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BizReport : Loyalty Marketing : July 05, 2013

How to improve your loyalty program

Loyalty programs are on the rise...and in some cases in a downward spiral. Because, for all the new loyalty club members there are many more who aren't being properly served by the brand. According to experts loyalty programs have grown more than 25% since 2011 with more than 2.65 billion consumers in at least one program, but engagement levels are down by as much as 4%.

by Kristina Knight

Kristina: Despite the significant growth in loyalty programs, engagement levels aren't as high as they've been in the past - why is that?

Joe Easley, Director of Global Product Strategy, Kobie Marketing: Many brands are trying too hard. Trying to engage consumers on every channel all the time can sometimes dilute the message that goes out to market. It's important that brands invest in researching how their customers and loyalty program members want to be engaged, as message consistency is critical. Millennials for example, might be highly engaged, but older Gen Xers and Baby Boomers could be disengaged with their loyalty programs. My recommendation for retailers and many other business verticals, is to focus on member sub-segmentation strategies.
Continue to focus on what works best on what channel, using tactics like pilots and promotions. Marketers must also make loyalty programs more reflective of their core brand message. Every engagement point must marry the culture of your brand. If you're a "touch and feel" organization, why would online be your best channel? The brands that are engaging members on their channel of choice, however, are seeing high engagement levels.

Kristina: How are loyalty programs changing the way consumers shop?

Joe: The answer could be positive or negative. Poorly-constructed loyalty programs might incent people to not engage with a brand, as they feel bombarded by too many programs that look and feel the same. In those instances, brand loyalty is reduced. Effective programs are a different endgame. Loyalty programs should provide a combination of incentives and rewards and do so in a way that empowers the consumer to make an emotional brand connection. There's also a cyclic nature to this. Loyalty programs, by engaging consumers across multiple channels, are also encouraging them to use those channels with greater frequency. So, it's not just about going where consumers already are. It's about encouraging them to migrate to those channels as well. And as status-based loyalty - wherein brand referrals and ambassadorial behavior get rewarded - has grown in importance, you're seeing shopping become an even more social, collective experience. Loyalty, combined with social media, is helping make that happen.

Kristina: And, related, how can businesses better integrate a loyalty program that will pull more consumers in?

Joe: The loyalty program must be omnichannel, but focus on which channels are most preferred (and most effective) by the consumers in question. The consumer-focused channel experiences must be seamless and efficient, rewards must be rewarding and genuine experiences must go hand-in-hand with traditional rewards. Program differentiation is key, as is rapid responsiveness when, inevitably, problems arise. And beyond just using data to engage existing members, sending opt-in messaging to potential customers on their mobile devices - messaging built on typical shopper behaviors - will also add to programs' ranks.

You can read part one of my interview with Joe here.

Image via Shutterstock

Tags: Kobie Marketing, loyal customer trends, loyalty marketing, loyalty trends

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