Loyalty programs have taken over just about everything from fast food to luxury travel. The satisfaction customers feel from earning points and rewards seems to be at the center of the modern customer experience. But, it isn’t just the gamification aspect that makes loyalty programs so alluring. It’s that they make every participating customer feel important and valued. Individual customers can truly feel seen by some of the world’s biggest brands. That is, if brands follow loyalty program best practices.
There are several different types of loyalty and rewards programs enterprise brands can take advantage of from mission-based or value-based programs where customers donate their rewards to a cause to paid programs like Amazon Prime. No matter what type of program the same loyalty program best practices apply.
So what’s in it for brands aside from creating undying loyalty from deeply engaged customers? The answer is data, data, and even more data. Loyalty programs enable enterprise brands to collect the first-party data they need to better understand and segment their customers. With first-party data, brands gain insights that ultimately allow them to deliver the right offers and messaging to the right people. This means personalized customer experiences at scale and more intentional and effective marketing. Both reinforce customer loyalty with the same intensity as the program itself.
Loyalty Program Best Practices
Most B2C enterprise brands likely already have a loyalty program in place. But, not all of them cultivate brand loyalty, inspire passionate customers, and drive ROI the way they were intended to.
While loyalty programs may bring in an initial surge of curious customers, they are also costly to operate and execute. So they need to be enticing enough to keep customers engaged for the long haul. Even the biggest brands are missing out on ROI or even losing money on their loyalty program if they don’t get it right.
Let’s explore some loyalty program best practices enterprise companies should take note of.
A one-off coupon, a birthday freebie, or a discount here and there isn’t a loyalty program. A loyalty program is a consistent long-term relationship between the brand and the customer.
According to Entrepreneur, a disjointed experience is the quickest way for a loyalty program to feel out of touch. A program shouldn’t just assign arbitrary points, deliver inconsistent rewards, or only reward on a transaction. These fragmented actions don’t open up the opportunity for additional customer behaviors and engagement. Therefore, consistency is always a loyalty program best practice.
2. Simplicity and Convenience
Loyalty programs should be easy to join, simple to understand, and convenient to use. Long and complicated registration processes or rules that are vague, hard to explain, and changeable will deter customers from signing up in the first place. Difficulty redeeming awards will also diminish the ROI companies receive from a loyalty program.
Customers don’t want to see offer after offer, deal with complex terms and conditions, or download an app or carry a physical card. Points and rewards should be easy to earn, appear in the customer’s account right after a transaction, and be easy to redeem in a couple clicks. The easier and more convenient your loyalty program is to use, the more customers will participate in it and the more your company will get out of it.
Loyalty program or not, today’s customers expect personalized marketing. According to SheerID, 85% of marketers say that using consumer-provided data to build personalized experiences is important. 65% of consumers are willing to share their personal data to get more tailored offerings. This is the perfect opportunity for a personalized customer experience.
Brands can use the data they receive from customers when they sign up for their loyalty program and gather through their behavior to personalize relevant and timely offers for loyal customers in every tier or stage in the customer journey.
A simple and straightforward dashboard that outlines redemption history, loyalty status, points value, etc. is a great way to promote simplicity and transparency through a personalized customer experience. But, personalization is about more than UX or even the most relevant offer.
The words brands use to speak to each segment are just as important. Personalized language can boost revenue by 40%. Learn how leading enterprise brands use first-party data and Generative AI to achieve language personalization across channels and segments.
British retailer Marks & Spencer, for example, used the customer rich data from their Sparks loyalty program to personalize their digital channels and recreate their individualized in-store experience online. M&S took their omnichannel personalization one step further when they used Persado Generative AI to create messaging that motivates and resonates with customers at scale.
4. Actual Value
Loyalty programs should be mutually beneficial to both the brand and the customer. In best practice, the spend-to-reward ratio should reflect how much the brand values a loyal customer.
For example, if a coffee shop runs a loyalty program where customers get a free coffee after buying nine, that’s a nice $5-$10 reward. However, if a luxury hotel chain only offers a loyal customer a free coffee every tenth night, that isn’t a proportional spend-to-reward ratio. The customer won’t feel appreciated if they spend thousands of dollars and receive only a few dollars worth of rewards. In this case, the customer will likely take their business where they can receive free nights or a major upgrade for their loyalty.
If points are always expiring or customers have to jump through hoops in order to trade them in, they are unlikely to remain loyal to your brand. How frustrating would it be if Amazon Prime only offered free two-day shipping every other Tuesday and only on select items that change daily? In order for loyalty programs to be successful, brands need to provide valuable rewards that are actually attainable when customers want to use them.
5. Loyal Customer Community
In addition to creating an intimate relationship between the customer and a global enterprise brand, loyalty programs should also give members a sense of community. Travel rewards programs are a prime example, as members often compare experiences, share hotel recommendations, or chat about different ways to get the most out of their favorite loyalty programs.
Royal Caribbean’s Crown & Anchor Society program offers high value members access to exclusive concierge lounges across various ships to further create a sense of community at sea. The Coach Insider loyalty program provides members with Insider events so they too can feel like part of a community in addition to perks such as free customization, personalized offers, and gifts with purchase. Discover more on how their parent company Tapestry personalizes their digital experiences with Generative AI. This sense of community around an enterprise brand makes some of the world’s biggest brands feel like a pillar of a local community rather than a global monolith.
Enterprise brands should aspire to create loyalty programs that feel like a small and intimate community despite their massive global scale. The best enterprise loyalty programs have such a strong sense of community that members are excited to recommend them to friends and family without any incentive other than the personal affinity they feel for the brand community.
Of course, it is a loyalty program best practice to incentivize members to refer friends. Find out how top brands like Dropbox, Uber, and Airbnb built impactful refer-a-friend incentive programs.
6. Excitement and Anticipation
Participating in a loyalty program shouldn’t feel like an obligation. Loyalty members should be excited to earn and redeem rewards. Brands often use gamification within their loyalty programs to fuel excitement. Starbucks Rewards, for example, promotes gamification as members earn “stars” with each purchase. But, there are so many other ways to surprise and delight your loyalty members through random rewards, early access to a VIP sale, or an unexpected upgrade. For loyalty members, it should always feel like something exciting is just around the corner.
The Power of Loyalty Programs
To a loyal customer, their Hilton Honors number doesn’t feel like just a number. It’s a personal connection to their favorite hotels and resorts, a lifeline to their next family vacation, and the key to added travel perks. The Hilton in-app experience feels personalized and motivates members to stay at a Hilton property over other options because they could earn a free night. After receiving a deep discount on a wonderful family vacation thanks to all the points they earned, members may even recommend the program to a friend.
For a global travel and hospitality company with 7,165 properties worldwide and 19 hotel brands across 123 countries and territories to have such a personalized relationship with a single customer is outstanding. This is what every enterprise loyalty program best practices should achieve—a one to one relationship with millions of customers at scale.
Ready to take your loyalty program to the next level? Talk to Persado about how our Motivation AI – a specialized Generative AI for the enterprise built on 1.5 billion customer interactions – can help you personalize your customer experience with messaging that motivates customers to engage and act.