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Loyalty · 

8 minutes

The 3 key factors of a successful loyalty program

Bart HendrikszPiggy

In my previous blog, I referred to large retailers, such as Amazon and Hema, that increasingly let their customers pay with their data instead of money. 

The question is, how do you ensure that customers want to share their data with you? And why, actually, do you want it? 

The more you know about a customer, the better you can coordinate your offer and marketing. That is why collecting customer data and gaining insight into customer behavior is crucial for any retailer, large or small. 

However, once you’ve collected the data, what should you do with it? The big players focus on effective loyalty programs that go beyond transactions.

They apply three success factors to collect data and increase the impact of their loyalty programs: 

  • Emotional bonding

  • Personalization

  • Connection through channels.

Success Factor 1 - Forming an emotional bond

In my opinion, many retailers miss the point with their loyalty program by focusing mainly on transactions.

The traditional idea of ​​spend-and-receive is simply not enough for today's consumer. After all, if there is a better offer elsewhere, customers will leave. In short, there is no emotional bond.

Of course, the transactions remain important, but to activate more people and ensure a stronger bond and brand preference, it is even better to look for a real connection with the consumer. And that is not only on the rational level, but also on the emotional level.

Here’s a question for you - would you talk to your neighbor about a loyalty program where you get a 10% discount after the 10th purchase? Or would you talk about being seated one night at the 'Chef's Table' at a restaurant, as a reward for your customer loyalty?

That is why the most successful loyalty programs and platforms in the world see drastic increases in visit frequency with greater emotional connection. They do not achieve this with transactional rewards, but by creating experiences and lasting memories.

Success Factor 2. Account Based Loyalty

Don't get me wrong - I understand that the 'Chef's Table' example I mentioned above might be enormously appreciated by some, but maybe not at all to you.

That is why loyalty programs and B2B incentive programs should also be much more personal, instead of generic savings rules and rewards. After all, every customer is different.

Only on the basis of data can you determine which reward is suitable for which group of customers. We call this Account Based Loyalty (ABL). This form of hyper-personalization is crucial if you want to keep consumers motivated within your loyalty program. In fact, some consumers today demand this the moment their data is shared.

While consumers are becoming increasingly aware about giving away their data, they also expect a personal and tailored experience through every touchpoint and contact. A consumer wants to get the feeling that you 'really understand' them.

Instead of firing rewards randomly at your entire target audience, you can tailor specific rewards to specific groups, or sometimes even just one account, based on customer insights.

The more personal and better the reward is, the more your customers will participate, stay incentivized and create a natural, emotional bond with your company.

Success Factor 3. Connections through channels

While companies tend to focus on providing opportunities to collect points in-store and online, providing other channels can help provide customers with a richer experience. A great example of this approach is one of the most widely cited and successful loyalty programs in the world - Starbucks.

To earn points - or in the case of Starbucks, “Stars” - every interaction with the customer counts. So customers collect stars for transactions, but also for reviews and likes on social media. It is super easy for the customer to participate and collect stars, which makes the participation and activation extremely high. And this provides Starbucks with a huge amount of data about the behavior and preferences of their customers.

When you consider that 16.8 million consumers participate in this program, you can understand how valuable the insights Starbucks can derive from this area.

By knowing that Mona drinks a single espresso-soy-skinny-latte-whatever every Monday and Wednesday at 9:30 AM at Central Station, what rewards she's redeemed, what posts she likes, and when she last left a review, Starbucks can personalize the entire program account-specifically.

When you make it easy for customers to collect points (Or Stars, or anything) through multiple channels, they will reward you with their data. And with that data you can then personalize messages, rewards and much, much more - which in turn ensures maximum effectiveness.


How can you improve your loyalty program?

In concrete terms, I believe that your loyalty program will be much more successful if you:

  • Reward customers with experiences that create an emotional bond

  • That you personalize the savings rules and rewards per customer or account group

  • Collect as much data as possible by giving customers the opportunity to participate through a wide range of channels.

This way you strike an emotional chord more quickly - and hopefully create a customer for life.

So, now that you know the success factors of loyalty programs, how are you going to approach them? It can be painstaking work without automation. Fortunately, I know of a certain loyalty platform that can collect data, provide insights and a whole lot more.

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