Rethink your loyalty programme with "Brain" and "Heart"

In the last couple of years, we have seen many new loyalty programmes being introduced in the FMCG and retail industries. However, there are still many loyalty programmes that are not differentiated from each other. ‘Collect 5000 points and receive a? free product!’ or ‘Visit us nine times and get the tenth visit free!’ Do you remember the time when you used to have a stack of punch cards from restaurants and hairdressers in your wallet that you never remembered to use? Most loyalty programmes nowadays are exactly the same, only the punch cards are digitised in apps! Many customers are facing fatigue from all the sam-ey loyalty programmes. And what’s more, they barely remember how many points they have or how many more purchases they need to make before receiving a reward! When customers have low engagement with a loyalty programme, their experiences are purely transactional and customers become very discount-oriented. Through all the customer research I did, I often hear that customers don’t think loyalty programmes are generous enough, even when the loyalty programme actually gives away fairly decent rewards.?

It’s time to rethink your loyalty programme!

A loyalty programme that appeals to customers for a long time requires “Brain” and “Heart”. ‘’Brain’’ means using data on customer behaviours to define the right value proposition and loyalty mechanic, giving customers a clear reason to participate, and ensuring a positive commercial return to the business. And ‘heart’ is about applying creativity to give customers a unique and memorable experience with a loyalty programme, which will entice customers to keep returning.

THE ‘BRAIN’ OF A LOYALTY PROGRAMME

The ‘Brain’ of a loyalty programme includes two parts:

1. Define a clear reason for customers to participate (or a ‘value proposition’)

How to find enticing reasons for customers to participate in loyalty programmes, it’s simple: ask your customers what they want. According to my research, discounts and freebies are still the most important reasons for customers to join loyalty programmes, but there are ‘non-monetary’ levers that can be important as well. For example, providing an easy and convenient experience to your loyal customers can be a useful tactic. Many Starbucks loyalty customers enjoy the ‘pick-up’ feature, which prioritises their coffee orders and allows them to skip the queue to get their coffee sooner. For those who depend on their morning coffee to kick off the day, shaving three minutes off the waiting time for coffee is probably the best reason to use a brand loyalty programme!

Secondly, businesses must assess whether the loyalty mechanic aligns with customer behaviours. For example, in an industry where customers only purchase products infrequently, rewarding customers based on their purchase frequency is not ideal. This is because customers won’t be able to see the end goal, i.e. receiving meaningful rewards. Also, if customers’ spending per trip varies massively, rewarding customers based on their spending is worth considering, so high-spending customers don’t feel the programme is unfair.?

Thirdly, businesses need to ensure the value proposition (i.e., the reason to join) and the mechanics of their loyalty programmes are comprehensible to customers. All too often,? customers are confused about how a loyalty programme works, and it’s rare to see customers remember how many points they have or which tier they are in. Designing a loyalty programme is complicated, but businesses shouldn’t expose the complications to customers. It is a marketer’s job to make a loyalty programme simple for customers to use.

2. Ensure a positive commercial return.?

Loyalty requires upfront investment (strategy, design, tech) and ongoing financial investment (redemption cost), so the cost and investment have to be reviewed carefully. Also, businesses need to estimate how much incremental sales a loyalty programme can bring to them, hence whether it is worthwhile to build it in the first place.

In addition, brands need to remember that not all customers are equal, meaning some customers bring higher value to the brand than others, or some customers have a higher potential to bring higher value. Therefore, brands must identify which customer segment (or segments) their loyalty programmes should focus on, and the loyalty mechanic should be centred around the high-value and high-potential customer segments.?

THE ‘HEART’ OF A LOYALTY PROGRAMME

Defining the value proposition and loyalty mechanic is only half of the job. The next important step is to use creativity to bring the programme to life, and attention to detail to ensure the customer experience is sleek and memorable!?

1. Make the brand personality shine through the loyalty programme.

A loyalty programme is ultimately a marketing practice to engage with customers, but I have often observed that the brand tone of voice and personality is left out. For customers, it is very disconnecting to see an emotional piece of advertising on TV or a very witty post on social media from a brand, and then see the loyalty programme which is simply a digitised version of a stamp card.?

When I launched a new loyalty programme for KFC UK&I, one of my “ah-hah” moments was how powerful personality in a loyalty programme can drive emotive customer responses, just like any other marketing communications. With the new loyalty programme, we overhauled the look and feel and injected the brand personality into every single interaction with customers. The result was incredible - more customers used the loyalty programmes more often. From our research, over ? KFC loyalty customers would recommend the programme to their friends and families! Just like a person, a loyalty programme with a distinctive personality and consistent style is more attractive to customers.

1. Keep customer experience at the heart.

Loyalty programmes are in place to drive customer engagement and repeat sales for businesses, but giving away points, discounts, or freebies is no longer enough for customers. Businesses must make sure improving the customer experience is at the core of the loyalty programme – ultimately, an enjoyable and memorable experience is what brings customers back.?

A handy tool to improve customer experience is Customer Journey Mapping. Customer Journey Mapping creates a visual storyline of every customer engagement with a service, brand, or product. The customer journey mapping process asks the organisation to put themselves directly in the consumer’s shoes to better understand the customer’s processes, needs, and perceptions at the different stages of their lifecycle. Through Customer Journey Mapping, businesses can identify when rewards need to be given away and when a piece of CRM communication is required.?

In addition, it is critical to engage with the frontline Customer Service team when developing a loyalty programme. Not only do customer service teams have an enormous amount of insights to improve customer experience or a product, but also, since no loyalty programmes can be ‘problem free’, Customer Service teams need to be equipped to help customers answer their questions and solve any issues speedily.??

FINAL THOUGHTS

Loyalty programmes can be incredibly efficient to engage customers and bring incremental value to businesses, when you define a clear and unique proposition. And loyalty programmes can be engaging and fun for customers, once you sprinkle creativity into its look and feel, and dedicatedly craft an easy customer experience.? So rethink your loyalty programmes with your brain and heart!