An extended version of this post first appeared in Loyalty Management Magazine, Q2 2018.  

If you read much about customer loyalty, you’ll probably have heard the news: Traditional, transaction-based loyalty programs are on their way out. It’s not all bad, though – there’s still opportunity for engagement-based programs, which reward customers for their loyal behavior beyond purchases.

But the success of these programs isn’t just about the loyalty mechanics that drive them. It’s also down to the fact that they sit within a wider loyalty strategy, which aims to create value and positive experiences for the customer across their entire journey – not just at the moment they swipe their card.

The loyalty program, then, becomes a means to an end rather than an end in itself – one component in the customer experience machine, where profitable loyalty is the end goal.

So how do you make this shift: from an isolated loyalty program to an integrated strategy, with a business-wide impact on customer experience?

1. Prioritize data

When moving to an experience-focused loyalty strategy, the first and most important thing to consider is what you know about your customers and how you can use that to your advantage – and theirs. Start by asking questions like:

Where could the right data help us make the customer’s experience faster, easier or more connected? What data do we need to make their journey more personalized?

You’ll probably come up with a long list of potential use cases, so prioritize one or two based on your marketing objectives.

For example, if one of your objectives is to increase the average basket size of a key customer segment, focus on ways that better use of data could make your upselling efforts more relevant.

Product recommendations and possible points - driven by data

Then, do an audit of the data you currently have – is it accurate and up-to-date? Do you have what you need to implement the use cases you’ve chosen to focus on?

If there’s essential customer data you’re missing, think about how you can collect this through your program – whether through implicit behavioral data, or by incentivizing members to share their interests, preferences or other information.

2. Take ownership

As customer needs change, business goals shift, or simply as you learn more about what drives loyalty among your base, you’ll want to optimize and tweak your approach – without having to go through a full program overhaul.

For many businesses that will mean bringing the loyalty program (and its associated tech) back in house as much as possible.

If your loyalty program has been managed or implemented by an agency, this might sound daunting. Fortunately, SaaS (software-as-a-service) platforms offer a good solution.

Cloud-based loyalty software should come with plenty of features and integrations “off-the-shelf”, meaning you won’t end up with a complicated implementation. That makes it much easier for your internal teams to manage.

3. Get the (tech) basics right

As people become accustomed to new channels and devices, they’ll increasingly expect the brands they buy from to interact with them there – and provide a good experience while doing it.

But before you dive straight into augmented reality or the like, it’s important to get the basics right.

Seamless, connected customer experiences – the kind that drive emotional loyalty – depend on the right data, working across channels in real-time. That means joining up all the touchpoints and channels where customers currently interact with you and getting data flowing smoothly between them, so you can shape the customer experience on the fly.

Data from various touchpoints should ideally feed into a central platform

For this, its good to have a platform that can act as a central “brain” for your loyalty and CX efforts, processing, analyzing and actioning data across multiple systems. This enables each system to deliver a personalized experience based on the most up-to-date information – whether at point of sale in-store, through a mobile app or on the web.

4. Measure the right things

That you should measure the impact of your efforts goes without saying. But when looking at a wider loyalty strategy, there are some unique things to consider.

First, make sure your KPIs aren’t too narrow; instead, look at the impact of your loyalty and CX initiatives across business functions.

That could be an increase in referred customers, an uptick in the number of product categories members purchase from, even a reduction in calls to your support center – exactly what you measure will depend on your business goals and the mechanics you’ve put in place.

Ultimately, though, it means requiring your efforts to show some kind of financial impact.

Because emotional loyalty is the goal, it’s also a good idea to keep tabs on the state of your customers’ relationship with your brand. Measuring things like their overall value and sentiment towards your business will be a good indicator of whether your efforts are making a difference.

Finally, beware of relying too heavily on vanity metrics. Things like the number of customers enrolled in your loyalty program are good to monitor, but they won’t necessarily tell you whether your loyalty strategy is having an impact on your bottom line.

Customer expectations are changing fast, and the loyalty program as we know it is fading out. It’s critical that customer-centric businesses begin to see loyalty as a core revenue-driving function, rather than a siloed solution to customer churn.