times a year that would ensure you 10% profitability. Partner with solution providers for effective CRM programs that will take care of this.

Identify Tactics to Encourage Customer Loyalty:

Tracking customer purchases are important but you have to devise tactics to enhance the quality of business relationships with the customers.

Sales Representatives Must Visit and Engage with Premier Customers
Personalize Invitations and Engagement with Premier Customers
Guarantee 24×7 Premium Services to Loyal Customers
Offer Additional Discounts on Personal Milestones

Design Customer Loyalty Programs:

Before launching a loyalty program, you need to assess your customers’ current level of satisfaction through surveys, interviews, social media and personal interactions. Identify employees and subsequently engage them with these prioritized customers to execute the loyalty programs optimally.

New Ideas into Existing Customer Loyalty Programs

Gamification of Loyalty Programs: Gamification is increasingly being layered within loyalty programs. The idea is to make these programs addictive to customers and to keep them engaged with them. The gamified design must be exactly aligned to the behavior the brand intends to inspire. The gaming interface should make it simple for the customers and also enable them to measure whether they are achieving their goals from the programs.

Omnichannel Loyalty Programs: The customers can connect to your loyalty program any channel—it could be websites, mobile apps, social media, in-shop visits, QR codes, videos or anything else. You must gather these data from multiple channels and build a single view of the customer. Your loyalty program’s success would depend on the customer profile and pattern selected from multiple channels.

Use of AI and Big Data in Loyalty Programs: AI helps you to analyze large volumes of data points from different sources, track customer purchase and behavioral trends, and uncover profitable co-relations. Armed with these insights, you can accurately predict the right product and promotions to showcase to a customer segment, at the right time, and through the right channel. You can also use AI for Churn Forecasting. This can essentially predict the possibility of a customer switching to a competitor by analyzing several factors like NPS scores, purchase patterns, latency, and transaction values.

Unified and Consortium-based Loyalty Programs: In unified loyalty programs, a group of unrelated brands come together to offer a joint loyalty program. They are becoming increasingly popular amongst customers as these often offer them greater flexibility and choice in earning and redeeming points. Such consortiums often help offer a fully omnichannel loyalty experience for the customers. This helps you access a wider customer pool and unify customer data to build 360-degree views. This makes business sense for large conglomerates that handle multiple brand portfolios.

Influencer Loyalty and B2B Loyalty: Till date the general nature of most customer loyalty programs focused on B2C products and services. However, even B2C brands are increasingly using loyalty programs to identify key influencers (often professionals or paid endorsers) to communicate product launches/new promotions, and reward the best performing ones. Loyalty programs have also become critical channel marketing and relationship management engines for B2B driven sectors. where the end-customer is not the primary decision-maker.

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