There are a number of different tried and tested Customer Loyalty Programmes (CLP) out there for companies to choose from.
Each can be met with varying degrees of success but what works for one company mightn’t necessarily work for the next.
It is important to select a programme that provides customers with rewards that they view as being valuable.
Some of the most common and well received loyalty programmes include the following;
Point System
This is one of the simplest and widely used. It involves rewarding customers with ‘points’ in exchange for a purchase.
These points are often recorded on a loyalty card which is swiped at the till. Points then translate into some type of reward, companies such as Tesco and Brown Thomas use this method.
Using this method allows companies to gather useful information about their consumers, what they buy, when they buy and how they buy.
This information can be then used to inform Customer Experience strategy and personalise the rewards so that they appeal to the individual and encourage repeat purchases.
One of the biggest pitfalls with this method is overcomplicating it. If you opt for a points-based loyalty program, keep the conversions simple and intuitive. It is also important that this does not become a numbers game for marketing departments, using sign ups as KPIs for performance. It is instead more valuable to look at the percentage of users who have signed up who actively participate in the programme. As these customers who are actively engage with the brand tend to generate higher sales than those who do not.
Tiered Programme
The aim here is to entice customers by rewarding initial loyalty and encouraging more purchases.
This method involves providing a smaller reward as a base offering for being a part of the program, and then encouraging repeat customers by increasing the value of the rewards as the customer moves up the loyalty ladder.
Again, here it is important to clearly communicate the various levels within the programme, the perks of each stage and the level of loyalty required to reach each subsequent stage.
If this is not clearly communicated, the programme’s ability to influence purchase decisions will be diminished.
Investment is therefore needed in communications. Based on their research, Chilli Pepper reports that loyalty programme members are generally willing to engage with the operators, a majority stating that they always read communications they receive about membership.
Non-Monetary Rewards
Many brands opt to employ this method as a means to appeal to motivations beyond that of simple monetary rewards.
This often involves companies donating a percentage of the profit made on a sale to a worthy cause.
The brand Toms provides one pair of shoes to a person in need for every pair of Toms purchased. Understanding your customers values and sense of worth and creating a sense of shared value can have a huge impact on customer loyalty.
This method requires a greater understanding of your customers motivations and therefore in-depth customer analysis is required. The cause which you choose to support must resonate with your target audience or else the message will be lost, and the campaign will fail.
Loyalty programmes aren’t just for B2C companies, as we recently explored with Leanne Papaioannou, Managing Director of Chilli Pepper Marketing.
They can be just as beneficial for B2B companies. This is clearly demonstrated in their work with Dulux Paints.
Programmes like this involve a deep understanding of your customer as well as insight into what motivates them in order to create a two way mutually beneficial relationship. Because although we want our CLP to impact the bottom line if this is your main focus its sure not to be a success.
One final point on the topic is to ensure that you never build a CLP without firstly developing a solid business case. Additional budget is another reason as to why CLPs fail. Often times brands fail to consider the ongoing costs of implementing a CLP and look only to the initial set up. However, if brands take this short-sighted approach they will likely fail in their endeavour as CLPs are ongoing as opposed to a one and done endeavour. They should continually be evolving as new data flows through the organisation.
This is why, , it is always vital to create a business case ahead of time which seeks to set out the overarching aim of the CLP and showcase its commercial benefits.
