Canadians are joining loyalty programs at an ever-increasing rate. A recent study by Bond Brand Loyalty showed that, in 2020, individual Canadians were members of an average of 8 loyalty programs. With so many options on the market, what’s the key to building a successful loyalty program?
For consumers, loyalty programs can mean significant savings and provide an enriched experience. For companies, it means being able to obtain rich, quality data, offering consumers personalized experiences, and engaging with clients so they’ll pick your company over another.
Profitability versus costs
Although there are many loyalty program benefits for consumers and companies, not all programs are successful.
To measure your program’s success (and profitability), you need to think beyond costs. Too many companies see loyalty as a cost centre as opposed to a revenue generator. Your program must generate a positive return on investment. It is key to identify the incremental sales generated by a program but also to factor in secondary benefits, such as a reduction in the cost of acquisition and non-financial benefits such as increasing customer satisfaction. Taken together, this data will help you evaluate your program’s true success.
The key to a successful program
To ensure your loyalty program is successful, you first need to define your objectives. Identify the best potential customers and what you want them to accomplish. Is your objective for them to purchase more often or purchase from specific categories? Your program should encourage profitable customers to buy your brand above all others, treat them better and engage them with your brand. It should raise their loyalty and lifetime value.
Next, you then decide the benefits that will support your objectives. These benefits must be convincing enough to help you attain your goals and yield an acceptable ROI.
The benefits of a loyalty program may cost you more upfront, but they don’t all create the same value. That’s why it’s important to identify the benefits that have real value for your clients—which can prove to be a challenge. To figure this out, ask customers how they feel about your value proposition and the benefits you have to offer. Some benefits may be very valuable to your clients while representing a smaller cost to your company. Try to identify these benefits and make the most of them. Remember that not all benefits need to be financial. Exclusive access and VIP treatment can also be of value to loyal clients, as well as help you achieve your goals.
While identifying program benefits, remember to keep your objectives and target audience in mind. These benefits aim to influence or reinforce your target audience’s behaviour to increase lifetime value and generate a positive ROI.
The evolution of strategy
Just like with any marketing strategy, your loyalty program must evolve and adapt to change. When designing your loyalty program, start to think about its future. Make sure you’ve planned the next phases. Imagine what new experiences and benefits you can offer clients. Use the data you are capturing to drive engagement. This is a good way to keep your program active and continue to surprise and delight customers.
From the start, create a program that is flexible enough to stay viable as your company and strategy evolve. Be sure to prioritize solutions that will let you continue to grow and give your customers a reason to continue their relationship with you.