Capabilities and Features of an Effective Customer Loyalty Program
A loyalty program, done right, can provide a significant competitive advantage. Many so-called loyalty programs are just frequent buyer programs – and when a competitive choice becomes available, the distinction between a “frequent buyer program” and a “loyalty program“ becomes critical. A frequent buyer program often falls short of its desired objectives and can’t easily be extended to include the important features necessary for an effective loyalty program. The money and time invested in a basic “frequent buyer program” is left stranded.
An effective loyalty program should ultimately include the following:
- A comprehensive database that collects data about existing and potential customers.
- A promotional platform to drive marketing campaigns and promotions.
- Insight into customer purchasing behaviors and patterns, both at an individual and customer segment level.
- Ability to drive an increase in purchasing frequency per customer.
- Enticements for customers to move up-segment via threshold, tiered-based programs, spend by certain product type, etc.
- Ability to test effectiveness of marketing campaigns, promotions, channels.
- Formulating pricing structure by segmentation through customer subgroup, channel, product families, time, etc., and testing offers on the various segments.
- Ability to identify customers who defect to competitors and entice them back with customer specific offers.
- Enabling rapid response to competitive challenges, for example, price changes, new product introductions, etc.
- Ability to easily redeem points (web, brick and mortar stores, partners, all).
- Creating brand advocates.
- Providing more effective use of promotional and advertising dollars.
Additional elements that further enhance the “stickiness” of a loyalty program:
- Redemption using a combination of points and cash.
- Ability to receive points for external sources (partners) combining and redeeming via multiple venues.
- Real-time point calculation and balance.
- Global solutions support via multi-language, variable currency, etc.
Anecdotally, think about how many loyalty programs you actually actively participate in and what features they provide.
