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Loyalty programs can be significantly impactful on customers and beneficial to brands. The sophistication of some loyalty programs can create even stronger relationships between customers and brands.
But, how do you know when your loyalty program hasn’t created a true point of differentiation and falls into the “me too” category?
Loyalty360 talked to Jon Siegal, VP/GM for Stellar Loyalty, about this intriguing topic.
What are the warning signs that my loyalty program is “me too” or “a loser” or “commodity”?
Siegal: “Me too” or “commodity” programs are difficult to distinguish from your competitors. In the restaurant segment, for example, the consumer visits X times and gets something for free or discounted. If you look at a few of your competitors, and their programs look just like yours, you have a commodity program.
Furthermore, “loser” programs are typically rewarding customers for existing behavior and are not actually motivating behavior. It is likely that a losing program is adding cost, but not generating incremental revenue, or in other words, losing you money.
What should I be aiming for to achieve a competitive advantage?
Siegal: Loyalty programs that reinforce the unique values of your brand are best poised to help you achieve competitive advantage. These types of programs will have high levels of member acquisition and engagement. A great example of such a program is The Vans Family loyalty program, which perfectly embodies Vans’ brand values. It’s interactive and intuitive, designed to recognize, reward and celebrate Vans fans for who they are and what they like to do.
For example, members receive insider information, access to member-only contests and experiences, and sneak previews of upcoming product releases. They can also accrue points for shopping and engaging with the brand and have access to exclusive patterns to customize footwear and accessories in the Vans Customs platform.
Doug Palladini, Brand President for Vans Global, describes the program as a vehicle to “engage our fans—from newcomers to loyalists—as individuals with unexpected experiences tailored to their personal interests.”
How do I decide whether I can make my current solution better or whether I need to replace it?
Siegal: In every industry, competition for the customer has never been more fierce. If your current solution can’t keep pace with your business goals or doesn’t reflect your brand values, it’s time to make a change.
What’s important to do before implementing any change, however, is to gain feedback from both employees and customers. Employees are the ones interacting with the customers every day and customers, of course, usually have pretty strong opinions about what works for them.
What are the challenges stopping most brands from embracing transformation and how do they get past those?
Siegal: Organizations by their nature become complacent because it’s easier to keep doing what you’ve been doing rather than marshal a complex organization and its people to adopt new processes and systems. Brand leadership can overcome this inertia by underscoring the opportunity for change and communicating a sense of urgency and the cost of doing nothing or very little.
We’d recommend creating a scorecard of your current program and comparing this to relevant competitors. This analysis has proven to be effective at calculating the opportunity for change and supporting why it must occur.
Does a loyalty program necessarily have to be unique in some way to find success?
Siegal: There are always exceptions to every rule, however, non-unique programs will typically have lower levels of membership and/or engagement when compared to programs that customers perceive as unique and a strong reflection of the brand.
Furthermore, non-unique programs that do have higher levels of membership and engagement are less likely to motivate new behavior, but rather simply cannibalize profit margins to reward existing behavior.
A great example of a unique brand loyalty program is from Old Chicago Pizza & Taproom, part of the CraftWorks Restaurants & Breweries family. With more than 25 percent of its revenue generated by loyal customers, Old Chicago designed a unique customer recognition program that is rewarding and engaging for its loyal guests. Its OC Rewards program is creative and multidimensional, featuring the famous World Beer Tours with beers from all around the world. The results demonstrate its impact. It is a huge customer favorite and they are seeing extraordinarily high engagement rates.
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