A core part of marketing strategies for many businesses, loyalty programs can help brands to both attract and retain valuable customers.
When done correctly, loyalty programs encourage repeat purchases, potentially converting customers into brand advocates. But if done incorrectly, loyalty programs can be a waste of time and resources, as well as, a nuisance for customers who don’t want to be involved.
Increasingly, many of our fortune 500 clients are seeking ways to link their proprietary insight communities to their customer loyalty programs. Doing so allows them to not only tap into these programs for ongoing insights, but perhaps more importantly, helps them to connect these two assets into an ecosystem that can fuel both consumer-driven business improvement strategies and deeper customer engagement.
Here are four examples that illustrate how companies today are integrating loyalty programs into their marketing strategies.
- Aeroplan targets students by expanding rewards to include tuition.
Aeroplan has built its brand convincing people to collect loyalty points to pay for flights. In recent years, it has been expanding the things those points can buy: charitable donations, song downloads, necklaces, and even fondue sets. Starting Friday, another item will be added to the rewards catalogue: tuition.
The program comes at a time when tuition is rising and student debt puts a significant weight on the shoulders of young people attempting to kick-start their adult lives. And it also represents an opportunity for the loyalty industry. – Susan Krashinsky in The Globe and Mail
Tweet this: Aeroplan targets #students by expanding rewards to #include tuition. See @VisionCritical roundup: http://ow.ly/rhb0G
- Is a Bitcoin rewards program the answer to get people on board?
Bitcoin suffers two big problems when it comes to consumer adoption: retailers are unfamiliar with it, and shoppers have no incentive to spend it. A rewards program by gift card site Gyft shows how this could change.
Recall that a big problem for Bitcoin is that it’s great in theory but, in practice, it’s not good for much besides speculating. A handful of places in New York and San Francisco accept it, but most retailers haven’t even heard of Bitcoin and, besides, it’s still much easier to pay by swiping a card. – Jeff John Roberts in Gigaom
- Starbucks uses its loyalty program to target non-customers.
A great case study to look at when deciding on the value of loyalty cards is coffee stores. Most would be familiar with the coffee stamp system where shoppers are rewarded with a free coffee for collecting stamps each time they buy one.
That was until recently as two of the big high street coffee brands, Costa and Starbucks, decided to start plastic loyalty card systems more akin to supermarket loyalty schemes.
Although it is not much of a reason to stay loyal to one brand in any case. Starbucks director of business intelligence and analytics, Joe LaCugna, said earlier this year that the data the company gathered from loyalty cards had shown them that it was not the regular customer that was worth targeting but the one that flits from store to store. – George Arnett in The Guardian
- Virgin Airlines uses a tier-system reward program to encourage more purchases.
Finding a balance between attainable and desirable rewards is a challenge for most companies designing loyalty programs. One way to combat this is to implement a tiered system. Offer small rewards as a base offering for being a part of the program, and encourage repeat customers by increasing the value of the rewards as the customer moves up the loyalty ladder. This helps solve the problem of members forgetting about their points and never redeeming them because the time between purchase and gratification is too long.
Virgin Airlines’ Flying Club inducts members at the Club Red tier, then bumps them up through Club Silver and Club Gold. Club Red members earn miles on flights and get discounts on rental cars and hotels. Club Silver members earn 50% more points on flights, expedited check-in, and priority stand-by seating. Club Gold members get double miles, priority boarding, and access to exclusive clubhouses where they can grab a drink or get a massage before their flight. The key is to offer benefits in the early stages to hook the customer into coming back. Once they do, they’ll realize that “gold” status isn’t unattainable, and offers really cool benefits. – Kendal Peiguss in HubSpot