Customer Loyalty: Best Practices for an Effective Loyalty Program.

Customer customer loyalty is a major challenge for businesses. Implementing a loyalty program is an essential tactic used in marketing strategies to increase customer brand loyalty and, consequently, retain customers.

However, some loyalty programs fail to meet their goals. It is essential to understand why this happens so that we can revise our action plan and provide customers with a unique experience.

Why do some loyalty programs fail to meet their goals?

Perhaps because they’re identical to the six or seven loyalty programs that the vast majority of consumers already have: most of them have no idea how many points they’ve earned, how they earned them, or what benefits they’re entitled to. In short, the only connection they have to these brands is a vague customer number and communications that are often not very personalized.  Not exactly enough to inspire much loyalty!

And that’s exactly what loyalty programs are missing: engagement strategies. These are what drive interaction, enthusiasm, loyalty, and, of course, purchases. So how can we make a program truly appealing—one that fosters a lasting relationship between a brand and its customers?

The questions every retailer should ask themselves first and foremost

For an individual to engage, the brand must create the conditions that will allow them to connect with it. Before launching a loyalty program, it is essential to consider the company’s value proposition. What shared interests does the company have with its customers? What promise and what story emerge from its business and are embodied in its products and services? Without such an approach, it will be difficult to foster genuine engagement among customers, and without a strong emotional connection to the brand, they will not hesitate—given equal benefits—to turn to a more attractive promotional offer from a competitor. The idea, therefore, is to go beyond traditional marketing campaigns and offer consumers a world with which they can identify. These efforts must help create experiences and emotions that consumers can only feel through the brand and its products—emotions they spontaneously associate with the brand and actively seek out when engaging with it. To the point where they want to extend this relationship and the emotions it evokes by sharing the brand, its services, and its innovations—notably by posting about its products on social media—or even by creating a buzz within their own community around the brand’s world.

Beyond the promotions offered to customers, it is essential to provide them with that extra something that, in return, will encourage them to engage with the brand by sharing their personal information, interacting with its services, and even promoting its image to other potential customers. Brand positioning is therefore a fundamental pillar of customer engagement.

So, how far should a loyalty program go?

What kind of incentive is enough to get a customer to return and stay engaged? Depending on the industry and value proposition, a company must be able to create a number of opportunities for customer engagement andregularly refresh its loyalty program. Naturally, the strategies will differ: in the retail sector, where customer acquisition and repeat purchases are constant challenges, a bank or a gym will need to implement anti-churn programs and customer satisfaction measurement programs to retain their customer base, which by nature “subscribes” to their services.

It is therefore important to clearly define the objectives that the loyalty program is designed to achieve. For example, depending on the business model, a company may aim to increase the frequency of visits, while in other industries, it may seek to extend the subscription period and, consequently, the customer’s lifetime value.

Once these elements are in place, the brand will be well-positioned to launch an effective loyalty program. But it still needs to be actively managed!

Collecting customer data… What’s next?

Building an engaging customer relationship requires a deep understanding of the customer. It is therefore essential to collect a certain amount of data about them, analyze it to extract as much actionable insight as possible, and then… start over! Data collection and analysis must, in fact, be an ongoing process. Simply gathering as much data as possible at the start of the customer relationship without subsequently updating it inevitably dooms a loyalty program to failure. Without updates, for example, the customer would remain forever a single thirty-something renter with no change in income, and would consequently receive communications and offers that are ill-suited to their situation.

Conversely, armed with a substantial volume of data—and, more importantly, information that is relevant because it is up-to-date—the brand will be able to understand each behavior it analyzes, respond to it as accurately as possible, and thus create a fruitful interaction. While collecting data is obviously essential, the key to customer engagement lies inthe management of the loyalty program.
This involves short, intense moments that are completely different.

The 5 pillars of customer engagement:

1. The transaction: No loyalty program overlooks this opportunity to reward customers who have just purchased a product or service from the brand—even though, technically, this is the only time when there would be no need to build their loyalty, since they have just made a commitment! Yet a large number of programs limit themselves to this approach.

2. Customer qualification: reward them every time they provide you with information about themselves. It’s crucial not to overlook this strong commitment from the customer when they qualify themselves. They’re providing the brand with valuable data: if you reward them accordingly, they’ll be more likely to share information again—and more often.

3. The frequency of customer interactions with the brand, regardless of their nature (transactional or “simply” emotional), should be rewarded through the loyalty program.

4. Collaboration with the brand: The customer comments on posts on the brand’s website or blog, refers new customers, tests products, shares photos featuring themselves on social media… Their enthusiasm for the brand, as well as their spontaneous desire to promote it and devote their time to it, are signs of a close connection and strong commitment on their part. Each of their interactions must be valued with particular care, and it is important to give them special attention to reinforce their commitment (early access to new product testing, invitations to events, exclusive perks, etc.).

5. Discovering the breadth of the product range: another way to build customer loyalty is to introduce customers to other products and services they may not be aware of. Not only will this contribute to the brand’s revenue, but it will also strengthen customer loyalty by fulfilling their need for change and discovery while allowing them to remain within a world that resonates with them and from which they derive new sources of satisfaction. For example, Aigle has understood this well. In 1989, the brand began a coherent diversification of its business, shifting from an initial single-product focus (its famous boots) to a single-purpose strategy (outdoor activities). Today, it derives the bulk of its revenue from its apparel, having successfully maintained the perception its customers have of its entire product line (authenticity and quality).

In conclusion, brands need to ask themselves the right questions about what they offer their customers that strongly motivates them to engage with the brand. If customers can connect with a story and values they identify with, as well as interactions and emotions they experience only through their engagement with the brand, then the brand possesses the essential tools to forge a unique relationship that sets it apart from its competitors and is capable of captivating customers over the long term.