Loyalty scheme versus loyalty program.

When many people think of loyalty, they think of points-means-prizes reward programs with a plastic card. These schemes are typified by transactional exchanges which earn some form of partial credit towards a future purchase, but for most consumers they do little to create brand loyalty by themselves. Greater convenience or lower price will still generally trump a plastic card and a promise of a future discount or reward.

By contrast a strategic loyalty program is a series of initiatives that creates an exceptional experience for your customers across every interaction they have with your brand – before, during and after purchase. These programs go beyond transactional rewards to include added-value benefits such as extra product support, exclusive offers and events or a personal touch at the point-of-sale, and they create a consistent and differentiated customer experience fully aligned with the core brand offer.

So, do you actually need a ‘loyalty scheme’ to implement a successful strategic loyalty program? Where does the plastic come in? The different components, rewards and communications that make up an engaging program and create an exceptional customer experience must be based on a deep understanding of your customers. You need to know who they are, what they value, and what they respond to. If you can achieve this without a card then you’re at an advantage, but if you have to run a ‘scheme’ to identify your customers and learn about how they interact with your brand then you need to view it as one tool in your loyalty strategy or risk it becoming just another expensive marketing gimmick.

Setting up a strategic loyalty program.

The first step to developing your loyalty strategy should be about data: aggregating and mining what you already have, and putting mechanisms in place to collect insights you haven’t.

Most organizations have more data than they know what to do with: transactional data; contact information; market research; website interactions – all contain valuable information about who your customers are and what they care most about. The challenge is to build a holistic view of your customers’ cumulative interactions with your brand. Effective loyalty marketers will further enrich these data sources with demographic appends and Social Media activity or by setting up voice-of-the-customer surveys to create a truly robust view of the customer from inside out and outside in.

Once you have a unified customer view, your next step should be mining it for key customer insights. What delights your customers; what do they care most about; and what barriers to purchase have you inadvertently created for them? These insights will help you prioritize where to focus your efforts for the greatest customer impact. You may need to make it easier for repeat customers to check out online, or you may learn that your after-sales support doesn’t match the expectations created by your in-store experience and product pricing, pushing your customers to a competitive brand.

As you go through this process, you’ll find that the brand-specific blockers to loyalty you uncover will also help you determine how to design, launch and/or improve your “traditional” loyalty scheme, perhaps finding that specialized support is a priority for your most valuable customers, making a fast-tacked concierge service a great key feature for your loyalty program.
Ultimately, customer loyalty is an emotional concept, while loyalty programs are transactional. To create true loyalty your brand must deliver a consistent and differentiated experience that your customers will value more than your competitors’ offers. You need a program in place to deliver this and you need to know your customers better than anyone else to do it well. That piece of plastic may be the tool you need to start this process, but it should be the start of your journey, not the destination.

To learn more how to setup a strategic loyalty program, contact one of our Team Wired consultants today.