It pays for retailers to reward their loyal customers. Returning customers spend 67% more than new customers. However, simply having a loyalty program for your retail chain is not enough. The key to unlocking the true profit potential of your most loyal customers is discovering what they really want in a loyalty program. A successful loyalty program focuses on the four R’s in the lifecycle of loyal customer acquisition – Reward, Redemption, Relationship, and Recommend.
Reward – Providing rewards that your customers find valuable is only one part of the loyalty puzzle. Loyalty programs should be easy to use and understand or consumers won’t want to participate.
The best loyalty programs make signing up new members quick and easy. Allowing your customers to easily earn points, as well as redeem them quickly keeps them engaged. Colloquy conducted an in-depth loyalty census in 2017 that concluded “57% left a program because it took too long to earn, and 53% left because a program did not provide rewards they were interested in.”
Getting a quick reward brings customers back into your store. Receiving a coupon for their next purchase just for signing up or completing their member profile online gives customers a tangible reason to participate in your program.
Personalizing rewards based upon spending history also makes customers feel more connected to a brand because it has demonstrated an understanding of what they want. These crucial reward components can make or break your loyalty program.
Redemption – Bond’s Loyalty Report 2017 reveals that “An estimated $100 billion in points are left unredeemed by Members.” Part of the problem is that it takes too long to earn rewards and/or keep track of points.
Retailers should attempt to make the process of earning and redeeming membership rewards as frictionless as possible by offering mobile apps, web accessibility, as well as the ability to see point values printed on customer receipts. In CodeBroker’s 2017 Shopper Loyalty Survey Results “71% said they would be more likely to use their loyalty cards if they could access these cards and rewards from their mobile phone.”
Another pain point customers experience when it comes to loyalty programs is the expiration of points. CodeBroker’s survey results also showed that “43% said their rewards expired before they had a chance to use them.” Extending or eliminating expiration dates all together might just be reward in itself for participating in your loyalty program. Without expiration dates point accumulation might even become a brag-worthy event that creates friendly competition among friends and family to see who can amass the most points.
Friendly competition through gamification of your loyalty program can encourage goal setting which keeps customers engaged. It also makes redeeming points a celebratory occasion. Customers who redeem their points experience more overall satisfaction with a loyalty program than those that don’t and are more likely to continue to participate. Customer engagement is paramount to the success of the best loyalty programs.
Relationship –– Direct benefits such as ease of use and great rewards are huge motivators for customers to sign up for your loyalty program. However, research shows that customers also want more than a transactional relationship with a brand; they want to feel an emotional connection.
Colloquy’s 2017 Loyalty Census did a thorough analysis of customers’ implicit motivators for participating a loyalty program. “The top motivator for participation in a loyalty program is I love the brand, company, retailer, or service – which is purely emotional” Other emotional motivators were indicated by the statements: “The program makes me feel like a valued member and The program goes beyond my expectations.”
Your sales associates should be effective brand ambassadors in nurturing customer relationships. They should make your customers feel important. They must also be able to effectively communicate the benefits of your loyalty program to your customers because it has a significant impact on customer retention.
Bond’s Loyalty Report 2017 found that “When representatives improve Members’ understanding of the Program, including how it works and the benefits, we see a 12-fold increase in Member retention. More compelling, among Members who agree the Program’s representatives make them feel positive emotions, there is a 13-fold higher likelihood of member retention.”
Recommend – According to Bond’s Loyalty Report 2017, “73% of Members are more likely to recommend brands with good loyalty Programs.” Thanks to the internet, the ability to recommend a product or brand is at the tip of consumers’ fingertips every waking moment. What to buy and where to buy it is largely influenced by what others have to say about it.
Online user-generated content including ratings, reviews, product photos, product videos or commentary written by the consumer about products carry enormous weight. In Turnto’s report entitled Hearing The Voice of the Consumer “An overwhelming 90% of US consumers report user-generated content to be the most influential part of their purchase decisions.”
Not only do the best loyalty programs elicit a natural word of mouth referral response, but they also actively seek to reward their loyal customers for their natural inclination to spread the word. Rewarding points for sharing on social media channels, posting reviews on a retailer’s website, or assigning a percentage of additional points for each friend or family member that a customer invites to sign up for the loyalty program are great examples.
According to a report by Accenture Strategy called Seeing Beyond The Loyalty Illusion: It’s Time You Invest More Wisely, “Rather than investing in initiatives aimed at directly increasing the wallet share of loyal customers, companies can benefit from placing greater investment emphasis on leveraging the goodwill and word-of-mouth generated by the loyal base as a source of ‘warm’ acquisitions.” Your loyal customers become lead generators.
Give your loyal customers what they really want - a rewards program that makes it quick and easy to earn and redeem points for things they actually want. Make the process frictionless through the use of mobile technology. You can make participation fun by utilizing gamification, social media integration, and celebratory rewards for birthdays or loyalty anniversaries.
Once they feel that your brand actually cares about their needs, your customers will form an emotional connection that becomes the implicit driving force for continued engagement and referral of your brand to others. Brand loyalty goes far deeper than a simple transactional system of membership rewards. It’s a complex relationship of reciprocity created by providing your customers with tangible value and rewarded with increased sales and new customer acquisition.