Loyalty Programs and Building Loyalty

Posted on Posted in Customer Engagement


One of the biggest challenges that brands face today is to find and cultivate loyal customers. Most brands have some sort of loyalty programs to reward loyalty from their customers. Most of these loyalty programs that I am a part of, totally miss the point of loyalty itself.

In general, the expectation from enterprise customers or consumers have significantly increased and they now expect brands to not just deliver great products and services but also acknowledge them as individuals and engage, excite and/or woo them to become loyal customers. Add to this, the fact that we are today also living in a world where switching costs are going down and its become easier for customers/consumers to switch products and services that don’t match or even exceed their expectations.

In this scenario, it is critical that brands have a good loyalty program that works for the brand and also for their customers.

HERE ARE MY 2 CENTS FOR MAKING YOUR LOYALTY PROGRAM MORE EFFECTIVE

1. Loyalty Programs should be for Loyal Customers

Today, I am part of at least 25 different loyalty programs, each with a different retailer or a business. Does that mean that I am a loyal customer to all of these businesses. Definitely not. Just like millions of others who enroll in a loyalty program, I was also auto-enrolled by the billing clerk while getting my purchase billed. I understand that businesses need to collect information about consumers and then track their purchases and affinity towards their business, to make many tiny decisions.

However, getting everyone part of the loyalty program indicates to me that you don’t value the loyalty but just the business. By doing this the business is also setting the expectation that you will get some discounts by being part of the program and maybe there are levels in the program which entail a lot of benefits for you as a loyal customer. What this tells me as a consumer is that if I want better discounts from the business, I should enroll in the program. Nothing more and nothing less.

In my opinion, instead of enrolling every customer into your loyalty program, businesses, should be very selective about who gets invited to their loyalty programs and as the next logical step, what benefits should be offered to this elite list of consumers to keep them coming back for more. As Eddie Yoon defines, the loyalty programs should be defined for the SuperConsumers.

These class of consumers can not only help your brand grow but can also play a significant part in your product growth strategy, new innovations and even help your brand become a lot more relevant. For more information about Superconsumers and how businesses can find them, engage & learn from them, read the insightful book by Eddie YoonSuperConsumers.

2. Engage people with exceptional experiences.

One of the most diffucult things to do for marketing is to engage people and do so en masse. However, Creating engaging experience does have a significant impact. They elicit emotions which make your brand memorable and makes people eager to share.

When it comes to eliciting emotions, the best emotion to go after is positive surprise. If you are able to positively surprise your customers, most other things can and generally do take a back seat.

Everyone still remembers the KLM surprise act where they spontaneously gave relevant presents to customers based on their social profiles.

3. Create Rituals or traditions! And not just your annual Christmas card. 

As humans, we have always been creatures of habits and evolved using rituals or traditions. Think about what kinds of habits would you like to instill – in yourself, in how you engage your customers and in your customers themselves. Habits create traditions; traditions turn into values. One need to be cautitious here so as to not be selfish in this activity, as it will most certainly backfire. You need to keep your customers life and ambitions central when you are thinking about creating rituals or traditions or habits. This is how cultures are built. One habit, one ritual, one tradition and one story at a time.

4. Give them a voice & Connect them. 

Nurturing a great relationship between your brand and your customers is as important as creating opportunities for your customers to discover other similar customers with similar interests. It is an important pillar that most brands forget when they are building the loyalty programs.

Some Common Mistakes to avoid

  1. Most times, the way loyalty programs are designed are dictated by the technology they use to manage the program rather than the other way around. It is critical that we understand this and not make this mistake when one designs a new loyalty program.
  2. It is important to not hide behind customer sat numbers (yes, I’m talking about the NPS or any such customer satisfaction measurement program). Averages don’t tell you the full truth and can at times be out-right dangerous. So, Go out and meet your customers so you can create meaningful experiences AND traditions. It’s all about people because, in the end, they make up the numbers.
  3. Loyalty programs are for loyal customers and not the other way around. You can’t build loyalty among your customers by enrolling in a loyalty program. Loyalty needs to be earned.

If you are planning or working on creating a new loyalty program, and would like to bounce off ideas, reach out to me and I would be more than happy to share my thoughts and ideas with you. You can reach out to me on twitter @rmukeshgupta.

Do share your thoughts and continue the discussion