CRM daily has an interesting article on customer loyalty. Here are some key points from this one which I felt were relevant:
- SAS survey conducted last month says that 67% of consumers indicated price to be a major factor in their shopping choices. Only 35% felt reward programs generated loyalty! (It has some serious implications on structuring member benefits for any loyalty program. Clearly points don't seem to drive loyalty. It must have the right balance between reward points and price benefits that are passed on to members of loyalty programs. Points must offer real value.)
- Loyalty programs cannot be a substitute for bad business models or products. Amazon and Starbucks are great businesses first. Hence, loyalty programs work better for them as it is one of the elements of the brand promise. ( Closer home in India, Jet Airways has a great product/service to offer. Hence, the loyalty program they run complements it beautifully)
- Making relevant offers is critical. Just running a loyalty program is not good enough. It is no more a differentiator.
- Look alike programs bore people. Doing something unexpected will have more of an edge.
- Rewards that can be redeemed in a variety of sectors offer more value to customers. Look for coalition, alliances and giving more options to choose seem to be working better.
- Mixing instant rewards and reducing the wait to redeem the points seem more acceptable now as rewards become more tangible and relevant.
- Using transactional data is critical for a successful loyalty program. Effective data management is the engine that can drive loyalty.
- Personalization of benefits can make a big difference as the Virgin case study has shown in the article.