Join Plum to drive behaviors that power business results, with rewards and incentives made simple. Choose from the widest global catalogue of 20,000+ gift cards, perks, experiences, merchandise and benefits. Submit a request to see our platform in action right away!
SCHEDULE A DEMO NOW
Customer loyalty programs have evolved significantly over the years and include both customer service and reward new customer acquisition and retention programs
It is important and usually less expensive to ensure that existing customers are happy and keep coming back to the business. Customer loyalty programs have evolved significantly over the years and include both customer service and rewards. Customer retention programs have been around for a long time, such as McDonald’s ‘Toy with Happy Meal’ program. However, marketers are bringing new customer acquisition and retention programs with millennials becoming a major part of the current customer landscape.
Good loyalty programs are an important part of attracting the millennial customer, says Salesforce, a leading CRM platform. Offering attractive perks as part of the loyalty program is an important tool for customer acquisition. Traditional perks of discounts and cash back are giving way to innovative loyalty programs such as Multi-brand Program Customer Rewards, Multi-visit Loyalty Rewards, and e-rewards programs. Branded and customized cards are both an effective and cost-efficient tool for a customer retention, acquisition, or win-back program.
In this digital age, the loyalty programs are evolving to lure millennials. Digital rewards are becoming a big hit with many incentives and rewards users. This is because this kind of reward can be used almost immediately and gives a sense of instant gratification.
For example, a virtual prepaid card would be emailed to the end user immediately through the instant redemption process. The end user, within minutes, will have their reward and can activate it online or by phone. But using cheques or prepaid cards, for example, would take a few days to generate the card or print the cheque and a few more days for it to get to the end user.
For enhanced Customer Experience, Loyalty programs must allow for “Right-Now” in all forms. Provided the engagement is correct and when they want it, you have a good shot at retaining your customer, says alldigitalrewards.com.
Today the end user expects engagement immediately and they want it to be correct the first time. If the end user is instantly captivated, they might let a bad experience slide even if the engagement presented is wrong.
Data shows that if delivery of engagement or result of the engagement is immediate but not right, continued loyalty was over 75% ensured. If the delivery of the engagement was right but not immediate, continued loyalty was less than 65%.
By missing both engagement and the delivery, continued loyalty crashed at less than 30%. Customer retention in those cases continued to drop in the following weeks no matter how good it was after the first event.
Innovative loyalty schemes are an important part of acquiring new customers, however, it is important to consider the type of schemes to attract high-quality customers and reach the relevant audience. Taking the example of the highly competitive insurance industry, it is crucial for insurance providers to have a unique offering for their customers. While 95% respondents of a consumer survey stated that price was one of the most important factors to them when deciding which insurance provider to choose, only 55% stated that the reason they chose their provider was that they offered the lowest price.
This shows that despite most consumers’ desire to get the best price, they will often choose a provider that offers them something extra of value. Other deciding factors indicated by Marks & Spencer's survey were whether the insurance provider offered the customer a personalized or unique service, how highly ranked the provider was and whether the provider offered a loyalty/reward scheme. To attract the millennial generation, the loyalty programs must be promoted via social media; use Twitter and Facebook to let followers know about loyalty updates. Second, use social media to expand your program’s reach.
KURU footwear uses Sweet Tooth to reward points when a shopper shares a product over social media – in this case, over Facebook, Pinterest, Twitter or Google+. Millennials want to know details about your program before they commit to joining. It is better to outline the benefits, as well as how members earn points and what rewards they can get. The average American has 634 social connections – quite the expanded reach for encouraging a share. Millennials love to share; they just need a reason. Simply saying “sign up for bonus points” is going to be lost on millennials as they like to be informed, says colloquy.com.
Use a visual explainer page to show everything that they need to know. Keep it minimal and picture-heavy, and keep boring terms and conditions separate.
A well-done loyalty program can boost repeat business and help customer satisfaction. Below, are highlighted the advantages and disadvantages of different loyalty systems, and how you can assess their effectiveness.
The most basic loyalty program is the points system. Frequent customers earn points with every purchase they make, usually with a member card.
These points accumulate into some sort of discount or customer advantage. A point system is a great loyalty program for businesses whose customers make small but frequent purchases.
One of the great point system loyalty programs is Starbuck’s “My Starbucks Rewards.” It’s also one of the most popular, with over 10 million active users. At its core, it’s a simple point system. However, Starbucks mixes in random discounts and special birthday rewards to keep their customers from becoming bored.
If your business chooses to implement a point-based rewards program, remember to keep the sign-up process simple, and vary your reward offerings to keep customers interested.
The difference between a tiered program and points program is that a tiered program can offer greater rewards in the long term. The tiered system works by first offering small rewards for joining the program, then increasing the value of rewards as customers become more loyal.
Southwest Airlines’ successful Rapid Rewards programs is a point system that has three different tiers of rewards: A-list, A-list preferred, and companion pass.
Moving up the point ladder unlocks privileges such as priority boarding, free in-flight Wi-Fi, a100% points earning a bonus, and eventually a companion pass that allows one friend to ride one free round-trip flight. Tiered loyalty programs tend to work better for businesses that require a higher commitment such as insurance, hospitality, or travel. If your customer-base primarily purchases small items, then a tiered system might discourage them, as the next level could seem unreachable, according to customerthink.com.
Financial institutions need to optimize program costs to break even and generate profits. A low scale program presents a cost challenge in managing administration and redemption expenses. Program administration costs have also increased along with the rise in complexity of loyalty program. Program administration costs range anywhere between 10-20% of the overall loyalty costs and come down to 2-5% with an increase in the customer base and loyalty program spend due to the advantages of economies of scale. Issuers adopt various business models to distribute program costs among various participants.
Loyalty programs now have to deal with emerging technologies in mobile and online channels which have increased the complexity of loyalty program administration, implementation, and measurement across the loyalty management lifecycle.
Loyalty programs allow their members to be rewarded instantly using real-time POS at merchant outlets for discounts, merchandise, or services. The online channel allows customers to redeem reward points using a variety of travel, lifestyle, and leisure options. Mobile channel payments allow redemptions based on contactless transactions and various mobile-based applications. Pay Pal and Google Wallet: Payment providers such as PayPal™ and Google Wallet are providing loyalty programs to attract customers to use their payment systems. Financial services institutions, therefore, need to introduce flexible ways to redeem reward points by integrating various redemption channel options—such as online, merchant outlets, and mobile phones—into their rewards programs.
A host of customer-driven features online have enhanced the complexity of the customer interface and have put additional technology demands on managing the loyalty system.
Mobile coupons and rewards are gaining popularity as new smartphone applications evolve to manage multiple loyalty programs. Loyalty programs must, therefore, be able to deliver offers and coupons directly to the consumer in real-time through wireless-enabled devices using various mobile based applications such as Google Wallet and Foursquare.
It is becoming increasingly complex to measure the impact of new channels such as online, mobile, and social, on incremental customer spend and customer satisfaction improvement, according to identita.com.
Recent research conducted by the International Institute for Analytics and sponsored by SAS Institute shows that many businesses are, indeed, struggling to create relevant and unique programs that promote true brand affinity, translating to repeat purchases. In fact, on average, the self-reported effectiveness of loyalty programs is marginal, with an average of 6.5 out of 10.While retaining the most valuable customers is the top priority of loyalty programs among a majority of the companies, only 56 percent use a customer retention rate metric to measure loyalty programs success, and just 27 percent calculate customer lifetime value. Additionally, only 54 percent of organizations surveyed said they were able to calculate the revenue impact of their customer loyalty initiatives.
Despite making large yearly investments in loyalty programs, the findings show that many businesses don’t have a handle on their effectiveness. Forty-five percent of our survey respondents cite measuring programs effectiveness as a top challenge. Customer retention rate and customer satisfaction are the two primary metrics used, but only by slightly more than half of our respondents. A significant number of organizations use the second tier of metrics that includes average customer purchase, customer loyalty campaign response rates, share of customer wallet, and customer lifetime value. Measuring the financial impact of loyalty programs is also elusive. Only 54% of survey respondents by sas.com indicated that they can determine the revenue impact of their programs. Many companies might be surprised to find that increased spend on loyalty programs is not necessarily translating into higher growth rates, as reported in a recent study by McKinsey.
While loyalty initiatives might improve customer retention rates and bump up customer satisfaction, program benefits could be actually hurting the bottom line.
E-commerce Rewards programs should not be complicated. Whenever you start messing around in points, rewards, levels, and achievements, things can quickly spiral out of control. Most people lose interest.
You need to reduce the complexity as much as possible to create an enjoyable experience for the buyer. It will take the buyer just a few seconds to decide whether she wants to join. Therefore, you should make the program’s overview easy to understand and analyze.
You don’t want to create any barriers to a customer joining the program. It should be as easy. Usually, the best way to allow users to sign up is a simple email entry.GILT: Gilt uses the email entry option, but also allows users to log in with Facebook. This increasingly popular social login feature is a major plus, especially for users who are already sharing, buying and interacting on social sites.
Rewards should accrue without the customer having to worry about it. Most customers don’t want to have to enter a PIN or redeem a coupon code just to participate in the loyalty program. Industry example: Starbucks’ loyalty program lets users participate simply by paying with your card or app.
For the reward program to be compelling, it has to provide true rewards. The reason why so many loyalty programs fall short is because they are superficial — they’re just a way to snag an email address or get people to sign up. Don’t be like that. A true rewards program is one that pays off. The most appealing kinds of rewards are cash, rebates, coupons and free stuff.
If your e-commerce loyalty program is going to make customers buy more, then you need to encourage participation. The drawback of many loyalty programs is that they reward users who are already loyal, without compelling users who should be loyal.
Walgreens rewards active members, literally. By tracking their activity, fitness, weight, sleep and other health factors, loyalty program members can earn real rewards.
What good is a rewards programs that doesn’t feel any better? When a customer makes progress and wins rewards, they want to actually sense it.Industry example: Starbucks does a great job of this. When you reach the gold level, you receive an actual gold card (sorry; it’s actually plastic) in the mail. Starbucks also promises that your barista will know that you’re someone special.
If you want your loyalty programs to spread, there are a few ways to do this:
Setting up a card-based loyalty programs would take weeks or months. However online loyalty solutions can be implemented faster than the loyalty programs of old. They are also much easier to set up. An online loyalty programs also avoids the need to have expensive plastic cards to keep track of shopper transactions. Industry example - With Smile.io loyalty programs you can easily change and adjust how shoppers earn and spend points without the need for custom development.
An online loyalty programs can reward points for a ton of profitable actions that are impossible to do with a card-based programs. Online reward points can easily be awarded for customer referrals, reviews, social sharing, and more.
The good thing about rewarding for actions like these is that it drives value for everyone. Rewarding for actions like referrals and reviews not only gives value to loyalty programs members (points) but also drives value to the store through extended reach and visibility.
Today, the loyalty program software is stored in the cloud and is easy to download and get started. This cloud-based software has a few key benefits. First, it makes customer loyalty affordable. In the past, if you wanted to start a customer loyalty programs there would be a huge cost associated with getting started. With cloud-based software you pay a monthly subscription, so you don’t have to pay anything additional. It also allows you to always have the most recent version of your loyalty software. When you purchase software outright you have that software forever. But what happens when the next version comes out? You would have to purchase the software again. With cloud-based software, you always have access to the latest version of the software.
According to smile.io online loyalty software allows you to create a program exactly how you want it, and branded to your store. Online you will never have a program dictated to you. When you start an online loyalty program you are in control. You can set up exactly what you want to reward for, how much you want to reward for it, and how much those points are worth. You also can name your programs what you want and call your points whatever you want. With your online loyalty programs, you are in the driver seat.
There is a huge leap in businesses integrating formal reward and recognition schemes into online employee benefits portals. Separate from standard salary and benefits, staff recognition schemes help to motivate and engage staff by acknowledging their good work in a variety of ways. Initiatives such as employee-nominated training and development, digital gift cards, and experiential and lifestyle-based rewards can all be claimed and monitored through a portal. They offer a cost-effective retention tool, and many businesses and HR teams are catching on, according to hcamag.com.
Online social and mobile channels make it easier for issuers to connect with loyalty programs members and their social networks of friends and followers to help to increase the customer base and card usage.
For a consumer, the perceived value of traditional rewards programs has been on a decline. Loyalty programs have become over-saturated in mature markets, which have led to lower acquisition response rates to rewards card offers. Since most of the rewards programs offer similar value propositions, attracting and retaining customers has become harder. Using e-reward programs on social media, points earned via social networking (social currency) can be gifted to friends and family within the network, engendering customer loyalty and enhancing customer satisfaction with the loyalty programs.
The growth of wireless-enabled devices has enabled loyalty card programs to deliver offers and coupons directly to the consumer in real-time in the form of mobile coupons. Use of online and real-time technologies allows for simplified transactions, data exchange, and wireless communications between two devices in close proximity says identita.com in its article on next-generation loyalty management system.
Program differentiation from competitors. Given the rising number of customer loyalty programs in the market, it comes as a little surprise that companies struggle to differentiate their loyalty programs from competitors. Over four in ten (42 percent) cite this as one of their top three loyalty program challenges. Only 37 percent of respondents believe that their customer loyalty program is distinctly different from competitors’ programs, and respondents give themselves a rating of 6.9 out of 10 on the effectiveness of defending their customer base against competitors. Based on the survey* (Study by International Institute of Analytics; Keeping Customers – Successful Loyalty through Analytics, August 2014), there are some distinct differences in the loyalty offerings of respondents who feel their programs are differentiated versus those who do not. First, the breadth of the programs differs. Those who believe their programs are differentiated offer an average of 4.3 benefits versus 3.4 among undifferentiated programs. Programs that stand out from the competition are more likely to focus on member points or rewards, while the top benefit among parity programs is exclusive sales or discounts. This reinforces the notion that many loyalty programs drive their members to shop on price, or to delay purchases until there is a discount or sale. By contrast, the competitively unique programs combine a number of program components to build loyalty, says sas.com.
Making a Referral program more exciting for customers
The company aimed to make referral programs more exciting for customers by providing high perceived value, customized experience gift boxes. The company wanted to provide a different but engaging and exciting reward as part of this program which is easy to execute, manage and scalable.
Every Real Estate company offers 1% of the value of flat as a referral. This is default expectation and hence in order to create excitement in the trade & customers, Brigade wanted to offer something new. We offered customers Experience box which was beyond the referral budget. The price was only 10K per box, but the excitement created in customer was immense. The customers were given choice of choosing from over 10,000+ refreshing experiences and activities across India.
Existing customers: For every successful referral, existing customer of Brigade Group is rewarded with up to 1% of the Agreement Value of the property booked by their friend or family. Should the customer book another property with Brigade Group, he or she will earn a Loyalty Bonus, up to 1% of the Agreement Value of the property booked. Registered with us but not booked: For those who have visited one of our properties but for some reason not made a purchase, we still have provision for them to refer friends and family and earn up to 0.5.% of the Agreement Value of the property booked by their friend or family as referral reward.
Should the customer book another property with Brigade Group, he or she will earn a Loyalty Bonus, up to 1% of the Agreement Value of the property booked.
Incentivise customers to become Loyal Customers
METRO Cash & Carry is an international self-service wholesaler. The client wanted to engage and incentivize loyal customers through an automated and scalable portal to increase loyalty customer base and hence repeat transactions.
Xoxoday provided an Enterprise Platform where customers can avail special perks to buy regularly from METRO. Customer retention is the key challenge in retail business. Discounts are one parameter, but the company wanted to offer special privilege to loyal customers who buy from the store every month. The customers can login and avail privileges/perks/discounts to be part of Metro Loyalty Program. Specific perks were kept exclusively for Metro customers in the platform.
METRO Bandhan
METRO Bandhan is not just about better services; it’s also about greater profits for you. We’re here to create wider profit margins for you. And that’s the aim of the Bandhan Bonus Program – where, the more you purchase, the more profits you earn!
Tailor-made Bonus Rewards program
We’ve created a Bonus Rewards solution tailor-made to suit your business cycle. This Bonus Program entitles you to earn bonus rewards of up to 2% on your METRO purchases for a METRO Bandhan Gold member
Redeeming METRO Bandhan Bonus Rewards
METRO Bandhan Bonus Rewards are directly credited to your METRO account within 15 days of the ending of each quarter. You will be informed of your total Rewards by mail. And you can redeem these Rewards against subsequent purchases at METRO. How simple can it get! But do ensure that you redeem your Bonus Rewards within 60 days, failing which the validity of your Rewards will automatically lapse.
