Companies offering loyalty programs to their customers would do well to concentrate on personalization and focus on building more meaningful consumer relationships that go beyond special offers.
This includes an emphasis on much more emotional connections with customers that help them identify with the brand’s core values.
At the same time, loyalty programs should be looking to technologies that offer moments of delight and engagement, from online treasure hunts and gamified prize wheels to monthly social media challenges.
Attila Kecsmar, CEO and co-founder of Antavo, an omnichannel loyalty management platform, noted the pandemic has turned loyalty programs into a sought-after feature, with tiered loyalty programs proving to be particularly popular.
He pointed to an in-house customer loyalty report that revealed existing program owners found their loyalty program helped keep their customers engaged during crises.
“Behind the scenes, an important paradigm shift is happening for loyalty programs,” Kecsmar said. “Of the companies that are planning to launch their loyalty program in the next two years, more than half of respondents specified that their program would be more emotional than rational.”
He said these statistics align with the conclusion that upcoming loyalty programs will place much more emphasis on emotional connection, experiential rewards and personalization.
“At this point, choosing to introduce an emotional loyalty program can still be considered as a unique selling point, but as more and more programs will share this sentiment, it will become a hygiene factor instead of a differentiator,” he said.
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Pandemic Made Loyalty Programs More Diverse, Personalized
“We're definitely seeing a really positive shift in the industry towards people looking less at loyalty as a standalone thing and more as using loyalty data as a way to personalize lots of the other marketing channels and tools,” she said.
As the collection of zero- and first-party data becomes critical in the wake of more stringent data privacy laws and updates to Apple’s iOS and Google’s Android platform, loyalty programs can encourage sharing of that data.
“These programs are a really great way of providing that value exchange so that a customer feels inclined to share personal information, because they know that it will be deployed in a way that's going to benefit them long-term,” Stevens said. “We're seeing a lot of people come to us with a view that a loyalty program can help them save that data and navigate those issues as it becomes harder to get customers to opt in.”
She added the demographic of a single person has grown much more complicated now due to consumers using multiple devices, where their behavior can be very different when walking down the street or on the phone.
“Suddenly you have to understand that one person can represent lots of different personalities and behaviors,” she said.
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Data-Driven Decisions Require an Ecosystem Approach
Stevens said it’s also critical that customers know they can obtain these rewards wherever they are, whether they’re on their phone, in a store or on their laptop.
“It has to be very joined up and the brand experience has to be the same across all of those channels,” she said. “If you can deliver that, then you should be able to secure loyalty because the customer knows that regardless of whether they're shopping on their phone or in-store, they're still going to get rewarded for it.”
When it comes to data-driven decision-making and loyalty programs, Kecsmar said the best course of action is to treat it as part of an ecosystem.
If integrated alongside a customer data platform (CDP) and a marketing automation platform, loyalty programs can push an organization’s data strategy to a whole new level.
“Loyalty programs enable the collection of valuable customer data through its touchpoints that can be used for segmentation,” Kecsmar said. “For instance, knowing that a loyalty member belongs to a higher tier indicates that they are a frequent and valuable customer.”
This new layer of insight can then be fed to the sophisticated machine learning algorithm of a CDP for advanced intel, such as churn prediction.
“With this information at hand, organizations can turn to their marketing automation provider to execute highly personalized communication, such as emails with relevant product recommendations, to prevent a valuable customer from churning,” he explained.
Multiple Touchpoints, Smooth Transitions Improve Omnichannel Loyalty Programs
Moreover, loyalty programs can be useful at this stage as well. Knowing the reward history of a specific customer (based on what kind of benefits they claimed previously) helps a company decide the perfect incentive to use in their communication.
Kecsmar added that customer expectations for an omnichannel experience are the same as always: a smooth transition between channels and plenty of touchpoints.
“With the recent digital hyperjump behind us, it can be confidently stated that one such customer demand is to be able to use their smartphone in every situation,” he said. “App-based loyalty passes for in-store visits should be a given, but in 2022, there are some other ways too to increase omnichannel engagement.”
For instance, while waiting in line in a store, customers could scan a QR code, which instantly redirects them to the enrollment page. “If done correctly," said Kecsmar, "when it’s their turn, they are already a registered member, ready to earn some loyalty points.”
“We're seeing a lot of people use their loyalty programs to reflect their brands, tell their brand story and to build communities around their brands,” said Stevens. “In turn, the opportunity for a marketer is huge. There's so much more you can do with that channel than there was previously — it's something you can build into your entire marketing strategy.”