Customer loyalty can be fickle, but it can also be incredibly rewarding for businesses that invest in it. Many brands now offer loyalty programs to entice customers to shop with them more often and offer rewards. The good news is that it seems to be working according to the latest For Love or Money research, carried out by The Point of Loyalty. The annual report, now in its 10th year, found that 71 per cent of respondents said loyalty programs have a direct impact on how often and how much
w much they spend with a brand, up from 56 per cent in 2020.
And, as shoppers increasingly acclimatise to the fact that their data is being collected and used by retailers, their expectations as to what brands do with that data to make their lives easier is increasing.
According to the report, 45 per cent of respondents now thinking brands need to do more with their data if they are part of a loyalty program.
Though customers want ‘more’, it can be difficult to understand what they actually want out of the relationship.
Adam Posner, report author and chief executive at The Point of Loyalty, told Inside Retail that value has been the key desire from customers for the last three years, followed by personalised offers and initiatives that make their shopping experience simpler.
If brands can find a way to do all three, that’s perfect.
“For example, if a business is collecting my data and knows who I am, it knows that I’ve bought six bottles of wine recently, it could offer me a repeat purchase opportunity,” Posner said.
“It doesn’t have to be monetary value. Value can be time saved, or a valuable experience.”
Choice was also high on consumers’ list of wants from loyalty programs. Rather than just offering loyalty program members a $20 voucher on their birthday, for example, brands could instead offer a voucher or a $20 pre-selected gift, which would then be sent to the member.
Spreading joyalty
Another way to reward customers and push their customer experience beyond being simply transactional, is harnessing the power of ‘joyalty’, said Posner.
The concept was borrowed and adapted from a book by author and ex-Amazon advertising executive Steve Susi, and describes “a moment of magic that brings joy to a customers’ life”.
“I think programs need to do more of that – they need to find ways to bring a bit of joy to their customers,” Posner said.
“It starts to build an emotional connection between the brand and customer. A good example of that is Adore Beauty sending Tim Tams to shoppers, or Mecca’s Beauty Loop Boxes.”
The power of why
The most important factor in the success of a loyalty program is why a business wants to run one at all, according to Posner.
“I ask every single brand that I work with why they want to do a loyalty program. What problem are you trying to solve, either for your business or your customers?,” Posner said.
“Otherwise, are you just going to do another set of points, perks and birthday messages?”
According to Posner, loyalty programs can be incredibly important to customers, but only if they actually serve a purpose.
“If your program can solve a problem for the business and a problem for the consumer, then you’re on your way [to doing something customers will like],” Posner said.