The prime movers of loyalty

23 October 2019

In the top 5 loyalty drivers worldwide, customers tell us that the ease of earning and redemption along with the variety of rewards are key.

But how do brands make these the prime movers of their loyalty programme?

Here are 3 key findings to help you improve your customers’ engagement:

  • Make it easy: Do you know what can disengage customers in a minute? Complexity! When earning and burning rules are too complex, customers drop off. The complexity of the earning and burning process in a loyalty programme is the 4th redemption barrier worldwide.

Example: Walgreens’ Register Rewards is a loyalty programme that gives members coupons at checkout, good towards the next in-store purchase. However, to make it work, shoppers must follow a combination of several rules making it hard to understand and to actually get. “If there are too many terms and conditions to earn something of value - for example you have to shop on a Tuesday after 3 p.m. to get points - consumers kind of shut themselves off.” says Jeff Berry, research director with Colloquy.

  • Make the reward count: It appears worldwide that customers enjoy a certain type of reward: cashback and discount on purchases. Because these are costly rewards, one of our experts’ advice is: Why not reward less often but make it count more?

Example: Sephora’s rewards programme is very popular. The programme counts more than 17 million loyal members, who make up 80% of Sephora’s annual sales. Customers earn rewards for each purchase based on a traditional point system. The interesting and engaging part is that members can choose how to use their reward points: for gift cards and discounts, to offset purchase prices, for more exclusive things like limited edition products or in-store beauty tutorials. Giving loyalty members the flexibility to choose enables Sephora to offer customers the deals and products they really want without cheapening the perceived value of their products.

  • Reward the right customers: A powerful loyalty strategy comes from a strong targeting. To offer a meaningful experience without getting their budget blown, brands must target and personalise correctly their rewards. By only rewarding the most valuable customers and the most promising ones, brands are ensured to keep their budget in hand and engage the right customers in a sustainable way.

Example: Starbucks’ loyalty programme is a great example. In order to earn loyalty points, customers must order or pay with the Starbucks app. Centralising customer transactions this way creates a goldmine of data on customer preferences and behaviour. This way, Starbucks is able to set up customer attributes and target the most valuable members to engage them deeper with meaningful communications and offers.