July 30, 2015

Having created the first frequent flyer program in America (1980), I’ve always been a big believer of brand loyalty programs. According to the 2015 Loyalty Report from Bond Brand Loyalty, the past year saw more and more consumers opt-in to a variety of different loyalty programs. So what are the keys to a successful loyalty program? According to this study, reported by Media Post Communications , they are:

Focus on authentically fulfilling customer needs to break the constant reliance on the discount-oriented value proposition. The ease with which rewards can be redeemed and amount accumulated per $1 spent, rank high as drivers of program satisfaction. Yet, relying on these functional elements is a pitfall to which many brands have succumbed.

Your program must serve the brand, not just the program. Slightly more than a third (34%) of customers say they would not be loyal to you if it wasn’t for your loyalty program. Programs are perceived as an extension of your brand, 76% think that loyalty programs are part of their relationships with a brand.

Accessing programs via mobile not only improves the program experience, but ultimately drives loyalty to the brand. Mobile is a strategic high ground in loyalty. And yet, while 48% of respondents agree with the statement, “I would like to engage with loyalty programs through my mobile device,” only 12% of customers have downloaded a program app, and 60% of smart phone owners are not even aware whether or not their program offers a mobile app.

Even if you don’t have a loyalty program, the basic principles of these programs should be used. While many brands have no formal loyalty program, they use loyalty principles to achieve success without a formal program. What are these principles?

These brands have crafted a value proposition that is not solely reliant on a discount and monetary offers, by focusing on an approach which fulfills customer needs, makes customers feel recognized and valued, and engages them through relevant and personalized experiences.

In short, these principles help make the experience with your brand better, get customers to a place where they’re willing to pay a premium, and make them more loyal to the brand.

In each of the years Bond Brand Loyalty has conducted this comprehensive study on consumer usage of and attitudes toward loyalty programs, they have captured and tracked a number of general sentiments, including:

  • 86% agree that programs are definitely worth the effort
  • 83% say programs make me more likely to continue doing business with certain companies
  • 76% agree that programs are part of my relationships with the brands
  • 76% modify when and where  purchases are made in order to maximize the benefits
  • 64%  modify what brands purchased in order to maximize the benefits

Despite the increase in average enrollment, the average number of programs in which Members are active (i.e., make a purchase) has not shown a corresponding increase. This suggests consumers are reaching a program engagement saturation point.

For some loyalty brands, the race for share of mind and wallet could be a race to the bottom. Only 49% of consumers agree they spend more after having joined a loyalty program, suggesting that marketers are incurring program costs with no corresponding increase in sales among a significant portion of their customer base.

The study reveals a path for marketers eager to reduce their reliance on monetary incentives in pursuit of customer engagement and program satisfaction.  Elements that ranked as the top experience include:

  • The program is worth the effort of participating.
  • The program meets my needs.
  • The program is enjoyable.
  • The program is simple.
  • The program is easy to understand.

You can access the free Loyalty Report here. I would also be happy to work with anyone that is interested in creating a loyalty program.

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