For Cindy Faust, VP of Product Management, Aimia, behavior management is at the core of loyalty program success.
During Thursday’s Loyalty 360 webinar titled, “Rewarding Interactions,” Faust told attendees that the majority of loyalty programs reward based on total spend, and not on interactions.
“Interacting socially is based on trust,” Faust said. “Connecting dots socially is changing loyalty.”
Loyalty programs that reward customers for behaviors and attitude can build deep customer advocacy—and a sustainable competitive advantage. Behavioral loyalty is at the core of most loyalty programs today. Customers make a purchase or provide information in exchange for a reward.
Besides rewarding customers for transactions and information, companies also need to reward customers for interactions—specifically, social interactions that translate to engagement and advocacy.
“We need a different way to reward people,” Faust said. “How do we properly reward loyalty? Gift economies are focused on relationships. Establishing relationships is increasingly about creating this social currency. Brands need to seize the moments that shape the customer journey because people thrive on recognition, and sharing in social communities.”
Faust said traditional loyalty programs are one-dimensional.
“Social loyalty programs deliver a well-rounded, three-dimensional experience,” she said. “Harness social currency through a gamified and rewarding experience. We’re closer to being able to connect the dots with all the new technologies out there and through marketers leveraging their customer-centric data.”
Emily Collins, Analyst, Customer Insights Team, Forrester, told attendees that consumers are “less ready” for customer intimacy, but only if marketers are providing value.
“There has to be some kind of benefit that goes back to them,” Collins said. “They want to know what’s in it for them and not just for the company. Empowered consumers demand more control.”
With the proliferation of smartphones and all mobile devices, Collins said Forrester research revealed that 38% of U.S. adults are “always addressable.”
“If we’re truly in the age of the customer, then customer loyalty is the only competitive edge for marketers,” she said. “Companies need to focus on more than customer wallets to win. They have to focus on relationships, engagement, and advocacy. We’re starting to see signs of a loyalty program evolution.”
Transactional loyalty programs for purchases are still relevant, Collins said, but companies are getting more creative and hosting special member events that go a long way toward gaining engagement and loyalty.
Collins said most customers have positive feelings toward loyalty programs, but view them often as a savings vehicle.
“Program differentiation presents a significant hurdle to success,” she said. “Just having a loyalty program isn’t a competitive advantage.”
Collins listed four reasons why loyalty programs often stumble:
Organization and strategic silos: Loyalty may start with a program but goes far beyond that. How you use data? Identify key stakeholders across the organization and show them the value of the program specific to their roles and why it matters to the company
Generic targeting and treatment: Unfocused loyalty programs prove costly. Untargeted offers fail to drive beneficial behavioral change. Successful programs target incremental spenders
Low perceived value of rewards
Failure to engage beyond the purchase: Just focusing on dishing out rewards weakens potential impact. Need a more meaningful connection