Loyalty Programs – 2
A table from the book “Customer Relationship Management: Concept, Strategy, and Tools” summarises the key characteristics of loyalty programs (LPs):
An excellent new book, “Loyalty Programs: The Complete Guide” summarises the pros and cons of loyalty programs:
From a consumer perspective, the benefits a loyalty program can provide, include:
- Value: members may be rewarded with points, miles, discounts, value-adds or other tangible benefits which non-members do not receive.
- Exclusivity: members may be provided with exclusive benefits such as access to lounges, priority queues and VIP events.
- Recognition: members may be shown appreciation through the delivery of surprise gifts or rewards.
- Relevancy: members receive tailored communications, offers and rewards specific to their individual preferences, increasing the usefulness and appeal.
Core challenges consumers face when engaging with loyalty programs can include:
Value: the rewards provided by the program are not always adequate, compelling or accessible. For example, the member may not spend enough with the brand to earn access to a sufficiently desirable reward, or the reward they can access are not appealing.
Program saturation: consumers may be overwhelmed by the sheer volume of loyalty programs being promoted to them, with most consumer companies offering a program to their customers.
Marketing assault: many loyalty programs send large volumes of marketing materials to members via email, SMS, push notification, banner advertising and mail. For some members, the volume of marketing received may be perceived as excessive, while the content may not be relevant.
Data capture and control: a loyalty program may capture personal data in ways the member is not aware of, or does not approve of, and use it for purposes the member may not deem appropriate. The member may also feel they have a lack of control over how their data is captured and used by the program.
Loyalty programs done right can be a very powerful platform for customer retention and revenue maximisation.