Loyalty Programs – Are They Becoming Blase?

We’ve all seen the stores out there that offer programs for being a “loyal” customer. To be honest, anyone and their mom can typically become a member of these loyalty programs and receive a card to keep with them and use while shopping. Most of us carry around a three pound ring of loyalty cards. The grocery store, the hardware store, the electronics store, the pet store and on and on. These programs can also include coupons used at check out to reward points based on qualifying purchases. Airlines were some of the first to use frequent flyer miles for every trip a loyal customer takes with the airline. Numerous companies employ loyalty marketing programs, but the real question from a business perspective is whether or not it is worth the cost to create and operate a loyalty program within your business. Let’s explore the possible answer.Recent research has determined that a little more than 50% of Americans participate in various loyalty programs. Those numbers are considerably higher in Canada and Europe. The question seems to be why does only a little over half the US population use loyalty programs, is it profitable to put a program in place and does a loyalty program ensure repeat business?Without going into a long drawn out lesson on where loyalty programs started, let’s just cover the few basics on how loyalty programs have changed and then we can cover why you should (or should not) use a loyalty program.Loyalty marketing has existed for years; however, it was only recently that consumers really started to buy in to the loyalty program idea. Airline frequent flyer miles were introduced in the 80′s by American Airlines. Since its beginning the American Airlines program has grown to over 50 million active members. But do the big corporations really get the value of a good loyalty rewards program. I personally think they missed the basic idea of loyalty. Loyalty is the result of the “Golden Rule” and listening to your customers rather than ignoring their requests on how to be treated. Many large companies are more concerned with their brand image than with customer satisfaction. Finding the proper loyalty program which produces solutions based on research, customer desires, expressed needs and more is very difficult to find.So what does this mean for you? Does it work or doesn’t it? Well, it’s difficult to answer the question based solely on what we might know about loyalty programs. The biggest part to the answer comes from the feedback of the consumer over the past several years. Brandweek went the distance to survey the consumer market to get an answer. Statistics quoted from the report on Brandweek were as follows:
69% say their experience with loyalty programs has been “pretty good”
50% said their loyalty program “strongly motivated” them for repeat business
37% said individual rewards had less to offer by way of value
32% said they felt the program had little value
10% said they were “very satisfied”
So what do these statistics really mean? By in large they imply that if you are going to invest in a rewards or loyalty program be sure it is a good one that offers a lot by way of value to the customer. Notice the key word is “value”. It doesn’t say that you have to give up the farm in order to create loyalty, but it does say that the consumer needs to feel like they are benefiting in some fashion and they are being rewarded for being a loyal customer.To quickly sum up, if you decide you want to invest in a loyalty rewards program, here are a few tips that will help you keep consumers coming back, instead of creating a customer for your competition.
Choose the right value to offer your customer.
66% polled said they liked programs with “discounts and savings ( we like to use the word incentives verses discounts. Discounts are overdone and you can get caught up in the discount mania that seems to be everywhere)43% were looking for “better deals and offers” ( again incentives )38% wanted “free products and premiums” ( A free product should always be tied to purchase)36% asked for “perks and privileges” (perks and privileges should be tied to volume buying)33% said “cash back” ( Cash back is easy to understand and can actually be a better motivator for a higher spend and frequency in visits)18% wanted “recognition and appreciation” ( a thank you email campaign following a visit or purchase can open other opportunities for up-sells and offers for future visits)And 12% said “more individualized attention” ( all of the above makes the consumer feel appreciated for doing business with you)
People are looking for the best prices everyday – not just on Sunday
Thanks to consumer retailers like Walmart, Target, IKEA, and other big box stores consumers are now conditioned to check for the cheapest price everyday and not just in the Sunday ads. Be cognizant of your consumers search and build a program that offers the ideal shopping offer every day.
Be aware of your competition (and don’t carbon copy or get caught up in the discount wars. You may find yourself discounting yourself right out of business.!)
When researching for a way to engage your current clients, be original in your attempt to re-engage them. If a loyalty program is your answer and your competition already has one, look into what it is they are offering. Offer something different to your customers, be creative. You may even draw some of the customers from your competition by offering something the customers really wants.
Lastly but not least, treat your customers right. Listen to their wants and needs then give it to them.
However you determine to initiate a loyalty program, make sure the customers best value is in mind. If you can give things away without losing money then do it. If you can offer more quantity for the same price, give a little more. The consumer who is appreciated and feels good value is offered will shop with you again and again and again and they will tell their friends.Customer loyalty is by far the most important business pursuit bar none. Understanding how customers desire to be treated, rewarded, valued, appreciated and communicated with, will do more to assure viability and profitability than any other single pursuit, there is not even a close second place. Yet in spite of the overwhelming evidence we continue to see poor loyalty solutions implemented constantly.Determining whether or not to initiate a loyalty program depends on your business and what you want to offer to your loyal customers. Take the time to research what your customers want, what your competitors are doing (so you know what to do differently), and give your customers the loyalty program they have been waiting for! A program that they won’t find to be Blase.