These are pretty crazy numbers. But it shows that loyalty programs are alive and well and that consumers are not afraid to enroll in them. Especially Americans.<\/p>\n
What exactly is loyalty?<\/h4>\n
In Oracle\u2019s report on designing next-generation loyalty programs<\/a>, Oracle defines loyalty as \u201ca positive belief, generated over the course of multiple interactions, in the value that a company and its products and\/or services provide, which leads to continued interactions and purchases over time.\u201d There a several goals that nearly all loyalty programs are focused on. Number one is to generate sales. But besides generating sales, loyalty programs should also have goals that help both the company better serve its customers as well as, help the company grow. These goals include<\/p>\n Each individual business needs to focus on figuring out exactly what they want their loyalty program to accomplish before building it. Every industry and business within each industry, serves their customers differently. This means that each loyalty program needs to be custom-tailored to suit its customers. This will help a loyalty program enroll more customers as well as, become a valuable asset for the company.<\/p>\n The short answer is profits. But there is much more to it than that. Now let’s elaborate on these cornerstones<\/p>\n With a loyalty program that provides good value to the customer, customers will not only want to join, but will also be willing to give you their information in exchange for a better experience. Gaining customer knowledge is much more important in a B2C business as B2B businesses already have information on their customers(not saying B2B is not important, just that B2C has more angles). These B2C businesses can use their customers data to give them personalized offers and form a much better relationship with them. A well done loyalty program should also increase customer retention rates. If a loyalty program provides good value to the customer, then it will cost the customer (either in money, time, benefits, etc) too much to switch to a competitor. The higher these costs, the more likely the member is to remain loyal. By being unique and valuable to customers, businesses create a win-win situation where both the business and the customer understand the value they are receiving.<\/p>\n Another great thing about loyalty programs is they enable\u00a0businesses to compete less on price, and more on value. Businesses never want to be in a position where they are competing solely on price. A loyalty program can help deter that from happening. Profitability is, of course, the main goal of a loyalty program. There are a few different ways a loyalty program can help improve profitability.<\/p>\n As discussed previously, customer retention is a huge part of a loyalty program and a huge part in gaining profitability. According to Frederick Reichheld of Bain & Company, a 5 percent increase in customer retention<\/strong> results in a 25 percent to 100 percent increase in profitability<\/strong>.<\/p>\n Now at this point, you understand why a business needs a loyalty program, the goals of a loyalty program, and what you should do to\u00a0cultivate customer loyalty<\/a>. But now comes the most important part of them all, implementing a loyalty program and accomplishing all of the goals of the loyalty program. Gaining insight into customers can be difficult depending on what type of loyalty program a business is running. An airline has a much easier time tracking someone’s travel habits through a frequent flyer number than a restaurant does trying to track someone\u2019s preferences through a paper loyalty campaign. This example points out directly as to why digital loyalty programs remain king when it comes to customer knowledge.<\/p>\n To increase customer knowledge, businesses need data. Traditional loyalty campaigns don\u2019t offer a good way to collect information on each individual customer. Digital loyalty campaigns offer the ability to have real-time analytics that allow businesses to stay up to date on their customers purchasing habits. You can track how often customers enter the store, what they purchased by linking the loyalty card to the transaction, as well as see how long until a customer reaches a reward for their loyalty. This is one of my favorites when it comes to digital loyalty programs. As previously talked about, customer retention is about creating so much value, that it costs the consumer too much to switch to a competitor. So with a digital loyalty campaign, you have the ability to create much more value than with a traditional loyalty campaign. But, a business has the chance to create a tremendous amount of value if they incorporate their digital loyalty campaign into the mobile wallet. Here\u2019s why.
\nLoyalty is focused on long-term customer relationships. So an organization should be focused on how their loyalty program entices a customer to stay with them for a long period of time. A strong element within this is minimizing the willingness of a customer to switch to a competitor. A loyalty program that is done well, should make it a difficult decision for a customer to switch to a competitor.<\/p>\nThe goals of a loyalty program<\/h4>\n
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What do we want loyalty programs to accomplish?<\/h4>\n
\nA loyalty program that is properly built with clear goals and provides value to the customer can be extremely beneficial to the business. Areas such as customer knowledge, product and service differentiation, customer retention, and profitability can greatly increase with a proper loyalty program.
\nHere are the four cornerstone\u2019s that a business should focus on in order to gain the most benefit from a loyalty program.<\/p>\n\n
Customer Knowledge<\/h4>\n
\nCustomer knowledge also benefits businesses in terms of their market knowledge. The ability\u00a0to have access to information like what products your loyalty customers purchase together, gives you more insight into exactly which one of your products drives customer loyalty<\/a>. This will help businesses become much more successful.<\/p>\nCustomer Retention<\/h4>\n
\nThis is an area where a lot of loyalty programs go wrong. Many businesses focus too much on mimicking their competition\u2019s loyalty program rather than making theirs something that stands out from the competition\u2019s.
\n![\"Many](\"https:\/\/dxjl3qy52c1o9.cloudfront.net\/wp-content\/uploads\/2015\/11\/24183215\/cts_post_2012-06_what-is-a-loyalty-program-b.jpg\" "\\"\\"")
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\nThree ways to make a loyalty program standout<\/strong>:<\/p>\n\n
Differentiated Service and Brand Equity<\/h4>\n
\nBusinesses can refer back to their advanced customer knowledge that they gained from their loyalty program and use this to provide unique personalized products to their customers. This makes them\u00a0not only stand out from their competition, but also increases their brand value and their customer’s loyalty.
\n\u201cTo prove this point, 83% of hotel guests say that personalized service and attention to their needs provides value<\/strong>. It is \u201cvalue,\u201d rather than price, that defines a good deal for these customers,\u201d according to a survey commissioned by Wyndham International.
\nThis, of course, means that providing real value to customers is a cornerstone of a good loyalty campaign.<\/p>\nImproved Profitability<\/h4>\n
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Implementing a digital loyalty program<\/h3>\n
\nI am going to go back through the cornerstones of a loyalty program that I just told you about, and give you ideas on how to accomplish every single one of them through a digital loyalty campaign.<\/p>\nDigital Loyalty Program- Customer Knowledge<\/h3>\n
Data, data, data.<\/h4>\n
\nAnother good thing about digital loyalty programs when it comes to customer knowledge is that an analytics tool compiles the data for you. No need to try and break it all down and interpret it yourself. These analytics will provide your business with the data that it needs to make educated decisions based on customers purchasing habits. I view customer data as one of the most important tools for marketers. And if you had the right team I\u2019m sure your\u00a0data could even be incorporated into a CRM tool and help your business build very valuable customer relationships. Remember, knowledge is power. Especially with your customers.<\/p>\nDigital Loyalty Program- Customer Retention<\/h3>\n
\nPeople are already on their phone, so this is where your business should be. By placing your loyalty card in your customer\u2019s mobile wallet, you have an advantage that your competitors cannot beat. Allow me to elaborate.
\nMobile loyalty programs allow for the easiest opt-in. Customers can opt in a mobile loyalty program simply through a URL and adding the pass to their mobile wallet. Businesses can broadcast this URL directly to a customer\u2019s phone through a beacon<\/a> and Eddystone-URL<\/a>. This is extremely simple, effective, and it is the future.
\nSo now that they\u2019ve opted-in, your goal is to increase the cost of switching which means providing more value than the competition. Now that the mobile loyalty program pass is in your customer\u2019s mobile wallet, you can push updates to them letting them know about an offer that is tailored specifically to them. So instead of this offer being caught up within their email, it is now on the lockscreen of their phone.
\nThese tailor-made offers that the customer actually uses, because they didn\u2019t get lost in their email, create the ultimate win-win situation. This is key when developing customer retention. But now that they\u2019ve got the offer in their mobile wallet, we don\u2019t want them to forget to use it because that doesn\u2019t help create our win-win situation. This is where a beacon comes back into play.
\nThe mobile loyalty card is paired with a beacon at the register and will present itself directly on the member’s lockscreen when they are near the register. This way they never forget to use an offer and become much more loyal because of it. Another way to do this is by having a NFC enabled loyalty card like Walgreens. This way when the users goes to pay with Apple Pay, the loyalty card can be scanned through the NFC terminal. Check out the video below to see it in action.
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