Customer Loyalty Scheme

How to make a customer loyalty scheme work for your business

Customer loyalty schemes are recognised as a great way of attracting and retaining consumers, but while many are launched, often with great fanfare, almost as many fall by the wayside. How can a company make the most of rewards offered as part of a loyalty scheme and ensure that it stays relevant to the audience?

With technology’s rapid evolution over the last decade, it’s become a simple thing to set up an efficient customer loyalty scheme that should, in theory, encourage brand advocacy, higher average order values and long-term retention without incurring major development costs.

According to recent statistics, 38% of customers rate loyalty rewards as the most important feature of a shop or site and 61% of retailers cite customer retention as their biggest challenge (Retail Systems Research). In fact, it’s been estimated that companies could increase their profits by nearly 50% by retaining a mere 5% more of their customers.

This highlights the benefits of an effective reward scheme, but looking at it from the consumer perspective, 81% of loyalty members don’t know the benefits of their programmes or how they can receive their rewards, 32% of consumers see little or no value in being a member of their current loyalty scheme and only 40% are happy with the rewards that are on offer (according to a research study by Edgell Knowledge Network, titled State of the Industry Research Series: Customer Loyalty in Retail).

Quite a disconnect between the potential and the reality.

So how can a company get around this challenge and make sure that their customer loyalty scheme doesn’t become little more than an automated email that keeps arriving but no one really wants to take responsibility for?

Here are three suggestions to keep your strategy delivering:

1. Keep analysing the results

Make the most of any analytical tools available as part of your strategy and make sure you put a structure in place that keeps a focus on what’s happening and why. Make sure that reporting up the executive structure is regular but simple because, frankly, at a senior level, leadership just wants to know if something’s working, not be bombarded by yet another 40-page weekly report.

There is no point putting a strategy in place if no one’s responsible for it and senior leadership doesn’t keep an eye on how it’s performing.

2. Keep finessing the consumer offer

Use data to keep improving the rewards on offer and the means of communication – don’t be afraid to try different approaches. If you are keeping a close eye on the ebbs and flows of data, you can quickly respond to any challenges that start to emerge.

There is also a lot of expertise in the loyalty and rewards industry that you can discuss different strategies with, and they may be able to point out what has or hasn’t worked in similar situations.

Digital Rewards in an instant

3. Keep communicating the offers

Finally, you need to find a way to keep engaging your customers. This can be done in many different ways, but you need to work out the balance point between communicating what you have to offer and annoying people by offering too much information. The challenge is that this balance point differs for different people, varying as much with personality as time of day, work pattern, number and age of kids, size of pet dog, hamster, goldfish, road bike, mountain bike or motorbike.

It’s a long list of potential variables and it is worth ensuring that you have solid data so that you are making decisions based on genuine facts. Taking opinions from a variety of sources into account before making radical changes can also be a valuable exercise.

Poorly managed, a customer loyalty scheme can be a waste of valuable time and resources and can even reduce customer loyalty.

A well-managed strategy, on the other hand, can genuinely help bolster a business, generating insights into consumer preferences that can move an organisation forward.

Take a look at our customer loyalty schemes here.