Customer Loyalty is Bigger than a Loyalty Program

Companies are quickly coming around to the idea that customer loyalty will be key to success in coming years. According to a Forrester study, 81% of marketing decision makers place customer loyalty as a top priority for improvement. The challenge, however, is that many companies simply implement a cookie-cutter loyalty program—think points, discounts, and punch cards—and consider the customer loyalty issue solved.
Customer loyalty is bigger than just a program, according to officials for Deluxe Rewards during their Thursday webinar, “Seven Keys to Best-in-Class Loyalty Programs,” powered by Loyalty360. The key to sparking engagement is building deep, long-lasting relationships with customers instead of the typical “earn and burn” model found in too many of today’s loyalty programs. The featured speakers were: Adam Craig, Director of Product Development, Deluxe; and Emily Collins, Senior Analyst with leading market research firm Forrester.
Loyalty programs are an important component of customer loyalty, but they’re far from the only piece.
“Most programs cover only a small portion of the customer cycle,” Collins told attendees. “They kick in during the buy phase, reward the engagement phase, and some even incentivize the ask phase—offering direct access to customer support for top tier customers—but they fail to cover the rest of the consumer experience.”
Customer loyalty has gone through a paradigm shift in recent years.
“The power has shifted,” Collins said. “Customers no longer need to be loyal to brands, which makes that loyalty even more important on the brand side of the equation.”
When it comes to loyalty program design, customers are primarily interested in the rewards mix; how much value is being offered, and are those offers relevant to each individual shopper?
The key to answering these questions, according to Craig, is the development of consumer personas.
“If you’re looking to target a segment you don’t currently service, it becomes even more important to gain a full understanding of what they’re looking for in a rewards mix,” Craig said.
This necessary understanding comes from data gathered over the course of the program. Primary goals of a successful program have shifted, now being measured in the amount and type of consumer data that can be analyzed as a result of program engagement.
“Effective personalization can only be achieved through leveraging customer data,” Craig said. “This data is best gathered through an engaging loyalty program.”
Of course, customer data isn’t the only objective of loyalty programs; they also must increase retention, while providing value to the most loyal shoppers. This loyalty spans several factors, both rational and emotional, that must be considered.
-Retention loyalty: The likelihood that a customer will keep existing business with the company
-Enrichment loyalty: The likelihood that a customer will buy additional products and services from the company
-Advocacy loyalty: The likelihood that a customer will recommend the company to others
While customer loyalty continues to be a difficult concept to pin down, these factors, combined with the final goal of fully engaging brand advocates, serve as a guideline by which companies can create authentic customer loyalty.

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