How to Make Loyalty Programs Successful in the Digital Age

Businesses often bet big on loyalty programs as a way to incentivize customers to keep coming back, and with good reason. Done right, loyalty programs can generate as much as 20 percent of a company’s profits. However, despite companies spending an estimated $75 billion globally on customer loyalty management, most of these programs fail to generate value. Today’s customers are notorious for dropping out of loyalty programs – if they find the reward to be uninteresting, or the redemption experience to be inconvenient, they don’t bother redeeming and happily defect to other brands, leaving businesses high and dry. Yet, the few companies that are getting it right are reaping rich dividends. So what are they doing differently? And how can you ensure that your program is driving the maximum value?

We find that most businesses running successful loyalty programs are the ones that have kept pace with changing times and invested in digitalizing their loyalty programs. Noticing the customer’s shift to online shopping, they’ve also transitioned to digital technologies to support their customers online and make the redemption experience hassle-free. These businesses have also moved beyond a transaction-based rewards program to one that is geared toward rewarding engagement. Let’s look at how you can deploy the right tactics to make sure your loyalty program actually adds value to your business.

Going digital has immense benefits for businesses when it comes to solving many issues faced by customers in redeeming their rewards. Let’s take a look:

As per a KPMG report, at least 56 percent consumers rated customer service to be a key criterion in inspiring loyalty. This is where many businesses lag. Customers tend to use loyalty programs more when they are easier to use; alternatively, they tend to abandon programs that involve complicated registration processes, or when they get stuck with no one to help them with answers. Many a time when customers call up a business seeking information about loyalty points, they are kept waiting for long periods, and may still not receive a satisfactory response after speaking to a representative. Automated chatbots can help to resolve simple customer queries on WhatsApp for Business, Facebook Messenger, Live Chat, and so on. Companies can also share automated event-based notification triggers proactively – such as sending welcome messages to new members, sharing birthday coupons and promo codes, helping members keep track of points earned, letting them know when they are eligible for a discount, and so on.

Customers prefer to be a part of programs that are tailored to their individual needs. However, this seldom happens. Research by Capgemini suggests that only 11 percent loyalty programs offer personalized rewards. Businesses must focus on offering rewards based on their customer’s buying behavior and interests. And for this to happen, they need to first have a 360-degree view of their customer, no matter what the channel of interaction has been. Organizations must be able to track their customer’s journeys across different touchpoints to thoroughly understand what their customers value. Having an integrated digital communication platform pulls data from all touchpoints and gives businesses an unhindered view of the customer and once they know their customers this well, it’s not difficult to offer them deals they will love and thank you for.

Running a digital loyalty program helps companies generate vast troves of valuable data. They can use this data to analyze how frequently customers are earning a reward, how much time are they taking to redeem the reward, and in what ways they are preferring to redeem the reward. Monitoring the program can help companies understand which rewards are working and which are not, and can give them an opportunity to rethink their rewards. This way, they can re-engage under-redeemers with better incentives. If customers are dropping out due to some technical glitch, businesses can track that too and fix the bug.

Claiming rewards is not always a pain-free process for customers. They face a number of hurdles, including:

  • Inability to redeem rewards through preferred channels like WhatsApp for Business, Viber, etc.
  • Poor customer experience on mobile or websites
  • Loss of loyalty points and delays in crediting benefits due to technical glitches in linking rewards with online accounts
  • Long call wait times and transfers to multiple agents before customers can get their problems addressed
  • Call center agents not aware of issues with online channels due to lack of integration

Having a well-thought-out digital rewards program helps companies tip-toe around these pain points and makes redemption a hassle-free process. They can create a unique brand experience in the process and even use loyalty programs as a valuable marketing tool for cross-selling and up-selling activities.

There are companies that do invest in digitalizing their loyalty programs but still do not see hoped-for results. To make such programs actually work for your business, we suggest the following:

1) Make Sure Rewards Can Be Redeemed Across Channels​

Users love to reach out to companies across a number of channels, and expect to be able to redeem their reward irrespective of the channel. However, as per a Capgemini report, only 9 percent of loyalty programs offer redemption across all channels. Customers face difficulties when there is no provision to redeem a reward online and often, they choose to not redeem at all and abandon the program.

Again, sometimes customers do not redeem simply because it might have been advertised on a single channel and they may have failed to notice it. To make the program successful, companies should promote the program across channels and make provisions for customers to redeem them easily on any channel. They need to convey all rewards-related information effectively and encourage customers to redeem more often. Digital helps them achieve that. But they need to invest in technology platforms that are fully integrated with internal systems such as e-commerce, ERP, and POS. The platform must be able to support cross-channel rewards redemption. This will help to create an infinitely better redemption experience for their customers.

2) Do Not Reward Customers Only When They Make Transactions​

Almost 90 percent of companies reward customers only when they make a purchase. But those successfully running loyalty programs know that to get close to their customers, they must look beyond transactions and incentivize customers for any kind of engagement – for example, when the customer writes a positive review, takes a survey, participates in a campaign, or refers the program to a friend. They want to get the point across that they value their customers’ time and contributions, and want to thank them by way of gifting them an exclusive deal. This is what builds real trust and loyalty – not just points and rewards for transactions.

3) Leverage the Power of Social Media to Understand What Matters to Your Customers​

Many companies underestimate the vital role social media plays in ensuring the success of a loyalty program. Social media can be a great place to promote rewards and offers. Companies can create engagement by asking people to be part of a survey. They can even employ social listening techniques to understand what kind of rewards will delight customers more. Social media can also act as a platform for companies to reply to their customer’s loyalty-related queries and glean insights from these interactions.

4) Be Innovative With Your Rewards​

Companies usually associate loyalty rewards with price discounts; but they need not spend a lot of money all the time to run a successful loyalty program. They can incentivize customers in other ways, for example, invite them to product launches, give loyal customers early access to new products, write a personalized thank you note, and so on.

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As per Forbes, a company’s chances of selling to a new customer are just between 5 percent and 20 percent, whereas it increases to 50-70 percent for existing customers. So it really makes sense for companies to have a solid digital loyalty program which helps them keep their customers close and increases their lifetime value.

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Rajrupa Ghoshal
Writer and Editor
Rajrupa is a copywriter with a knack for crafting compelling narratives that help brands connect with their audiences effectively. As part of edna’s marketing team, she creates blogs, case studies, white papers and other content, using SEO best practices to drive up traffic to the website. She loves to stay updated on the latest digital marketing trends and hot-button topics related to CX. When not working, she loves to curl up with a good book.
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