Loyalty programs are a vital part of engaging consumers post-purchase. Still, when brands center programs on business impact rather than the value a customer will see, they’re unlikely to enrich the post-purchase experience meaningfully.
Brands love loyalty programs, and people love them with equal verve. The good ones, that is. In an environment where people are savvy to marketing plays and protective of their information, it’s one of the few marketing tactics that doesn’t face the same levels of cynicism that many strategies do.
Many brands have loyalty programs in an attempt to develop deeper relationships and return customers. But not all loyalty programs are created equally. Free loyalty programs have a 74% participation rate , while U.S. consumers, on average, belong to 16.6 loyalty programs . While the desire to participate in loyalty programs is there, several roadblocks still need to be addressed that stop many of them from truly being effective when building authentic customer relationships.
One of the main challenges brands may face is the need for more emotional connections between businesses and their customers. People value feeling emotionally connected to a brand and will reward a brand with loyalty and advocacy — in fact, customers who feel an emotional relationship with a brand have 306% higher lifetime value . Therefore an effective program needs to be more than financial incentives and benefits; it needs to speak to a person’s ideals and provide opportunities to build trust.
So how can marketers build trust, speak to customer ideals, and create connections in a loyalty program? You have to center your program around customer value in the post-purchase cycle.
What is customer-centric value?
Put simply, being customer-centric means being obsessed with your customer: who they are, what they like, and what they want. By developing a deep understanding of your customer and centering them during all business decisions, brands can create positive experiences and build beautiful, long-term relationships.
Because brands have customers with unique needs and desires, customer-centric value in the context of a loyalty program will mean something slightly different for every brand, but these are a few of our favorites:
1. Add value to the life of a product
Consumers are more aware of marketing strategies than they used to be. They can often see an attempt to upsell and, as a result, are wary of many marketing strategies at the outset. Rather than trying to convince customers to buy more, use your loyalty program as an opportunity to reward people who want to extend the life of their purchases through product protection.
Purchasing product protection signals to brands that consumers are in it for the long haul. They want to commit to a brand, so awarding loyalty points to people who purchase protection plans can solidify that relationship and communicate to customers that they are valued beyond how much they buy.
ANSWER THIS: How can people protect or extend the life of products purchased from you, and how can you reward that?
2. Add value that aligns with personal ideals
Globally 84% of consumers are more likely to buy from a brand whose values align with theirs, so your loyalty program should reflect that. Over the last few years, consumers’ trust in media and government has waned while their trust in businesses has increased. Not only do consumers buy and advocate for brands based on their beliefs, they expect businesses to play a significant role in fostering innovation and driving social impact.
Baking value-based loyalty into a loyalty program allows businesses to connect with customers on a deeper level and provides transparency to how brands contribute to societal issues. While customers may not be financially rewarded through this program, they can give back to the community in a way that aligns with the brand and consumers.
Take Sephora as an example. Their beauty insider program allows users to use their points in several ways: through products in their reward bazaar, coupons to use on future purchases ($10 off when 500 points are accumulated), or Sephora will donate it to their charity of the month (a $10 donation for every 500 points earned).
ANSWER THIS: What do your buyer personas tell you about your customers' behaviors and ideals?
3. Add value that will enrich people’s lives
Providing freebies, discounts, and coupon codes are all standard rewards within a loyalty program, so for brands with customers who want to deepen engagement, consider adding experience-focused rewards that enrich people’s lives.
REI is just one brand that successfully leans into experience-based rewards. As a paid loyalty program, it’s a little different from the swathes of free programs out there, but at $30 to become a lifetime REI Co-op member, the buy-in is low for most brand loyalists.
There’s still a place for more generic rewards, and REI offers many (think free shipping, discounts, and a percentage back on all purchases). What sets them apart are their experience-focused discounts. Deals on outdoor experiences, free tire repair, and machine wax for skis are popular. A newer reward is discounts on equipment rentals, which let REI’s loyalty members experience fun new activities they may not have had the opportunity to explore.
ANSWER THIS: What kind of feedback or data do you have that could inform your more unique program rewards?
Once you know what your customers desire from a loyalty program and what will deepen your customer relationships, you can determine the customer-centric value they will most appreciate.
Want to build authentic connections and more customer love through your loyalty programs? Reach out to us today to learn more about how offering product protection can help.
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