Beyond a Transactional Loyalty Program

brand loyalty supermarket aisle feature

Your loyalty program needs to create a deeper, personal engagement (credit: Charles Gao on Unsplash)

The high cost of a bad loyalty program is showing up on bottom lines, demonstrating a direct connection between retention and profitability that leaders can’t afford to ignore. To boost retention, companies are looking at loyalty programs with fresh eyes and finding that the “earn and burn” approach that’s driven these programs for decades has lost its luster.

Today’s consumers demand a deeper experience to earn their loyalty, one that goes beyond transactional value. They want to engage in a close, personal way with brands they love, building relationships that evolve with their needs.

While consumers are setting an ever-higher bar, many companies are getting stuck midstream when looking to take loyalty programs beyond transactional. They may have good data but run into challenges applying it. They may be listening to customers but not responding in ways that show they understand. Or their initial efforts may merely rehash the traditional point-based approach. Here’s what to know if this sounds like your brand.

How Well is Your Loyalty Program Working?

Before diving into customer data, ask a few key questions internally:

  • If you didn’t work at your company, would you join its loyalty program? Putting yourself in your customers’ shoes can quickly illuminate areas of strength and weakness.
  • What’s to love about your brand? How is it reinforced by your loyalty program? Does your loyalty program consistently remind your customers of the reasons they stay with your brand?
  • Does your CFO control the value exchange of your loyalty program? Consumer interests, not financial considerations, should be the primary driver of loyalty programs
  • Do your loyalty members have an easy way to invite non-members into your brand experience? Becoming an advocate is the highest order of loyalty, yet many brands lose opportunities by not prioritizing a platform for sharing benefits or referring friends.
  • Are there social communities that spend their own time raving about your brand? A compelling loyalty program can generate online buzz and curiosity.

Using Insights to Get from “Like” to “Love”

Loyalty and retention are rooted in a deep understanding of what consumers truly value. We recommend a holistic approach that combines business strategy, advanced data analytics and human-centered design to create a 360-degree view of your untapped customer opportunities. From there, you can build, rapid test and mobilize strategies.

Analyzing unstructured data across multiple sources and social listening can help you understand the conversation related to your category and build consumer sentiment analysis.

The challenge is the time and energy it takes to collect massive amounts of data from across the internet, synthesize it, and turn it into a single source of structured truth you can reference and take action on. Technology tools can streamline the process, putting all the data at your fingertips so you can focus on applying it to inform business decisions.

Building Value Through Partnerships 

Enhancing your customer experience may include reassessing co-branding criteria and forming new networked relationships. Rather than evaluating opportunities based on potential financial growth or the allure of additional acquisition channels, the first thing to consider is how and why the relationship will add value for your customers. Unless they see real benefit and connection, new partnerships are almost guaranteed to fall flat on all other fronts.

As you rethink your loyalty program, who will decide on strategic issues like partnerships? Are your decision makers in sync with your long-term goals? What happens if a potential partner promises an initial financial upside but adds no meaningful customer value? Or worse, distracts from your brand? Consider your criteria for success up front and take the time to ensure all decision makers are on the same page.

The Transformative Power of Testing 

Small-scale testing gives new loyalty program features quick and meaningful trials, informing whether you should commit to them. This takes the guesswork out of your program development, giving you valuable new insights in the process.

Due to the added time and money it takes, testing often falls by the wayside. Avoiding these short-term investments can result in more significant long-term costs down the road. Rapid, small-scale testing gives teams the confidence and data needed to think bigger and make bolder moves.

5 Steps to Winning Brand Loyalty and Love

Talk with your customers, and listen: Connect in ways that invite them to respond in their own words. Go beyond surveys that limit responses to 1-10 ratings or multiple choice.

Gain actionable insight to drive new strategies: A data science team and tools can extract actionable insights from massive data sets and help you forecast consumer wants and needs. 

Think bigger: While most loyalty programs focus on driving repeat business, consumers aren’t focused on a single brand experience. Look for ways to partner with complementary brands to create a networked community that enriches your brand. 

Test early and often: As you learn from your customers, test new ideas and reach out for feedback. Test a small population to save time, money and exposure. Rather than second-guessing the merits of a new idea, get out there and try it!

Keep listening and responding: Just as your customers’ needs evolve, so should your relationships. Keep asking your customers questions. Most important, keep showing that you understand them. Now more than ever, walking the talk matters.

A Growth Opportunity 

There has never been a greater risk of customers abandoning once-favored brands to try competing products. This means there’s never been a greater need to listen, test, learn, evolve and grow with your customers.

Are you putting at least as much effort and innovation into growing your current customer relationships as you do when it comes to acquiring new ones? In today’s demanding environment, that’s more than a good idea; it’s the beating heart of a durable, authentic brand.

Julie Smith is Senior Principal, Consumer and Retail for Point B