Designing a successful loyalty program for the long term can be a daunting task for marketers, but one that can catapult their respective customer engagement and customer experience strategies.

Loyalty360 caught up with Pam Spier, a senior manager at Lenati, to find out about some of the biggest challenges marketers face when designing a loyalty program. At Lenati—a marketing strategy firm that helps some of the world’s leading companies build customer loyalty and generate business growth−Spier has worked with such global brands as Hilton, Nordstrom, T-Mobile, and Microsoft.

What are some of the biggest challenges companies face when designing a loyalty program?

Spier: One macro level challenge brands face is defining the playing field for loyalty at their company.  Innovation in this space has increasingly meant brands are expanding the definition of “loyalty program” to membership services, subscription offerings, and experiential programs. Companies need to start by defining the scope of what they want to solve for, and what is right for their brand and their customers.

Another challenge that we see time and again is that companies often fall into the trap of looking for immediate value from programs. Most programs need a ramp-up period to acquire members and give them time to engage. In the design phase, you should decide if you are building a short-term program for transactional returns, or designing a new way customers will engage with the brand. The answer may determine the right philosophy for assessing return on investment. This needs to be incorporated into companies financial planning and programs must be given time to see results.

We also see that many companies try to do too much, making the program and experience way too complicated by incorporating too many rewards, too many rules, restrictions, etc. Programs need to be simple and easy to engage with. The customer shouldn’t have to work hard to engage. One way to design for simplicity is to start with a scaled back program—and then test, learn and measure unpublished benefits and experiences.

Any advice for companies thinking about designing or re-designing their loyalty program?

Spier: Design around your customers. Many companies design a program for themselves, forgetting that the program needs to be reciprocal, with the customer seeing as much benefit (if not more) than the company. This means talking to your customers...a lot. We often leverage focus groups and surveys–throughout design and launch—to ensure that companies are designing a program in which their customers want to engage.

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