Loyalty programs

Loyalty Programs 2

How loyalty programs are being implemented is constantly evolving. Early stamp cards gave way to physical account cards and frequent-flyer miles. Today there are fully digital app solutions that automatically combine collecting points with payment. But regardless of their shape and design, whoever offers customers real added value with a loyalty program will increase customer satisfaction, loyalty and sales. Below are the criteria for success.

Despite technical progress, the guiding principle of loyalty programs has always remained the same: to encourage customers not only to remain loyal but to buy more often and more expensive goods. This is true both for rewards which customers receive from retailers in the form of loyalty points and for airline frequent-flyer miles. But what has changed are customers’ expectations. Today customers demand loyalty programs that make it easy to collect loyalty points and offer clear advantages for purchases. Loyalty programs should therefore fulfill the following five criteria:

  • Simple: A loyalty program should integrate seamlessly with the payment process without adding an extra step for the customer.
  • Consistent: Customers must always meet the same processes and benefits, whether buying online, via mobile app or in a bricks-and-mortar store.
  • Personalized: The company should use all available data to send customers personalized offers that perfectly match their purchasing behavior.
  • Secure: When the loyalty program is linked directly to the payment process, customers must be able to trust the company that their data is secure.
  • Lucrative: A loyalty program must be worth it for customers, whether through general savings or personalized discounts. Only clear advantages for customers will establish an emotional tie to the company.

U.S. chain Starbucks’ “My Starbucks Reward” is often cited as a best-practice example of a successful loyalty program. Like other programs, customers collect points (in the form of “Stars”) which are credited to their account for every purchase made. Unique to this program, however, is that collecting “Stars” to a mobile wallet is directly linked to payment via the company’s app. No separate card or additional authentication is necessary. Thus the app, which has around 16 million active users in the USA alone, seamlessly integrates the payment process into the loyalty program. For users, this integration means that collecting points is automatic and couldn’t be easier. The lost customer card is now a thing of the past.

This added value for users also ensures clear advantages for you: Merchants who offer such a loyalty program increase customer satisfaction and brand loyalty. Indeed, many customers today state that they would use a mobile wallet more often if the platform allowed them to both earn and redeem loyalty points. By joining with partners, your company can increase its selection of rewards to not only expand possible customer points of contact with your brand but also strengthen customer loyalty and satisfaction.