When it comes to loyalty programs, retailers have not kept up with the times. They have paid way too much attention to customers’ wallets and very little to softer aspects like brand affinity, experience, advocacy, and engagement.
The need of the hour is not just a superficial rebranding of a loyalty program but a complete character overhaul that will transform the loyalty program into a key pillar in a brand’s marketing and engagement strategy. Without a DNA change, it will feel like old wine in a new bottle. Today, customers are smart enough to recognize whether your loyalty program is worth their time or not.
Over the last 10 years, Capillary has implemented 100+ successful loyalty programs and transitioned large-scale traditional loyalty programs into experiential, omnichannel programs for more than 400 customers across the globe.
Here’s what we believe separates the winners and laggards in the loyalty marketing space.
Four characteristics customers want in a loyalty program
When you look at what resonates with customers, we arrive at four (4) winning features of a loyalty program primed for driving higher sales and engagement.
- It offers a consistent customer experience across channels
The customer gets the same experience across the brand’s touchpoints, channels, and people.
- It leverages and encourages social behaviors.
Customers find it meaningful to exhibit their loyalty socially and participate in co-creating the loyalty program.
- It applies gamification to improve engagement
The program makes it fun for customers to ‘do the next thing’ and ‘win’ a recognition or an incentive.
- It goes beyond purchases and transactional rewards
The program appreciates and rewards emotional engagement and adds value to the customer’s life.
Engagement, and consequently loyalty-driven sales spike up when customers enjoy participating in your loyalty program. Now that we know the characteristics of a winning loyalty program let us discuss how you can revamp your loyalty program to drive a tangible impact on sales and engagement.
How to revamp your loyalty program to drive tangible sales
#1: Start by building deep customer insights
To be useful to your customers, you must know them thoroughly. You need to understand their behavior, interests and needs across the purchase lifecycle. And you need to look at these insights with an omnichannel lens – across online and offline channels. For example, look at your customers’ social media activity alongside the purchase checkpoints and find correlations (asking for recommendations, reading product reviews, etc.), or analyze their grocery shopping and find ways to add value through personalized offers (eg:- 1+1 on their preferred drink) Such a holistic view will give brands a better understanding of their loyalists and reveal how they may create more value, profitably.
Things you will need to consider:
- A CDP to create an integrated view of customer data across different online and offline sources
- An engagement-based loyalty platform to incorporate positive, non-purchase rewards in your loyalty formula
- A strong commitment to upholding customer data privacy
Success stories :
Bata, the Swiss footwear brand leverages CRM and Loyalty insights to create hyperpersonalized Facebook campaigns. The strategy helped them achieve 57X ROI and also unearth social media behavior about customers which were used to further enhance their personalization efforts.
Such dynamic and cross-channel data gives you in-depth information about customers in real-time — not merely when they make a purchase.
The luxury cosmetics brand Lancôme knows how valuable cross channel digital engagement with its consumers is.
It gives its members 10 points for every dollar they spend, but a much higher 25 points for sharing its product posts on Facebook, Twitter, or Instagram pages.
How customer insights drive sales:
Your customers stay with you because they feel valued and feel a sense of connectedness with your brand, And their positive engagement behaviors such as reviews or flaunting a purchase on social media spreads word-of-mouth, which peers trust more than any above-the-line advertising. This word of mouth brings you many more customers.
#2: Adopt integrated platforms and practices
Once you have identified your customers’ needs, you should hardwire the new thinking across your customer touchpoints. Bring different customer-facing teams on the same page, restructure the organization if needed. Get an integrated loyalty program technology that connects the separate dots – point of sale (POS), e-commerce, social media, CRM, ERP, marketing automation, financial, and customer service systems.
Things you will need to consider:
- A mobile-first loyalty program platform
- An AI layer on your loyalty platform to leverage predictive analytics and to personalize the rewards
- Training your customer-facing teams
Malaysia’s leading pharmacy chain, CARiNG* offers its customers a multi-purpose, omnichannel, app-based loyalty program that packs a host of features like news updates, health screening packages, free checkups, workshops, shopping, and management of vouchers all in one place.
CARiNG* customers can use the loyalty app virtually as well as in-store – for instance, redeem digital vouchers in the store through barcode scanning, etc.
Starbucks brought together digital marketing, mobile payments, and loyalty teams to ensure a tighter integration and a seamless collaboration across their customer touchpoints.
*Capillary is proud to partner with CARiNG for this initiative
How integration drives sales:
Charity begins at home. A genuinely holistic and seamless customer experience only comes from a holistic and integrated approach within the organization. Such restructuring ensures different stakeholders speak the same language, have a common understanding of every customer, and see their individual functions as parts of the bigger whole.
#3: Redefine loyalty metrics
The way you measure loyalty also has to change from a short-sighted and transactional approach to a broader, engagement oriented view. You must complement metrics such as Repeat Purchase Rates (RPR) and Average Basket Value (ABT) with metrics like reviews given, QR codes scanned, referrals provided, time spent in stores, engagement on social media, email, ads, etc.
Things you will need to consider:
- A good cross-channel marketing platform
- A customer engagement platform capable of assigning weights to various types of customer interactions
- Native integration between your customer engagement and loyalty platform to map the overall engagement score into your rewards equation
Walgreens, the US-based pharmacy chain, rewards its members for adopting a healthy lifestyle.
It lets them connect their digital health trackers to its member app and gives them points whenever they engage in a healthy activity.
How engagement drives sales:
According to Forrester Research, emotion is the #1 driver of loyalty. Capgemini’s study further reveals that ‘Consumers with high emotional engagement’ buy the brand 82% of the time whereas ‘Consumers with low emotional engagement’ buy it only 38% of the time. Thus, by measuring and encouraging emotional engagement, brands naturally create customers for life. For example, Walgreens’ ‘Balance Rewards’ program has 80 million of its 130 million members actively participating.
Conclusion: Unshrink loyalty
It is time to look at the bigger picture when designing, monitoring, and measuring your loyalty programs. It is not one customer but a connected set of customers. Not one purchase transaction but the entire relationship. And not just one point of sale, but omnichannel interactions.
Thinking of the ‘whole’ is the change in perspective needed to revamp your loyalty program and drive tangible value from it.