How would you answer this question: Can you buy customer loyalty?
- Of course!
- I think so…
- Surely not?
How you answer will depend on your goals and the longevity requirements of your rewards program. Fact is, many of the rewards programs in the market today are ‘buying’ the customer’s loyalty.
It is highly unlikely nowadays to find a loyalty program that does not include a rewards program. The expectation from consumers is that their loyalty to your brand needs to come with a tangible reward that essentially has a positive effect on their back pocket.
There are however rewards programs that are not part of a broader loyalty program. In my opinion these are only quick wins, and don’t form part of a long term loyalty strategy. Typical examples are retail rewards programs, where only points and vouchers are awarded. The loyalty cards linked to the rewards don’t even include the customer’s name or further details. It’s obvious then that no personalised interaction can take place between the service provider and the customer.
I saw an infographic recently – ‘the problem with customer loyalty‘ created by Total Customer which confirms this ‘quick win’ assumption. They state that “8 million fewer people used loyalty cards in 2013” ascribing this decline to an increasingly sophisticated consumer.
Are you cultivating loyal customers or rewarding regular shoppers?
Rewards Programs can initially bring customers back to your brand for repeat purchases. This strategy has short term benefits, but long term consequences. It cuts into your profit and compresses your margins. This is because you need to tap your current sales to afford the ‘rewards’ to bring back those customers.
You need to consider why the customer is engaging with your rewards program; is it just for the reward or because your program has achieved brand loyalty? Those customers who are only chasing a better price, will only be loyal until the next guy offers a slightly better reward and steals them away! How will you prevent this from happening?
Total Customer say: “The loyalty industry needs a shake-up. It has become far too reliant upon giving a brand what they want, rather than giving the customer what they want.”
By enhancing your rewards program and ‘upgrading’ it to a loyalty program, you can cultivate loyal customers instead of rewarding regular shoppers.
5 Ways to enrich your rewards program:
1. Acknowledge individuality: customers want to be recognised as unique individuals because each one has a unique relationship with your brand. Ensure you do this each time they interact with you. Something as simple as including their name on their loyalty card will make a difference.
2. Direct communications: all direct customer communications, whether it’s marketing, educational, transactional or operational; should be targeted, segmented and personalised – regardless of the communication channel. You also need to engage with your customers at all points during their lifecycle with your brand, as this will drive customer engagement, encourage the desired behaviour and increase loyalty. Consider implementing a customer lifecycle communications program, which forms an integral part of any loyalty program.
3. Capture customers’ preferences: You should be able to capture and hold your customers’ preferences around all aspects of their engagement with your brand; product, lifestyles and demographics. Consider retail receipts via email… This key touch point allows you to capture current contact data and create detailed customer profiles. Purchase data married to personal data provides you with valuable insight into your customers’ buying behaviour.
4. Engagement options: customers should be able to choose how they would like to be communicated with. This should include: on what device (phone, tablet, computer), what channel (email, text message, phone call, print / paper), what time of day / day of the week, and finally what content they feel is relevant to them.
5. Self Service: customers should have the ability to do as much as possible in terms of their engagement with your brand, without the need for ‘warm body’ interaction. An online portal where they can view product offerings, update any of their details while selecting the email communications they wish to receive is the most enriching avenue for this.
To answer the question I posed at the beginning of my post, “Can you buy loyalty?” My answer is “Never!”
It’s clear that if you are only providing a reward that can easily be matched or overshadowed by your competitors, you won’t have loyal customers. Instead you need to establish an effective communication channel that engages with your customer throughout their lifecycle with your organisation.
Providing them with relevant information based on their buying behaviour and preferences will ensure they have a consistent and positive experience with your brand, which will in turn generate loyalty and repeat purchases.
Need advice on how to boost your rewards program and gain loyal customers?