Consider the last time you joined a loyalty program. Was it then, as you signed up, that you first decided you felt loyal to that business? Chances are, the answer is no.
Whether you were already fond of the brand or simply wanted to save a bit of money, your loyalty probably didn’t start the moment they handed over your shiny new points card.
As consumers, we know that being a loyalty program member doesn’t necessarily mean we’re actually loyal to that brand over the competition. That’s because a rewards program alone doesn’t create loyalty.
And yet, when we take off our consumer hats and put on our marketing hats, we have a tendency to think that if a business is struggling to win customers’ hearts, a rewards scheme will solve the problem. Or if there’s already a program in place, it just needs a bit of a refresh.
This disconnect is a dangerous one. It means businesses are more likely to overestimate their customers’ loyalty and underestimate the scope of their loyalty strategy. It’s probably one of the reasons so many transactional loyalty programs fail within the first two years.
That’s not to say that loyalty programs aren’t important. For most businesses, especially in sectors such as retail, they’re essential.
A rewards program encourages desired behaviours, creates positive emotions and deepens the customer-brand relationship – but, in general, it doesn’t initiate loyalty. Loyalty starts with the customer experience.
Trust and likeability
The three most common things customers say about the brands they’re loyal to? They like the company, they trust them and the products / services are of good quality. That means that out of the three biggest motivators for customer loyalty, two of them are relatively subjective, intangible factors.
And unsurprisingly, they’re also closely related to the experience of doing business with a company. A company that is likeable and trustworthy communicates these characteristics indirectly, in their marketing, the way they communicate, and during every interaction they have with customers, across every channel.
What does this mean for your loyalty strategy? For one, if your overall customer experience is poor, implementing a loyalty program won’t have a substantial effect, either on your profits or on your customers’ attitude towards your company.
The first step in creating a loyalty strategy then, should be to assess your current customer experience. Here are a few things to consider:
- How well do you communicate with your customers at various stages of their journey? Are you able to recognise individual customers, present them with personalised, relevant content, and create a seamless experience across channels?
- Do customers have control over the way they interact with your brand, over the way they receive communications from you and over the data they share with you?
- How well are you able to uphold your brand values – and communicate them – across different touchpoints?
If you can do all these well, you’ll be in a good position to build trust and positive emotional connections with your customers. Your customer experience should “plant the seeds” of loyalty; then you can turn to a loyalty program to make them grow.
A (good) loyalty program still matters
A loyalty program may be secondary to the overall experience, but that doesn’t mean any old program will do. The factors of trust and likeability apply just as much to the actual program as they do to your loyalty strategy in general.
Just like the rest of your customer experience, your loyalty program must be relevant, personalised and consistent across channels. It should give customers flexibility in the way they earn points, redeem rewards, and generally interact with the program.
That means complicated points conversions, high thresholds for redemption, and generic, price-focused rewards are out. These simply won’t contribute to feelings trust, or build emotional connections between the customer and your brand.
The goal of your rewards program should be to strengthen a customer’s existing loyalty towards your brand – and make these feelings profitable, by encouraging desired behaviours like repeat purchasing and advocacy.
An effective loyalty program may not initiate loyalty, but it can make it grow into a relationship that adds value for both your customer and your business.
Whether you’re at the beginning of your loyalty journey, ready to implement a program or looking to upgrade your current approach, we’re here to help. Get in touch today to find out more about our consulting and software solutions.