Breathing Fresh Air into Your Loyalty Program

I’ve been watching a number of big brands in loyalty, such as Delta Airlines and Macy’s, as they evolve the structure of their programs to better retain and engage their members. While revamping a program can foster an improved customer experience, driving greater value and flexibility, the decision to implement new functionality, like loyalty tiers or revised benefits, is not an easy one. And brands are reluctant to disrupt consumers who are accustomed to their current models. However, as other loyalty programs continue to elevate the customer experience, your brand must also evolve and innovate in order to stay competitive.

By Michela Baxter.

But how do you know when is it time for a change? Here are a few opportunities for a revamp, as well as tips on how to successfully enhance your program, from introducing meaningful rewards at all levels, to spearheading streamlined communication.

Signs It’s Time to Reorganize

Admittedly, upgrading your brand’s loyalty program is no small feat. But conducting a competitive audit to determine whether other reward programs mirror yours in structure or reward type is a smart place to start. Gather knowledge and do some side-by-side comparisons. Do they offer rewards for purchase? Check. Partner with other brands? Check. Offer surprise and delight tactics? Check, check. If your model seems commonplace, a reorganization can deliver valuable differentiation. Loyalty programs allow brands to reward their best customers, provide unique benefits, and better connect with consumers. However, when your loyalty program compares apples to apples against another, consumers are more likely to see if they can find a better offering elsewhere and it might be time to diversify.

Program structure can also be a key indicator. If the majority of consumer interactions within your model are transactional, it may be time for a change. Consumers have increasingly prioritized brands that celebrate their individuality through unique and meaningful interactions. Many top-performing programs transcend spend-and-earn exchanges, tapping into customers’ emotional connections to brands by seamlessly meshing with their lifestyles. These holistic initiatives not only benefit consumers, but fortify deeper brand affinity.

“If the majority of consumer interactions within your model are transactional, it may be time for a change.”

As you assess your program, lean on your KPIs to determine if a change is needed. If your loyalty strategy is no longer generating the desired return – financial or otherwise – it may be time for a second look. Analyze churn rate to determine what percentage of members are leaving your program. If this number is high, it’s likely time to optimize your approach. Brands with a reward-based structure should assess how often members are redeeming, as a low frequency can reveal diminished value or that it’s too difficult to earn a reward. Ultimately, your overall loyalty metrics should reflect a stable and engaged member base, a sign of long-term sustainability.

Set Changes Up For Success

Once a refresh is in order, there are a few areas to focus on to position the program’s evolution for success. To ensure a strong value proposition, meaningful perks or rewards must be provided to all participants. Within tiered programs, baseline rewards should be valuable enough to inspire consumers to opt-in, while VIP rewards should be exclusive enough that consumers will remain motivated. Brands without loyalty tiers can offer members the option to select their reward, or consider leveraging program data to offer personalized perks. Tap into brand partnerships to deliver added value and differentiation through your rewards. Consumers appreciate choice, so keep members engaged by giving them the freedom to earn or select rewards that speak to their individual tastes.

Finally, make communication a top priority. Consumer frustration is inevitable when making program changes, therefore it is essential to clearly articulate updates and when to expect them. Above all, highlight the added value your new program will bring to loyalty members, as this will mitigate any potential dissatisfaction.

While it can be challenging to determine whether your loyalty program is due for a refresh, it’s even harder to figure out which changes will be most valuable. Start by identifying functionalities ripe for innovation or ways your brand may no longer be meeting loyalty goals and expectations. Then, lean on differentiated rewards to add value and transparent communications to keep consumers in the know. Upgrading your loyalty program may sound daunting but, when done correctly, can effectively breathe new life into your initiatives.

Michela Baxter is Senior Director of Loyalty at HelloWorld.

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