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How do the successful loyalty programs work?
Every year, companies spend billions on rewards programs. But from points to promotions to coupons, are they really successful?
There are so many programs out there: How can you make yours stand out?
To us, there are four main drivers of success for loyalty programs. Here’s how we make them work at Bumped.
In this day and age, everything’s got to be faster, if not already instantaneous. If customers don’t understand your loyalty program from the get-go, something’s wrong. If you need to keep explaining it, it’s not because they don’t get it, it’s because it’s too complicated. Your customers shouldn’t have to be mathematicians.
Simplicity is crucial: A customer needs to get it right away. Not only because they need to understand how they benefit, but also so they can tell their friends about your program.
For Bumped, we’ve explained it very simply to consumers on our site: “Get free stock and ETFs when you spend with the brands you love.”
Loyalty programs can be complicated. Buying stock or ETF shares can be complicated, too. We’ve taken something potentially challenging, and made it simple to do and easy to understand.
Understanding your program right away also builds trust. Which leads us into our next point.
Yes, explaining things simply and clearly can establish trust. But there’s also a lot of information you’ll need to be cognizant of when starting or successfully maintaining a loyalty program.
Because when customers sign up for a loyalty program, remember: They’re sharing information about themselves. The amount they share may depend on the level of involvement, but data’s still going to be part of the equation.
Overall, they’re giving you permission to market to them. You need to respect that. Keep your audience in mind, not just your business goals. Think about what you want as a customer, as a (literal) card-carrying loyalty program member.
You have the data. Use it wisely. If you take their permission and send them spam or messages that don’t “speak” to them, they may not just quit your program, they might look to a competitor.
At Bumped, we have security protocols surrounding how we use our data. We use data encryption throughout our production systems and databases. Data is stored in an encrypted state by default, and we further encrypt sensitive data using envelope encryption with keys managed by our own systems. This ensures access is protected by multiple layers of security.
Customers join and ideally stay in loyalty programs because they feel a connection with a brand. According to a report published by Forrester, emotion — and an emotional connection to a brand — is a stronger driver of loyalty than factors like “ease” and “effectiveness.”
For example, 57 percent of millennial women say their purchase decisions are driven by a brand’s values and stance on issues that are important to them. And more research shows that Gen Z cares about various environmental issues as well as social causes including racial, gender, and income inequality.
If customers already feel a connection with a business to patronize it, we believe that they’ll develop an even stronger link once they become literally invested in it. For all those times a customer has ever shopped enough somewhere to warrant joking, “We should own stock here,” now they can. That’s what connection means.
Loyalty programs are commonplace, but they’re also in flux.
It’s obvious conventional loyalty programs just aren’t cutting it anymore: Consumers' overall engagement in traditional loyalty programs has declined consistently over the past several years.
While total loyalty program subscriptions peaked at 2.65 billion in 2012, the overall percentage of active memberships slipped from 46 percent in 2010 to 44 percent in 2012, according to COLLOQUY research. The average U.S. household participates in 21.9 loyalty programs, but less than half, or only 9.5 of those memberships, are active, COLLOQUY also reported.
So what is next? A program like Bumped combines loyalty that matters to your business with rewards that benefit your customers.
Also, loyalty programs shouldn’t be one- size-fits-all; businesses and customers are different, and have varying needs. Bumped works closely with your existing loyalty currencies, like miles or points, to encourage specific goals or outcomes.
Customers are ready for actual value in a loyalty program. They want a program that’s easy to use, is worth signing up for, and matters. What better way to engender that than having a stake in your company? To give them a way to literally support their favorite brands and feel like a part of the organization?
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