The meaning of consumer loyalty seems to be changing by the day. Further complicating this changing landscape, companies continue to struggle with building a loyalty program that satisfies members and fulfills consumer data demands – all while keeping the user coming back for more. Some companies believe that simply offering incentives in exchange for spending is enough, but, according to a Harvard Business Review article, establishing an effective loyalty program requires a little more effort.
Identify loyal behaviors
It’s important for organizations to be able to identify what kind of loyalty they want their customers to have and determine what behaviors deserve reward and recognition.
This process should be based on the values of both the organization and its consumers. Walmart’s “savings catcher,” which encourages customers to submit their receipt for a chance to receive credit if a product was available for a lower price elsewhere, is a great example of this. The unique loyalty program does not discriminate between “best” and “typical” customers--it directly supports the brand’s promise to offer everyday low values to everybody.
Use tactics besides bribery
Companies need to be careful in how they gain loyalty. When bribery and promotional tactics are the foundation of a company’s relationship with its consumers, it can undermine brand equity. Don’t confuse retention, promotion and rewards for loyalty. Instead, companies should focus on finding ways to create new value opportunities. By doing so, you’ll not only keep current customers happy, but also inspire and acquire additional customers.
Look to Social Media
As social media platforms grow, so does the opportunity for consumers to rewrite the rules about customer value. A “typical” customer who makes a one-time purchase or shops sporadically, but takes to social media to express positive opinions about a company is becoming just as valuable as the ”best” customer who spends regularly. Look for opportunities to engage with these ambassadors to deepen their bond with your organization and gain further access to their networks.
Bottom line is that loyalty programs shouldn’t be built on data driven tactics that focus singularly on how much and how often a customer spends. Instead, pay attention to the kind of value and loyalty a brand wants to give and receive from its customers. For more insights on building loyalty, click through to read the full article from HBR.