You’ve heard about them, you’ve seen them in action, you probably have a wallet filled with cards because of them, but the verdict is still out on loyalty programs and whether they actually work or not…
For most of us it’s yet another plastic card or recently a smartphone application. We use it to amass points and eventually redeem them – the premise is simple:
“We – the customers – are being rewarded by the companies we transact with for our loyalty”.
I won’t go into the mechanics of how it works, although it’s crucial to now that the several available schemes (e.g. get points for specific items, get points for a specific mix of behaviors etc) can become quite complex & rich when a proper technology is supporting them. Its now easy to create even cross-promotions with complex rules for points collection & redemption. A loyalty program can also integrate with / become a crucial part of a CRM system and finally act as an immediate communication conduit with existing customers.
A recent study by Nielsen sheds ample light to the situation. It’s called “How Loyal Are Your Customers? A View of Loyalty SENTIMENT Around the World”.
The study contains invaluable information regarding the loyalty profiles of consumers per vertical & region and also depicts overall trends with regards to the sentiments of consumers towards loyalty programs.
Of particular interest is also the “switching profile” of consumers across regions – essentially what makes them consider & act.
One has to factor this image when deciding on the key aspects that a loyalty program offers towards the consumer – it’s not always & not only a discount that matters. There are several other factors at play – consider how the airline industry ( possibly the leading user of loyalty programs) is embedding a sense of status & accomplishment for frequent flyers by offering express check-in, access to premium lounges etc.
Are you using or considering establishing a loyalty program for your customers? What are the key goals you would define for yourself & what are the key factors potentially inhibiting adoption of such a program?