Nowadays, loyalty programs are a commonly widespread practice as their effectiveness and viable advantages have made them a necessity within advanced marketing strategies. They are mainly implemented within enterprises that emphasize the importance of the customer-centric approach – no matter what kind of business you are running, and in what industry you are specializing, it is always a good idea to reward your clients for their loyalty to your brand.
In order to keep your customers close, and to keep ahead of your competition, implementing a loyalty program is a must. If you want to gain business advantages over these competitors, read on to learn how to create a loyalty program that will bring you benefits – and how to avoid the most common mistakes.
How to create a successful loyalty program?
So you want to start a brand new loyalty program or adjust an existing one, and you have no idea where to start? Depending on your budget, human resources and time you can pick one of the following options:
1. Doing it in-house
Theoretically doable, practically available only for the biggest companies on the market. It costs a lot of money to cover all the expenses associated with hiring UX designers, programmers, developers, marketing, running focus groups and delivering not only the software but also the idea for the loyalty program.
2. Advertising agencies
Having a lot of creative people on board, and a lot of experience in creating marketing campaigns, agencies will be able to help you with your loyalty program development. Still, you should expect to pay a pretty penny for their services. Moreover, they might lack the technology to operate a large-scale campaign.
3. Loyalty software providers
They guarantee the best technological solutions available on the market. You will be sure that mobile apps won’t crash, points will be added without delay and the platform will operate smoothly. Most providers have in-house creatives as well, so they can help out if you lack ideas.
In order to maximize the profits, you need to remember about a few crucial matters that will make your program much more effective and customer-friendly.
Reward every customers’ action
Buying your products is not the only way that your customers remain close to you. If you want to turn your clients into brand ambassadors, you should appreciate them whenever they interact with your company. This includes:
- Sharing posts in social media
- Following your channels
- Subscribing to your blog
- Writing reviews
- Watching your promo videos
- Downloading your app
- Completing quizzes or tasks
Noticing each client’s engagement and rewarding them with even a small number of points for any interaction can make a difference between loyalty and leaving.
Show that you care about a cause
People appreciate brands for supporting important issues. According to research, 66% of consumers say it’s crucial for companies to take public stands on social issues, and 58% support social campaigns on social media.  It is all about making it easy for your clients to do something noble and make a difference while doing their daily shopping or using your services as usual. Make it about more than the money, and your customers will jump on that wagon. Allow them to donate small amounts to a chosen charity, cooperate with NGOs, and give away a small percentage of your income for valuable cause.
Offer a variety of rewards
Personalization is the key in the customer-centric approach. Not everyone is the same and wants the same prize. While one customer may have resources to collect points required for the best prize, another may like to get few little bonuses more often. Let your clients pick what kind of reward they love, and they will gladly collect more points to get it.
Make it fun and competitive
We are talking about gamification. People love games, badges, rankings and competing against each other. Make collecting points more fun and your customers will interact with your brand more frequently.
Be social media-friendly
We interact with others all the time – especially on social media. It is an incredibly effective channel to motivate your customers to share information about your brand. Connect your loyalty program to websites, mobile apps and social media platforms, and encourage people to share. For a fair prize, share they will.
What to avoid – the most common mistakes
We have learnt about the must-haves in your loyalty program. Now we are going to talk about what elements drive customers nuts, and therefore which you should definitely avoid.
Overly complicated rules
If you need more than one minute to explain the rules of your program, there is definitely something wrong with it. The simpler it is, the better. No one has time to study tables of contents, rocket science calculations or novel-like descriptions. Loyalty programs have to be easy to understand for everybody, points must be easy to collect, and prizes should be easy to claim. Be transparent and your customers will join your program. Otherwise, they might think you are just trying to rip them off.
Falling behind the technology
If you don’t have a mobile application, you have already failed, especially in the 21st century when some people do not use traditional wallets at all. Present your clients with loyalty cards, and you can be sure that they will lose them and get upset. According to one survey, 43% of shoppers find loyalty cards old-fashioned and unnecessary, while 71% admitted that they would only become a member of a loyalty program if they could access it from their smartphone.
Forgetting about your VIPs
The most valued customers should get more benefits. If you do not treat your top customers well, they will be ones who may kill your loyalty program off. Remember, social media is a powerful tool for angry customers. Because they invest time and money in your company, they want to feel appreciated. The best example is the travel industry and perks such as VIP lounges at airports, priority boarding, free upgrades or bigger luggage allowances that cost airlines next to nothing, but can make a huge difference for a passenger.
Not keeping in touch with clients
Clients need constant (but not annoying) reminders that your company exists. They haven’t logged in for a while – send them an email with a tiny discount. They haven’t claimed their prize – show them how many amazing products or services they can get. Their birthday is coming up – a personalized promotion or just a nice e-card is called for. Ask customers about their opinions, and you will collect a lot of useful feedback.
Not using customer data
Loyalty programs are a mine and customer data their precious ore. Information about preferences, what products clients like and dislike, and your target group can be used to help you make better business decisions, improve your products and adjust your services to what customers need.
If you do it right, a raft of benefits awaits!
In order to reveal the numerous advantages that come from incorporating customer loyalty programs into marketing activities, we can look at the measurable profits and benefits that fall into the following categories:
Increase of profitability
It is a basic fact that the implementation of loyalty programs directly results in a rise in sales, which automatically boosts revenue. One reason for the increase is that loyalty programs are designed to serve as an influence over customer retention. Remember, it is far more cost-effective to retain satisfied customers than it is to consistently acquire new clients, which can be up to 25 times more expensive than keeping the current ones. Since research shows that, on average, 20% of loyal customers are able to generate up to 80% of general revenue, and that an increase of the retention rate by 5% can raise profit by between 25% and 95%, it is clear that loyalty programs support the building of long-standing customer bases in a valuable manner. What is more, members of loyalty programs typically tend to spend up to 18% more than other customers.
Comarch’s vast experience, gained through creating more than 80 loyalty programs worldwide, can serve as proof of the accuracy of these statistics. For instance, after London Heathrow Airport introduced Comarch’s solution, it noted a 60% growth in transactions and a 20% increase in spend per visit (with loyalty program members spending £70 more than non-members).
Although in this context companies should focus on the customer relationship and lifetime value, these schemes simultaneously tend to draw in new customers by offering appealing incentives, which is also valuable.
Financial success is undoubtedly the main business goal of loyalty programs, although we need to keep in mind that this result is only obtained as a consequence of several other benefits.
Access to information
Regular customer activity (making purchases, redeeming points, choosing rewards and during other typical loyalty program member activities) generates a large amount of data, which can serve as a basis for priceless insight into customer preferences and habits. By analyzing the behavioral patterns revealed by decisions, preferred incentives, frequency structure and other vital elements, companies can gain vast knowledge about their loyalty program members. Using the acquired information, the overall marketing strategy can be adjusted based on the dominating trends, and offers can then be improved using –personalization as a powerful market differentiator. Gathered data can be utilized to group customers with comparable preferences, enabling smooth and suitable customization of offers. Catering for particular customer needs and keeping them in mind throughout the marketing process facilitates accurate targeting and maximizes the precision of the entire procedure. This translates automatically into increased customer interest and satisfaction.
Channel of communication
Another essential benefit of customer loyalty programs is the fact that they enable direct contact with customers. This is especially valuable in the highly interconnected world, where omnichannel communication is one of the main pillars of customer service for many businesses. Research shows that 34% of marketers manage at least two or three platforms, while 7% make sure to keep up with 10-20 channels.  These statistics show that this advanced approach to customer connections is necessary in order to keep up with the competition. Loyalty programs maintain this relationship in a seamless manner by making sure that all customer needs concerning their point status, rewards options, possibilities of claiming prizes, available offers and other concerns are easily accessible, and by providing a direct channel for marketing content.
Apart from optimizing procedures and accelerating time to market, loyalty programs enhance the overall functioning of cooperation across the entire marketing team. Furthermore, considering the fact that modern loyalty programs are often enriched with location-based services supported by Internet of Things (IoT) technology with the use of beacons, they can reach program members with a simpler method. In this case, messages are not just personalized in terms of content, but are highly relevant to the user and are delivered at an accurate time and place, thus having a more powerful impact and being more forceful in provoking desired customer behavior. The real-time aspect and the fact that the exclusive notifications react to users’ actions enhance the customer experience.
Better social proof
If your customers enjoy the benefits of your loyalty program, they will definitely share it with their family and friends. According to many studies word of mouth is still the most trusted and credible form of advertising for customers. After all, when your best friend had a great deal getting those new clothes or a free meal, it is a shame not to try yourself. Direct recommendation gets more interesting when clients hit the Internet and social media. Customer-generated reviews bring more clients in. Referrals posted by happy users are worth more than the best marketing campaign. Give a customer some extra points for writing a nice review of your product or service, and you will have a win-win situation: clients will be delighted to get extra credit, and you will get free advertising.
Evoking positive emotions
Finally, loyalty programs play an indispensable role in the complex and usually time-consuming operation of building a solid and meaningful relationship with the customer. Multichannel communication, offer customization and relevant contact all make the relationship much more personal and pleasant, and create a positive environment to form an attachment. This influence is clearly visible when the program is accompanied with an engagement and competition component; it automatically creates entertainment and instantly evokes positive emotions derived from the human reaction to competition. The addition of an interactive social community and digital rewards maximizes the attractiveness of programs and leads to authentic commitment. As a result of these processes, the company becomes much more approachable. And, through the personalized angle, the customer feels appreciated and a connection forms naturally. Moreover, this unique bond can easily translate into an improved brand image, since loyal customers often become advocates whose opinion can sometimes be more persuasive than the conventional practices.
Loyalty programs are an extremely influential marketing strategy with an abundance of advantages. To maximize their benefits, they should be designed by professionals with broad expertise. Comarch, as an internationally renowned customer relationship management specialist, is a perfect advisor and a reliable business partner for cooperation in this field.
For more information about loyalty management solutions and their benefits, click here.
 CodeBroker Retail Executive Report: 2017 Shopper Loyalty Survey Results