Do loyalty programs truly reflect what matters most to customers?

A loyalty program is a marketing tool for creating repeat purchases and profitable cooperation for a brand and its customers. Benefits for a company are numerous: higher basket value, more referrals, uplift in purchases frequency and marketing costs saving to name just a few. On the other side of the loyalty equation, there are benefits the program brings to members. Only when both sides are balanced may a be successful.

We can see four major categories of expectations that customers have towards a loyalty program. And not all of them are related to rewards – consumers want their brands to know what they like and deliver a more value-driven experience than ever before. Customers want to:

• Have a seamless experience
• Save money
• Feel special
• Know their data is secured

Sometimes, when brands develop a loyalty program and its Customer Value Proposition, they make life too complicated for consumers. Loyalty programs need to be consistent and easy to use, but operators need to keep in mind that consumers like novelty. A well-designed loyalty program can introduce new and different benefits that excite customers at a reasonable cost.

Customer Loyalty Programs vary strongly in terms of key mechanics. The below-mentioned categories show types of benefits from the member’s perspective, which the program operator should use to build a Customer Value Proposition.

Financial benefits

Financial benefits are transactional and range from discounts, earn and burn offers (money or points), cashback, members-only pricing, free delivery, and birthday coupons.

Experimental benefits

These enhance the experience of being a member, and can be events, access to limited resources, pre-sales gift boxes, and delight offers.

Functional benefits

Useful benefits aim to reduce friction or complexity. Focus on purchase experiences such as pre-order for members, a mobile payment option for members, or post-purchase options.

Personal benefits

Personalized content and behavior-triggered communications are critical. It is driven by member’s data such as product recommendations based on previous purchases.

Social benefits

Program benefits hit their peak emotional connection when playing a part to connect members and allow them to cooperate. Most common incentives in this category are forums for members and program ambassador communities.

When you don’t know the answer to the question “What is really important to my customers?”, the most obvious thing to do is to ask. This not only gets you the answers you want but shows customers that you are creating a program with their well-being in mind.

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