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Loyalty Programs Need More Human Connections to Prosper

The proliferation of loyalty programs often leads to mundane, cookie-cutter-type offerings that don’t fully resonate with their targeted customer groups. What can brands do better when it comes to customer loyalty and how can their programs extend and exist beyond the mundane?
 
HelloWorld attempted to answer those questions when it examined various aspects of loyalty/rewards programs in its comprehensive 2017 Barometer Report.

Loyalty360 talked to Michela Baxter, Senior Director of Loyalty at HelloWorld, about some key findings from the report that impact loyalty marketers.
 
What is your biggest takeaway from this report and why?

Baxter: Analyzing responses left us with one major takeaway: Brands need to have more human connections with their consumers. While still appealing to most, traditional and one-size-fits-all programs are going to struggle in the future—especially among Millennials—if they continue to focus on transactional interactions with their members. I believe the most successful programs in the future will go beyond the “spend and get” models to deliver differentiated and contextual experiences and services, with high intangible personal value.
 
Redemption has been an issue for many loyalty marketers in recent years? What trend(s) do you see related to this from your report?

Baxter: Far and away, the biggest pain point when it comes to rewards is the time it takes to get one. Over half of consumers in our study said that they don’t like loyalty programs, because it takes too long to earn a reward. This is no surprise and has been a point of discontent among consumers for many years.

Brands can overcome this in a few ways. Brands that can leverage services or experiences that can immediately deliver intangible rewards that create higher emotional connections over a single discount or tangible reward. Tapping into partners is a great way to differentiate a reward program and potentially deliver added benefits quicker than saving up would. (More than 2/3 of consumers in our study said programs should partner with brands to increase ways to earn—close to 80 percent among Millennials.) And lastly, brands can apply a little behavioral economics. Consumers prefer small, more frequent rewards over a single payout out sometime in the future—even if they stand to earn more for waiting. Structure your program and rewards in a way that delivers smaller rewards more often.
 
How should brands reward loyalty program members beyond the purchase?

Baxter: There are many ways to reward program members beyond purchase and no one approach works for every program. No matter which tactics brands choose, they should align with larger digital engagement strategies and brand capabilities. Above all, earning beyond purchase should always feel authentic to the brand’s audience. For example, from our research we saw that Baby Boomers are less inclined to want to be rewarded beyond purchase and the fewest consumers wanted to earn for brand engagement with credit card brands.
 
What was the biggest surprise from the report and why?

Baxter: We hypothesized that we would see more negative sentiment and appeal around traditional rewards strategies, which wasn’t the case. That led us to the conclusion that when it comes to innovating loyalty programs, consumers will need to be led through a new approach rather than push brands toward it. Henry Ford said, “If I had asked my customers what they wanted, they would have said, ‘Faster horses,’” and we think it rings very true for loyalty programs today, too. While listening to consumers is important when crafting your loyalty strategy, to innovate, it will also be important to find gaps and create beyond what people say they want.
 
What are loyalty marketers doing well related to loyalty programs and where do the ongoing challenges lie?

Baxter: We’re seeing more and more instances of brands shifting from marketing to loyalty segments toward marketing to individual brand loyalists. Consumers want and expect personalized rewards and tailored experiences. We saw it in our report, and we read about it every day. Brands like Amazon and Sephora are setting the standard and most other brands are playing catch up, working through data challenges and trying to figure out how to leverage emerging technologies like Watson to deliver tailored, dynamic, and often real-time loyalty experiences.

Interested in more? Download the full report.