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Striking Up Conversation About Modern-Day Loyalty

February 27, 2017

Data, value, relevancy and mobile capabilities are critical to move from the loyalty equivalent of polite cocktail-party chat to a mutually beneficial relationship.  

By Brandon Logsdon

When I'm asked to describe the ideal loyalty program, I often refer to an example of two strangers meeting at a social gathering or party. It goes something like this:

The meeting starts with polite introductions and how-do-you-dos. Next come a few icebreaker questions to gather basic background and personal information. What do you do? Where do you live? Family? Children? Quite soon, two former strangers are discussing their respective interests, hobbies, likes and dislikes. By the end of the conversation, they are enjoying each other’s company, exchanging contact information on their smartphones and arranging to meet for dinner.

This seemingly simple exchange has all the elements that create modern-day loyalty, whether it is person-to-person or customer-to-brand. The relationship is driven by mutual interests and informed by data. It delivers something of value and is supported within an increasingly mobile-dominated environment.

As today’s loyalty marketers develop strategies for the coming year and through the decade’s end, these basic concepts can make the difference between success and failure, especially in an era of shiny new technologies, mobile-first customers with high expectations, and increasing interest and competition from loyalty partnerships, retailers and vendors.

Successful loyalty programs that master the basics – provide value, leverage data and get the mobile environment right – can deliver measurable results. They can benefit from more foot traffic, higher sales and more engaged customers whose shopping behaviors are truly influenced by the relevance and value of the rewards they earn and redeem via their daily shopping routines.

Right carrot, right time, right customer

At the heart of every successful loyalty program is the right reward – the proverbial (and valuable) carrot-on-a-stick that attracts consumers’ interest and is powerful enough to influence how they shop and what they buy. Whether the reward is an airline mile, a hotel point, a retailer coupon or a discount on gasoline at the pump, it must be relevant and deliver value. If it’s not relevant, it will be ignored. If it’s not valuable, it won’t be earned or redeemed.

Combine relevance and value, however, and the reward has tremendous power.

A 2016 Excentus-Ipsos survey of U.S. consumers found that membership in a rewards program has significant and measurable impact on consumers’ retail preferences, shopping habits and spending. Survey findings revealed:

  • Nearly one-third of consumers (30%) decide where to shop based on membership in a loyalty program, including 14% who shop exclusively at stores where they earn rewards and 13% who are willing to switch brands or retailers to do so.
  • 27% will time their shopping trips to take advantage of certain rewards, promotions and members-only deals.
  • 24% will spend more with retailers or buy more than planned, to earn even more rewards.

A separate consumer survey of back-to-school shoppers echoed those behaviors: 65% said membership in a loyalty program influenced where they shopped for school supplies. Depending on the merchant category, 59% to 86% said they would return to those same retailers for holiday shopping as well.

Clearly, rewards do matter, and their influence is both profound and measurable.

Back up the carrot with data-powered personalization

In today’s customer centric climate, earning and redeeming rewards must have these attributes:

  • Very easy for customers to execute
  • Timely
  • Contextual
  • Smartphone-friendly and built for the mobile environment
  • Powered by data

Data provides the cues that help marketers decide which rewards to offer: to whom, what time of day, at which location and the amount of value associated with the reward. Data helps right-size the reward for each customer, while the mobile channel supports the delivery and real-time relevance that customers expect. 

When program members receive mobile offers, promotions or other marketing messages that match their needs at exactly the right time or in the ideal location, the brand-to-customer “friendship” is solidified. Ideally, loyalty program members will walk away from their experience feeling satisfied and thinking: “This brand really understands my needs and likes. This brand is thoughtful and timely. This brand gives me what I want, and I’ll be back.”

Loyalty programs are everywhere

It’s no secret that the market is getting saturated. However, we see two clear opportunities for both loyalty marketers and consumers. The first is the continual improvement of loyalty programs – the offer, the relevance and the user experience. Loyalty marketing is truly a space where a rising tide lifts all boats. This constant evolution is challenging for the loyalty marketer but very rewarding for the consumer.

Second, in search of growth, loyalty program operators are looking beyond sectors and verticals where loyalty programs are already established. Excentus’ recent move into the convenience-store sector is an example of this and is based on the foundations of loyalty program success:

  • Competitive operating environment
  • Fragmented store grid with high concentrations of regional operators
  • High recency and frequency of spend
  • Few established loyalty programs and program operators

Strike up the loyalty conversation now

Loyalty programs need to do more than make brands look good by “checking the box.” They must leverage data to create connections with members that are rewarding and valuable. They must make customers feel understood and appreciated. They must bring more customers through the door, encourage them to spend more and satisfy them enough so they return time and again.

As such, loyalty programs should always be prepared to strike up conversations with new consumers, wherever they are, and to deepen meaningful, valuable conversations with already loyal customers. With the right tools, data and the right value proposition, that simple get-to-know-you conversation just might turn into an engaging and successful relationship.

Brandon Logsdon is president and CEO of Excentus, which creates programs that lower the cost of everyday life, including the direct-to-consumer Fuel Rewards and fuelperks! and proprietary software that helps loyalty and marketing programs drive down the cost of commodities.