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GUIDE · 

LOYALTY · 

MINUTES

The Beginners Guide to Customer Loyalty

 
TONY O'CONNORPIGGY

If you’re looking for a quick introduction to the world of customer loyalty, you’ve come to the right place.

What is customer loyalty?

Confusingly, customer loyalty has many, many different definitions, but at Piggy we define it as:

Customer Loyalty: The ability to retain customers, and engage with them emotionally and rationally.

Or, in other words, it’s all about creating what are known as ‘repeat customers’, who keep returning to your business, over and over again.


Some businesses are able to achieve this organically, by treating their customers well and offering excellent value - or exceptional quality.


Other businesses simply don’t bother. They offer low prices and low quality, and appeal to an audience who only value price, and don’t really care who they buy from.


Most businesses, however, are in the middle ground, where creating loyal customers is vital for business, and something that needs to be optimised - and that’s where loyalty programs come in.

 

Ok. So what is a loyalty program?

A loyalty program is any sort of system that formalises the customer-business relationship.


The original version of a loyalty program was coffee-shops offering customers a cardboard stamp-card, where if they bought nine coffees, the tenth coffee was free.


Another common example are air-miles, where airlines offer you points for every kilometer you fly with them. Air-miles were one of the first loyalty programs to take advantage of the digital world.


Suddenly people could create an account, and calculate how many air-miles were required for different flights and plan their travel accordingly. You could also trade your air-miles for popular products, adding an extra layer of usefulness to the program.


It was the development of the smartphone when digital loyalty programs really took off.

A digital loyalty program is based on the same principle as the coffee card - however by using digital technology, they are able to offer far more when it comes to functionality.


Digital loyalty programs also allow companies to offer a range of different rewards, which appeal to a range of different customers.

They’re also able to create a new communication channel with their customers, such as email campaigns and newsletters.


Sophisticated loyalty programs can also collect customer data, and use this data to provide customers with tailored rewards, as well as tailored promotions.


All of this sounds great - but digital loyalty programs have one huge weakness - participation.

This is relatively simple to answer. 


Just think how many loyalty programs have you signed up for in the last 10 years? Now, how many of those do you still actively participate in?

If you’re like most people, you’ve probably signed up for between 5-10 - and you currently only actively participate in 1 or 2.


Humans are complicated beings, so there are many different reasons why it happens, but there is only one solution for a business that sees participation dropping - to spend more money on promoting and incentives, which reduces the overall profitability of the program, and an ever-decreasing spiral begins.


There is a solution to this problem however - the digital loyalty platform…

 

The easiest way to think of a digital loyalty platform is to look at other digital platforms. Spotify is a digital music platform that brings together millions of music fans and thousands of bands in the same place.


Another example might be takeaway.com, which brings together millions of hungry people and thousands of restaurants, all in the same place.


A digital loyalty platform does the same thing, bringing together millions of customers and thousands of businesses in the same place.


For customers, they can collect points and earn rewards at thousands of diverse businesses with a single account.


For businesses, they get to set their own rewards, collect customer data and then use that data to create marketing programs - all for a low monthly fee.


Most importantly of all, the digital loyalty platform helps to ensure participation. That's because it has millions of customers and thousands of companies, so it stays top-of-mind and relevant.

 

Well, that depends on business objectives and your budget. Here at Piggy, we have over 8,000 merchants, and over 2,000,000 million members, so we’re clearly doing something right.


If you’re considering developing a digital loyalty platform, we recommend searching online for other options - or even learning more about open-loop loyalty programs. Alternatively, if you want to speak to a real person, please feel free to reach out to one of our customer loyalty experts by clicking here.

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