08 October, 2019

Is your loyalty program actually just a transactional relationship?

It’s easy to think of a loyalty program as a points-and-rewards activity: just the right balance of accumulation and redemption. In fact, that’s how many reward programs feel. The problem with such an approach is that it doesn’t actually result in customer loyalty.

We all know what’s going on: every brand out there is working on customer retention and it’s much cheaper for them to give us a free cup of coffee once in a while than to keep advertising to new customers. For the most part we’re fine with this, we will bite as long as the economics make sense. But there’s hardly any loyalty created. Even the much celebrated Starbuck’s program gets criticized for just being all about the company’s profits.

We all know that loyalty is not a program, it’s a result. How do you achieve loyalty with customers without slipping into a quid pro quo relationship? Well, that takes some research!

Here are a few tips

  1. Trace your customer’s journey and find friction points. Eliminating friction is a great way to create loyalty (in life and business!). Does your customer wait in line too long? Is the payment process cumbersome? What can you do to ease these things?
  2. Personalize your messaging and offers. Being known is a huge emotional driver. Using the data customers are giving you, create personal messages and offers for them.
  3. Find adjacent products and services to offer your customers through partnerships. This is a powerful way to create loyalty. You are showing them that you understand more of what they care about beyond simply your offering. If you are selling paint to general contractors, partner with a professional uniform company to offer discounts on their products to your loyalty members. Apart from the added value you are creating for your customers, you are helping to grow the audience for your and your partner by exposing them to each other’s offerings.

One of the best loyalty programs I’ve encountered is offered by American Express Platinum Card. It doesn’t feel like a loyalty program, it just feels like what they do. They ‘magically’ know what I care about. They eliminate a lot of the friction I used to experience when traveling by offering memberships at lounges and free internet on the plane. They allow me to spend my points on Amazon purchases among many other places. The basis of their program is still points and redemptions, but their mix of rewards and partnerships make me feel like they’ve got my back. And for that I will forever be their customer, despite the fact they raised their annual fee last year.

How does my credit car know what I like?

In order to build a loyalty program that feels like a part of your brand’s nature, you need to understand your customers and offer them rewards that show that you truly care for them.

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