How to Launch Loyalty Programs that Really Work

For a loyalty Program that really works, retailers and hospitality firms need to think cross-channel and think in an integrated manner.

Clearly there are various other components to think about when creating a loyalty campaign that you want to help increase customer stickiness, but following those two fundamental rules gives businesses a framework for success.

But the best way to launch a loyalty Program that resonates with their customers is for businesses to actually speak to those shoppers and find out what it is they want from a brand. Professional services group Deloitte conducted research last year, which shines a light on some of those requirements and I believe it points organisations on the path to rolling out successful schemes.

Identify What Customers Want

The Deloitte study is noteworthy because it didn’t just ask a token number of people for its research – there were 2,000 UK consumers questioned in total, giving a strong flavour of what people are looking for from loyalty schemes.

Key findings included 22% of respondents have unused loyalty points, which suggests that many of the schemes in operation today are not working as they should be. It said there’s a need to rethink traditional loyalty schemes.

Some 54% of those answering the survey claim they like points-based loyalty schemes, but only half of consumers (47%) always redeem all of points. 18 to 24-year olds were found to be even less likely to redeem points (40%) despite 60% enjoying this type of loyalty scheme.

There’s clearly some usability issues being identified by shoppers, here, and Deloitte interestingly suggests the popular loyalty schemes of recent years were designed for previous generations and now need to reflect new consumers’ growing appetite for personalisation and experience.

Brand loyalty was said to be driven more by customer service, convenience, and the overall shopping experience than having a traditional loyalty scheme, so any loyalty Program that is going to work should ensure it is playing to these identified consumer desires.

Look at What Already Works

When retailers enter new international markets, they look at what incumbent retailers are doing and replicate where possible in order to gain traction with their new target demographic. In a similar way, there’s nothing wrong with looking at other loyalty schemes in the market and trying to duplicate some of the best features.

A standout loyalty scheme is the one from global coffee chain Starbucks, which added almost two million to its Starbucks Rewards scheme in the US in its third quarter alone. There are now 15.1 million active users of the scheme in the US, with total loyalty member spend now representing around 40% of US company-operated sales.

Its Mobile Order and Pay service is wrapped up with the loyalty Program, giving that all-important convenience and experience consumers are craving too.

Don’t Build Loyalty Program in a Siloed Way

What is great about the Starbucks loyalty Program is it is viewed internally – and by its customers – as a central cog of the whole operation: it certainly couldn’t be described as an add-on element.

It’s something other organisations operating in retail and hospitality would do well to bear in mind when rolling out their own Programs aimed at increasing customer stickiness and rewarding loyalty.

Retailers should be looking at flexible points and rewards management applications that are available both digitally or on a card, and which allow accrued points to be redeemable across channels for discounts, gift items or other rewards that make a customer feel special.

If they build these Programs in collaboration with customers, this will inevitably lead to deeper relationships forming and it will then open up access to shopping histories and preferences. Well-connected schemes will enable retailers to send out mobile notifications, digital coupons, and reward points that offer personalised incentives for customers to choose their stores over others.

Make a loyalty Program a seamless part of wider retail operations, and customers will use it and love it. That’s got to be the end goal.

As Deloitte’s head of consumer business research Ben Perkins states: “Consumers want to be recognised and rewarded as individuals, not as faceless points collectors.

“A decade on from the introduction of the first smartphone, today’s savvy consumer also expects brands to be more relevant in the way they communicate and engage with them.”

Many of those themes are addressed in iVend Retail’s free whitepaper, Redefining the Rules of Traditional Loyalty – download it today