Loyalty program activities that lead to an emotional relationship with the customers
Every customer interaction with a brand is an opportunity to deepen the relationship. Consequently, to immerse them into the world of the value your brand offers. It is primarily your job to be active in this process. If you expect emotional engagement, you should be the first to offer it. And the loyalty program is a great enabler that will help you drive customer value.
This article will teach you how to draw consumers into your brand’s world. How to constantly give them more reasons to stay in a relationship with you. How to deepen it until you lock them into your 'walled garden’. Additionally, you will learn how to plan the loyalty program value proposition so that your customers feel comfortable in your world, thus becoming their first choice.
Different groups of customers will engage with your brand in different ways. These range from customers who will casually look in your shop while at the mall, to those who will visit you from time to time, to ardent followers and fans for whom – if your brand suddenly disappeared from the market, the world would become at least a little bit worse place. Sometimes one of these groups will outnumber the other ones, and this is perfectly natural. The important thing is to have an 'incentive’ in place for each of these groups so that they go higher and higher up the customer engagement pyramid.
Customer engagement pyramid
By arranging the offer of your loyalty programme in an engagement pyramid, you can be sure that no matter how close a customer is to your brand (or, to the contrary, how far they can be), you will always find the tools to immerge them further into your world. This is how you ensure that you can provide a properly scaled exchange of values. As engagement increases over time, so does the number of interactions that give you additional opportunities to build this relationship. The further you go, the more meaningful the exchange of values between your brand and the customer should be, and the programme offering should be tailored as to always set up situations for further engagement.
- Grade 1 – Benefits for all club members;
- Grade 2 – Rewards for occasional visitors;
- Grade 3 – Rewards for those who plan to buy;
- Grade 4 – Branded Community.
Grade 1. Benefits for all loyalty program members
The cornerstone of your loyalty program are benefits. No matter how frequently your customers purchase or how much money they spend, the benefits ought to be accessible to every club member. They are the key motivators for signing up for your program. Thanks to them, a large audience will become aware of it. Thanks to the benefits, a fundamental exchange of values may arise: the customers give you their email or phone number, and, in exchange, they receive a specific value, which is a metaphorical entry ticket allowing for the further development of the engagement.
Offer benefits to the widest possible group of club members.
When building a benefit offer, it is worth considering the different shopping missions of your customers. Therefore, regardless of the mission, they always have the opportunity to experience the value of being a club member. The easiest and most common are, of course, discounts. We know them well as customers from our everyday shopping experience. 15% discount on the winter collection, three chocolates for the price of two, or free delivery – exclusively for registered club members: there is something for everyone. All of them will positively impact enrolment in your loyalty program.
The more balanced the offer, the better the return on investment.
Such a democratic approach, especially if limited to discounts only, can heavily inflate costs. To offset this, extend your offer with benefits such as a virtual receipt (transaction history), more convenient access to services (e.g. priority delivery), more favourable guarantee conditions, price stability guarantee for purchased products, extended return period, etc. This combination of benefits (discounts and more favourable purchase conditions) supports work with different customer groups. It also boosts profitability, as some of them will cost you nothing.
Analysis of the increase in engagement.
Apart from the obvious commercial benefits (customer – savings, brand – higher sales), benefits provide reasons to the customers to identify themselves during every transaction (e.g. scanning a QR code from an app or logging in when shopping online). And these goals should always be settled this way: by sales KPIs (increase in sales) and increase in engagement (share of sales), i.e.:
- increase in sales – as long as they boost our sales (particularly in relation to discounts);
- increase in engagement (share of sales) – what percentage of purchases are transactions performed by identified club members.
Both indicators should show the same positive direction. By increasing sales, you can offer more benefits to club members. And the more benefits you can offer, the more new customers will enrol to the club to take advantage of them. This will eventually translate into stronger sales results. Benefits are, therefore an investment which should pay off in increased sales and greater customer engagement
Grade 2. Loyalty program rewards for occasional visitors
They have become a synonym for a loyalty program. The more you spend, the more will return to you. Whether we are talking about stamps at the coffee shop or points at the petrol station, the next step in increasing customer involvement is creating a relationship based on transactions. A sizable group of clubbers visit you occasionally, and your brand is among many in the category they consider. Therefore, giving them something after each purchase is a good reminder of you. The goal is to move your brand higher in their hierarchy the next time they consider a repeat purchase. And to give them a reason to check you out, even if it would only be out of curiosity.
In this model, you share your margin with your customers. The key is that you do this judiciously.
Give a chance to win a prize.
Playing with the thresholds after which a club member can claim his or her prize is real art. Sometimes the distance to the award is so distant that it demotivates the consumer from making further purchases. Anyone who has collected miles for their private flights understands the issue. If you are not flying regularly, twice a year for holidays, plus once or twice professionally, you are unlikely to achieve a higher frequent flyer status. So why should you even bother? Thus, the only feeling the loyalty program likely evokes is a sense of inaccessibility and, perhaps, a slight jealousy towards those who have succeeded. It is rather a far cry from loyalty.
Support redemption, but don’t be stringent.
While some customers like to accumulate points or badges, the real value comes from redeeming them for rewards. Thousands, if not millions, of unused tokens sitting in your customers’ accounts, dragging down your bottom line. This is not good for anyone. The more often a club member can see the value of their points, the sooner claiming them will become a habit. Be careful, however: if you encourage your customers too often, the reward’s value may be unnoticed. Reducing every receipt at the grocery shop by a few pounds/dollars will be less valuable to the consumer than a few tens of pounds/dollars once in a while. This is a thing to be remembered in your strategy.
Make it challenging to convert to money.
Consumers know how to count. And they are best at counting their own money. You can be sure that if you introduce „linear” points in your loyalty program (e.g. 1 point for every 1 dollar spent), customers will naturally start to calculate how much fuel they need to buy to get a “free” hot dog. How many hotel nights do they have to pay for to get a welcome drink. And, in the end, it may then turn out that neither the hod-dog nor the awaited welcome drink will taste as well nice.
A balanced and targeted range of awards.
Be balanced in the rewards you use. Ideally, they should relate to your brand as a whole, not just your rewards catalogue. Ensure they have as much choice as possible – from product discounts to services or additional rewards because the customer decides what is important to them.
Grade 3. Rewards for those who plan to buy
Interactions are new transactions! This is where the real work of emotional engagement begins.
Have you ever thought about how many steps your customers take to shop in your category? Even for more spontaneous, day-to-day purchases like food, many customers like to check the promotional flyers for current bargains, log into their account to check your offers or click on an email you have sent them in search of exciting dinner ideas. And what if you sell clothes, furniture or cars… This path is probably even longer, and the number of digital footprints a customer leaves is significantly higher. Why does this matter so much? Because it gives you valuable insights about your customers. About what they are interested in. Do they focus on price or quality? Which product range is more important to them? And most importantly, it allows you to lead to desired behaviours if you start rewarding them.
Determine which interactions are most valuable.
You do not want to reward for everything the same way. There are more and less valuable interactions. For example, completing the data in the club member’s profile tells you the age of your customers’ children or whether they live in a house or flat. Using the product comparison tool on your website brings the customer closer to a purchase. Downloading an app? Or perhaps all of these at once? There is the value behind every interaction. Prioritise them and consider how much you can invest in them.
Set the right business rules.
When you reward interaction (such as logging into your account, completing data, using the app, etc.), there will always be a group of customers hoping to make a quick buck. This is why it is essential to set clear business rules to limit the abuse of rewards. After all, your goal is to reward desirable behaviour, not to encourage abuse.
By rewarding interaction, you create more reasons to stay in touch with your customer. Keep them informed of progress. Suggest the next possible step and encourage activity. All in white is where gamification comes in. Each next step will give you additional information about who the customer is and what his or her next step could be. You can also use this mechanism to educate the customer browsing your website or app so as to direct his or her moves to the desired areas.
Make sure everything is clear and readable from the user side. Simplify the process so the customer can understand the offer, even when they are reading about it on their phone on the bus to work. Most of the interactions you want to reward will occur under similar conditions. Ensure that clubbers have a view of their interaction history and the associated 'earning’. This will allow them to better plan their activities. Transparency builds trust, and trust is one of the strongest emotions.
A balanced and targeted range of awards.
Be balanced in the rewards you use. Ideally, they should relate primarily to the non-tangible value your brand provides. Providing access to all those tools that help customers make decisions can be interesting. For instance, if you own a clothing shop, you could arrange a meeting with a stylist, bringing the club member closer to your brand. Make sure to offer as much choice as possible – from product discounts to services and additional rewards.
Grade 4. Branded community
Building the community can be compared to putting the cherry on the cake. Before you decide to do it, make sure you have the cake. First of all, your brand should be strong and recognisable enough. You also need a whole lot of committed customers. After all, nobody likes to dance on an empty dance floor. Interestingly, the size of the brand does not matter so much. Communities around brands are created for both the biggest brands (Lego, Sephora) and the smaller and, above all, niche brands.
Communities are a huge repository of 'user-generated content’. An opportunity to showcase your brand in the everyday world of its users. It is a chance for the community to solve problems, to inspire each other. And above all, it authenticates your brand.
Start where your most committed loyalty program members have been for a long time.
That is social media. Before you start building a community on your channels, start animating the community where it naturally (spontaneously) gathers. This will be much simpler to start with, especially as if you wanted to build a new environment, clubbers would have to re-learn it from scratch and look there solely for your brand, and this is often too high a bar to set for your brand. Observing customer behaviour on social media also helps you understand the strategic directions of the community and following what is attracting the most attention of your customers and what topics are they focusing on.
Share secrets from the brand’s life and provide a VIP experience.
The community can be inspired by the activities of sports clubs, especially football clubs. Access to unpublished reports from the locker room, training sessions, the blending of on- and off-line worlds, community meetings, and experiencing matches together in and out of the stadium – this is what the best clubs offer. Much of this we can try to translate into our own brand.
It has become customary to think that loyalty programmes and consumer clubs are only for loyal customers. In reality, they are very effective tools that can provide mechanisms for any group of consumers, drawing them into your brand’s world, giving them more and more reasons to engage, and building stronger bonds with your customers. So: get on with it!