Loyalty programs should be one of the cornerstones of any effective marketing strategy. According to Accenture's recent study found that “members of loyalty programs generate between 12 to 18% [higher] incremental revenue growth per year than non-members.” But not all loyalty programs are created equal. There are capabilities and approaches like hyper-personalization that make a difference in how effectively you can unlock the revenue growth potential of your loyalty program.

Here are seven ways to increase customer loyalty today:

1. Add real personalization to your customer loyalty program.

Today’s customers want personalized journeys from their favorite brands. In fact 80% of consumers are more likely to make a purchase when a company provides a personalized experience. But how is this accomplished?

Companies are already gathering customer insights from their loyalty programs, but often these insights are disparate and hard to access. By using machine learning and artificial intelligence technology, marketers can seamlessly deliver offers that are individually tailored to their customers. These 1:1 personalized loyalty offers are fine-tuned to individual customers based on their recent activities, rather than relying on large segments or cohorts according to demographics.

2. Make your loyalty rewards speak to the customer’s aspirations.

Loyalty offerings have long been restricted to just dollars, points and the occasional tiered reward program. And while effective, this one-size-fits-all approach to rewards limits your ability to forge personal connections with your consumers. Instead, increase customer loyalty with rewards that reflect the customer's individual interests.

Take a hotel chain. With gold tier status comes a host of benefits—expedited check-ins, room upgrades, free spa treatments. But these perks apply to very different customers. The busy business traveller cares little about a discount on a 90-minute massage, for example. Rather than lumping everything together, the hotel chain should consider tailoring their perks to the interests of the traveler: maybe it’s a priority reservation line, expedited check-in and complimentary car service for the business traveler on the go; and an exclusive local experience, free nights and a bottle of champagne upon arrival for the luxury vacationer.

3. Provide your customers an opportunity to choose their reward.

Allow your customers a chance to voice their tastes. Why? Because customers like choice—82% find choice-of-reward appealing, according to a Nielsen report. By asking your customers about their interests, you increase the effectiveness of your programs and gain valuable insights, all while giving your customers the high-touch experience they crave.

A good example is how credit card companies like Mastercard and Visa offer rewards that give customers choices on how to redeem points, similar to an airline loyalty program. Customers can get anything from airline points to cash back to discounts on brand name goods.

4. Use loyalty rewards to encourage behaviors other than purchase.

Loyalty rewards are most commonly used to encourage a purchase, but they don’t have to be so limited. They can be used to incentivize customers to take all sorts of actions, like explore new product features or refer a friend. In fact, loyalty programs can be used for operational ends.

One example is grocery stores. The surge of after-work shoppers is costly to the business—it requires increased staffing and leads to a poor customer experience. The smart grocery chain could, however, use its loyalty program to alleviate this crush by doling out additional rewards to customers who come at off-peak times or order ahead.

5. Use a customer’s past behavior to decide what offer to deliver and when to deliver it.

Typically, customer rewards programs use geolocation to trigger the delivery of rewards. For example, every time you’re near a certain restaurant, you get an alert on your app. However, solely relying on location neither takes into account the day of the week nor the time of day. Moreover, it doesn’t take into consideration the customer’s past behaviors and preferences. Maybe the customer only visits the restaurant as a part of their weekly game-day outing for wings and beer. Or it’s a weekend-exclusive destination.

Offers for these diners outside those windows will likely fall on deaf ears. As McKinsey warned in an October 2017 report on consumer shopping habits, “Getting the timing wrong virtually eliminates the chance for a purchase while potentially annoying the customer.”

6. Test constantly, and don’t assume there’s only one winner.

Take two offers—test them, and you may have one winner and one dud. But what about three months from now? The winner, thanks to market fatigue, may have lost its punch; whereas the one-time clunker, as it gains awareness and momentum, may now be a star. A one-off test would have failed to capture this reversal.

Plus, it’s important to remember that loyalty programs are not one-size-fits-all—offers and promotions may resonate differently with different segments of your customers. A loyalty program should be flexible enough to serve targeted offers to specific segments.

7. Ramp up incrementally.

This all seems like a lot, but it doesn’t have to be. Establishing a clear process from the start between creative, legal, data and fulfillment can ensure offers are created and delivered without any holdups, especially if you can automate anything manual or otherwise time-consuming.

Templatizing your offers so that they are easily repeatable but also easy to change will further help. The same yearly promotion shouldn’t take the same time to build every year. Lastly, start with a small test with a specific channel or product before deploying to a wide customer audience. Using this small test allows you to learn what works and what doesn’t with fewer confounding variables.

Conclusion

Today, marketing is not just about customer acquisition but also retaining your biggest fans. And the best way is to increase customer loyalty through a loyalty program. To ensure its success:

  • Add 1:1 personalization to your offerings,
  • Speak to your customers’ aspiration,
  • Give them a choice in rewards,
  • Encourage behavior beyond just buying,
  • Understand past preferences to decide on best times to send offers,
  • Always experiment with customer offers,
  • And start small when revamping your customer loyalty program

Employing these seven tips will help your loyalty programs take off. Looking for more tips? Read our latest white paper, “Why Personalizations Isn’t Always Personal.”

Learn more about the Formation hyper personalization platform

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The Keys to Creating a Stronger Customer Loyalty Program

As digital transformation has changed the market, brands need to develop strategies to increase customer engagement and retention. Read about the three elements of an effective loyalty program.

How to Increase Customer LTV With a Loyalty Program

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See Our Additional Guides on Key Marketing Topics

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