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Most loyalty programs are poised to miss this moment of opportunity

Have no doubt, this is a moment of opportunity for loyalty programs. Data privacy laws continue to tighten, which only increases the importance of first party, permission-based data. Consumers know the importance of their information, and loyalty programs can provide an important value exchange for the permission to use it. Presto -- loyalty programs are now becoming THE foundation to all data driven marketing, quite a turnaround for what brand marketers once viewed as a promotional side hustle.

The question is, what can brands do to position their program to capitalize?   This is also a moment of great change, with COVID-19 providing a serious disruption to industries like dining, travel and retail. On the other hand, Ecommerce, grocery/drug, home delivery, entertainment, remote working/learning have had a tremendous run, but now need to maintain as we emerge. Stakes are high -- there will be winners and losers in the coming months.

There is no shortage of stats when it comes to loyalty programs, and most say more needs to be done to build true loyalty. A paltry 44% of loyalty program members are very satisfied with their program, and only 19% feel special and recognized[1]. Most C level executives I’ve done stakeholder interviews with question the profitability of their loyalty programs, particularly CFO’s. In recent months, many travel programs have devalued their currencies, and ballooning point balances ensure this trend will accelerate which will weaken consumer confidence and program satisfaction further.

It’s time to act decisively and transform your loyalty program! The loyalty value proposition is a complicated and delicate balance between three Loyalty Levers. They are 1) Behavior Drivers that maximize revenue and (2) Sentiment Builders that build an emotional bond that will insulate against the competition. There are proven psychological motivators that drive loyalty success, and that balance needs to be measured and constantly optimized on a “Near-1-1” basis. This can only be done through a robust and insight driven analytical program. In addition, (3) Engagement Activators serve to involve members in a compelling and relevant manner. Advancements in AI and Martech make this increasingly possible, and in fact essential as the customer experience converges with Loyalty at the center.

My experience with dozens of loyalty programs has consistently demonstrated that these three Loyalty Levers are the critical dimensions to Loyalty success. Behavior without sentiment is merely habit, while sentiment without action is nothing more than goodwill. And without significant engagement, loyalty programs deliver little incremental impact. Each Loyalty Lever must be carefully designed and then orchestrated together across the everchanging marketplace landscape to maximize loyalty impact.  Contact us to find out how you can start.


[1] Bond State of Loyalty report, 2018-2020