Over the last few years, I’ve seen client interest grow dramatically in revamping their customer loyalty program design. The focus has increased as these programs have become a central marketing strategy, and the competitive intensity is fierce. But change is never easy -- it takes a motivated executive sponsor and the right window of opportunity to get the project moving. This article lays out some catalysts to get your customer loyalty initiatives moving, and tips on how to design a customer loyalty program for maximum impact.
Loyalty Program Design
Is a Small Business Loyalty Program Worth it?
Small business owners are extremely busy, so adding a loyalty program to the list might seem like just more work. Or maybe you’ve tried a loyalty program, and it felt like you were only giving away rewards to customers who would’ve bought anyway. However, with a little set-up, you’ll find that your loyalty program will become the marketing engine for your business. And as highlighted in Software Options for Small Business Customer Loyalty Programs, POS systems that you may already have like Square, Clover and Toast have made it exceptionally easy.
POS Systems like Square, Clover and Toast have revolutionized Customer Loyalty Programs for Small Businesses. Each comes with powerful modules that can be enabled to identify customers and track their purchases, historically a capability limited to larger businesses with sizeable budgets. Combined, these platforms serve nearly 2.5 million small businesses, though a relatively small number are taking full advantage of the loyalty opportunity. This article will provide a review of the loyalty capabilities within each platform and help identify next steps for developing your loyalty program
Google Local Guides may not come to mind as a Gamification Loyalty Program, in fact most consumers aren’t even aware of it. Take a closer look though, and you’ll see that it’s the GOAT of gamification in loyalty programs! How many other programs can tout so many members who have had such a transformative effect on their business? Google Local guides is tough to beat, with over 150 million Local Guides globally, who:
Engaging with a loyalty consultant can provide a specific expertise, objective viewpoint or fresh thinking that benefits even for the most sophisticated loyalty firms and program operators. However, it can also be a challenge for program executives to manage the process and most importantly, get an actionable result from a loyalty consulting group. Well managed consulting engagements are based on loyalty insights and will deliver a viable program design that is well substantiated and will differentiate the brand.
As noted in the Nov 5 New York Times Article How Frequent Flier Programs Are Changing in a Changed World, business travel is still way off of pre-pandemic levels, and US Airlines are battling to retain the loyalty of frequent travelers. Tactics include lowering elite tier thresholds and increasing the credit allowed for non-flying transactions such as credit card spend. In addition, they are reducing focus on mileage due to the environmental concerns related to the notion of travelers taking unnecessary trips just to earn or retain their status.
Much of this response is due to the changes felt due to Covid-19, though as the author notes, some “may be disenchanted with airline loyalty programs, which, in the years leading up to the pandemic, had made upgrades and free tickets more elusive”.
The driver behind most loyalty program reviews is a general sense that the current loyalty benefits are not performing well. The opinion is usually formed from a patchwork of observations, for example churn is increasing, redemptions are decreasing, share of revenue is flat, or overall costs are escalating – just to name a few. This article provides an overview of the LoyaltyLevers Foundational Analysis, which provides a fact-based view of Loyalty program performance with loyalty KPI’s across the three crucial questions:
• Is the program activating engagement among the members?
• Driving profitable behavior?
• Building loyalty sentiment and an emotional connection?
The LoyaltyLevers Foundational Analysis is a key part of the Discovery process. You can find more information here on the full loyalty design process and how this critical piece fits in.
The online travel agent (OTA) space is highly competitive, and undergoing consolidation down to two key players: Booking Holdings (e.g booking.com, Priceline, Cheapflights and OpenTable), and Expedia Group (e.g. Expedia, Orbitz, Travelocity, and VRBO), and they are battling it out for market leadership.
Subscription is a new frontier in loyalty programs that’s been carved out so famously by Amazon Prime. However, over the last few years an exciting battle has emerged in the alpine ski industry between Vail Associate’s Epic Pass and Alterra Mountain’s Ikon Pass. While the lines between product and loyalty program get blurry in this space, it’s clear to me that the aim of these programs is loyalty: retention, cross-sell and maximizing share of wallet – just like it is for Amazon. So, while not a rewards program per se, subscription is certainly an avenue to be explored by marketers with these objectives. This article looks at these two competitors through the LoyaltyLevers lens and provides insights that can be applied to any category.
Just as Amazon Prime has changed the face of ecommerce, the Epic and Ikon passes have changed the complexion of the ski industry, pitting elite pairings of the most famous resorts against each-other in this high-stake battle.
Category titans Sephora and Ulta both have powerful loyalty programs, in fact according to Newsweek’s “America’s Best Loyalty Programs 2021” survey they are at parity with each receiving a 7.6 rating from consumers . This article provides a thorough review of each program, digging in to how they are applying loyalty design and best practices. Both programs are strong, with Beauty Insider delivering over 80% of Sephora’s revenue and Ultamate Rewards delivering over 90% for Ulta. However, they take dramatically different approaches, and the contrast provides insight to practitioners who are considering their program design and how it plays to their brand’s strengths.