How to Build a Long-term, Attractive Loyalty Program
- 5 min reading
When you are starting to think about a loyalty program in your organization, you need to be aware that they are no longer just tools to increase sales. Modern programs identify with customers, and allow them to develop their passions. Thanks to the technology behind loyalty programs, the customer feels exceptional in situations that are important for them.
A program structured in this way will help build an emotional bond with each client, all of whom are essential in the long run. In an innovative, modern program, the crucial goal should not be to generate sales. Instead, activities should be focused mainly on helping the customer, satisfying their needs, with sales as an ”add-on” to the program activities.
So, what’s important is to move away from a strict sales model to a model that solves problems for customers, helping them in their everyday lives.
When designing a loyalty program, it is worth listening to the voices and opinions of customers. This research will yield valuable information about how customers envision the program, and what functions and opportunities they want to use. Based on that knowledge, the company or organization can consider its own assumptions and goals in the short and long-term.
Strategy is paramount in a program action plan, and should be oriented towards realizing potential and connecting all resources. However, even such a strategy will not help without the right tools with which to implement it. With these tools, customers can be offered what they want in return for data about purchasing that can be processed appropriately using AI.
Building tools to analyze and collect data about customers is an expensive and time-consuming process. A much better and more affordable option is to use ready-made solutions, developed by external providers, in which case all that remains is to implement the direction of the strategy. With the volume of data involved, technology is crucial for achieving goals.
Part of building an attractive program involves ensuring that the budget is adequate for the strategy. Even the best strategy may not work if sufficient funds are not allocated. It's useful to analyze any campaigns carried out to date, and assess whether they delivered the expected results. This helps in establishing what works, and (importantly) in allocating the appropriate funds for future activities. It will also help in working out the golden mean in the context of investment required and the attractiveness of the rewards for the client.
Building an emotional bond with a brand/company
Loyalty program design should be based on creating an emotional bond with the customer. Who doesn't feel special when they receive a surprise on their birthday? The customer feels special and knows that the company remembers them at a significant time. Program members may also enjoy supporting their local community and making a significant, positive impact on their environment. For example, promoting the purchase of organic products through additional points given to customers brings an opportunity to promote a healthy lifestyle and support local producers. All activities that support environmental protection will also support local communities, building positive brand relations and influencing the organization's KPIs. There is also a possibility to build an emotional bond by giving the option to donate points to charities, or by running promotions on products close to their expiry date (thus helping the fight against food waste). Such actions enhance a brands image for those who place great importance on environmental issues.
In the course of a year, other such opportunities may arise – all of which are means of ensuring positive word of mouth promotion of the brand on social media.
Remember that any offer prepared for loyal customers must be consistently better than the one for the general public. This also has a considerable impact on building trust in the brand, and strengthening the emotional bond between the brand and the customer.
To build a long-term, attractive loyalty program, it is essential to look at each customer uniquely, which means placing personalization at the heart of technological solutions. This will allow an organization to understand the individual needs of each customer, and will also contribute to cost efficiency – meaning that investment in the program will have measurable benefits. With so many new challenges and opportunities constantly emerging, it’s important to keep two points in mind: the requirements of the customers and the activities of the program operator. To address these points successfully, AI and ML are essential tools. AI allows loyalty program operators to provide a unique customer experience and deliver the satisfaction of being a member of a unique program. Technology also significantly impacts customer retention over time, and creates brand loyalty. AI automates complicated yet monotonous and time-consuming analytical processes, freeing up time and resources to be used more productively. Personalization is the key to winning customer loyalty, and customers are more likely to make a purchase if they find the offers they are looking for on their phones. Artificial Intelligence and ML help quickly and efficiently deliver rewards and offers based on customers' shopping histories.
Current technology is blurring the boundaries between being online and offline, so an attractive program that can build loyalty in the long term should deliver an omnichannel experience. Customers are changing their behavior very quickly, which influences purchase decisions as well as the purchasing process. In the long term, customers will be happier if they can easily buy a product and be rewarded regardless of their device or preferred platform. Satisfying customers is the key to reducing customer churn, and will keep them coming back as new needs arise. Omnichannel activities take into account every platform and device a customer will use to interact with an organization, and provide an equally effective and positive experience across all platforms. Omnichannel is particularly important in loyalty, as it has a significant impact on keeping our customers loyal to a brand. This, in turn, has a direct effect on a company's performance.
If additional actions are planned alongside the program, it is essential to ensure that all offers still take the program into account, even if only in a small way. Ensuring the availability of dedicated offers from every available platform has a significant impact on the message to the customer, and adds value to the reward.
Mobile apps, too, are important in making a program attractive, and have unlimited possibilities for triggering customer interaction. Thanks to them, customers’ lives become more accessible through quality of life features. Right now, there are 6.3 billion* smartphone users across the world. App usage and smartphone penetration rates are still growing steadily, without any signs of slowing down in the future.
By providing one functionality such as “click and collect”, apps make it significantly easier for customers to make a purchase. It saves time (there’s no need to queue), and reduces the organization’s operating costs (by, for example, cutting cash handling expenses).
To sum up, in building a long-term attractive loyalty program, customers are most important, and each is an individual who needs to be rewarded uniquely. Only in this way will they feel special and be emotionally connected to the brand. Thanks to new technology and using AI, just such a solution is available in loyalty – and the vast amounts of data involved mean that modern loyalty programs are impossible without such technology.