In Part 1 of ‘how to design a perfectly fitting loyalty program’, we discussed the different needs from organizational perspective in relation to the business goals, KPI’s and long-term development. A commonly made mistake by businesses, is that they only stick to this side: the goals are covered within the loyalty mechanism, now just add some points or coupons and we’re done. But in that case, businesses typically experience that the program is not used by the customers, frequency is low and just small effects are seen on the business goals. Customer loyalty is key in designing your program, so include the needs of your customers to make the usage attractive.
So, in this blog, let’s turn our perspective into an outside-in approach and start highlighting the possibilities for designing an attractive reward mechanism from the customer point of view. What’s in it for the customers? Why should they show a certain kind of behavior? Including an attractive reward structure is key. It’s like raising a child or training a dog, how do we teach them certain behavior? One of the methods that we also like to apply within a loyalty approach, is what they call in psychology positive reinforcement: a desirable stimulus to encourage certain kind of behavior. And it is important that this stimulus is repeatedly being offered. And as we say in marketing: “it’s the power of repetition”.
Therefore, choosing the right rewarding structure that fits the needs of your customers and is relevant to your company, will have a large impact on the usage and therefore the effect of the program. Now let’s take a closer look at the variables and options there are in place for designing this reward structure.
Within the reward setup, we can distinguish different levels and elements, from direct rewards, benefits to promotions and special levels. Here is an outline of the most common practices:
So far, we haven’t touched the points-structure as reward. Is a point actually a reward? Not directly… On its own, points have no value if you can’t do anything with it. It is mainly a manner of calculating your setup for tiers, promotional targets or value for redemption. Points are communicated often as marketing tool, because it makes a program understandable for the members. But if you are not willing to use a point-structure, other calculations in the background are just as effective and it is just the way you present it to the customer. Just be sure that the way you process and present the calculation is attractive enough for the customer to really get engaged within the program.
The large variety of the elements, mechanism and ideas that are mentioned above and also in Part 1 about designing your perfect loyalty program, can be overwhelming and too much to digest at the moment. And did you, there is even more? But we’ll spare you for now and rather discuss this in person. One last thing we do want to support you with to make it a little easier, is our ‘KICK’-principle that should be covered during the design stage:
The most extensive programs are matching the KICK-principle and are combinations of the above elements and reward types, including or excluding point structures. In case you are not interested in a point structure, there are still plenty of other options on the pallet available. Perhaps a combination of frequency rewarding with perks, promotions and badges for community involvement? Let’s take an empty white paper and design your program setup together, with focus on your business goals and the customers’ needs. That’s what customer loyalty should be about!
Next time we’ll discuss the role of personalization and how data is a key driver in this process. Already curious what data can do? Read some first thoughts about it in the 2021 retail trend blog of our CEO Boudewijn Wildeman.
‘’I don’t give a 10, because that would mean there is no room for improvement, but I certainly give them a big fat 9, because that is what they deserve.’’
Manager Customer Service Omoda
North Africa Dreamin’
The North Africa Dreamin team is made up of volunteers from the Moroccan Trailblazers community whose common vision could be summed up in one word: sharing
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