Loyalty programs of the past focused on brands and strategies around discounts.
But that’s not the case today. It’s not enough to offer the same old loyalty program that everyone has been doing for 100 years. And that’s because loyalty programs are more important than ever.
Consumers have more choices than ever making it easy for them to find anything they want at the best price and right from their phones. We live in the age of the customer and that’s why it’s crucial for brands to differentiate themselves.
Consumers will pass by your loyalty program if it doesn’t engage them and offer value.
If that’s what modern retail looks like, what should a modern loyalty program look like?
A Modern Loyalty Program is Valuable
A modern loyalty program is only as good as the value it provides.
That’s why consumers today are even willing to pay for loyalty programs.
Consumers today can easily hop online and find the lowest price on just about any product they need, so there’s no longer much pain in switching brands.
That’s why differentiation is more important now than ever before. What unique value can your brand offer that your competitors can’t?
Take Sephora for example.
Its Beauty Insider program has a points aspect to it just like many other loyalty programs, but Sephora has really listened to its customers and tapped into their desires to build a program that is extremely valuable.
It provides members with many experiential benefits. People who sign up receive access to things like the Beauty Insider Community and beauty classes without having to spend anything at all.
For members who do spend $350 annually, they get access to the VIB tier. That equates to free gifts and one makeover per year. Members who spend $1000 annually are leveled up to Rouge status which gets them access to a private hotline and exclusive events.
Those experiential benefits offer value that members can’t get anywhere else. And that value is better demonstrated when it’s personalized for each member.
A Modern Loyalty Program is Personal
Personalization is a hot topic in the loyalty world today.
It’s not simply putting someone’s name in an email. It’s about helping your customers find what they need while giving them a better experience. It’s based on data that they have willingly provided.
The good news is that now, more than ever, customers are aware of this. They realize that for companies to tailor relevant messaging and experiences, they need to share more personal data.
And because of that, they’re more willing to share it than ever before, if they are getting value in return.
Think about it. When was the last time you voluntarily gave up some personal data in exchange for something useful or helpful?
Maybe it was giving your email address in exchange for an eBook. Maybe you had an awesome lunch after seeing a Facebook ad for a local restaurant. You might have been in an unfamiliar new town on a business trip. You saw that ad because you gave up some personal data. And it was helpful. That’s the whole point.
By collecting this data, retailers can personalize their communications and loyalty offers to add more value for members.
A Modern Loyalty Program is Seamless
Whether it’s navigating a website, reading an email (that’s hopefully personalized) or shopping in a store, consumers today expect a seamless, omnichannel experience.
That’s why modern loyalty programs aren’t thought of as add-ons. Great loyalty programs are woven into the DNA of a retailer.
Whether a consumer is using a mobile device to shop or visiting a store, the loyalty program always needs to reinforce your brand message. And it needs to be available whether in-store or online.
The last thing your customer needs is an experience that is clunky.
Not only is the shopping experience important, the program signup process is critical as well. Store associates have just as big of an impact on customer loyalty as a well-designed website.
They need to be well informed and excited about the program, so they can show the value to customers and encourage them to sign up.
Loyalty is about more than a customer giving up an email address in exchange for a coupon.
This is especially true of premium loyalty programs like the RH Members program and Beyond+ where customers are paying for membership.
There’s nothing as disastrous for a modern loyalty program than store associates who aren’t excited about the program or simply aren’t informed about it.
Modern loyalty is a holistic experience no matter where or when a customer engages.
A Modern Loyalty Program is Always On
Modern consumers want what they want, when they want it.
They demand instant gratification and traditional loyalty programs simply can’t deliver on that. The loyalty programs of the past require customers to spend over time to get rewards later. It’s purely transactional.
While many brands have added things like experiential benefits to their loyalty programs, the model is still the same. Spend money now, and after you’ve spent a lot, you’ll get something later.
That’s why premium loyalty programs do such a good job of keeping people engaged at all times. Take Amazon Prime for example. Members pay $139 annually and they immediately get access to all sorts of great benefits that they can access 24/7.
Sure, they enjoy things like fast, free shipping, but they also get access to things like Prime Video. And, once they’ve invested in the program and are in that ecosystem, they are likely to engage with the brand even more.
Lids Access Pass Premium is another great example. For five dollars annually, members get 20% off all hat purchases along with other benefits. One purchase can pay for the membership. And like Prime, members have access to these benefits immediately and whenever they want to engage.
See my review of Lids Access Pass Premium from a marketer’s perspective.
There’s no waiting around to collect points and there’s no need to wait for coupons to shop. The fact that many people sign up for these programs is proof that people are willing to pay for those always on benefits (if they’re valuable enough).
A Modern Loyalty Program is Constantly Optimized
So hopefully by now, you agree that a modern loyalty program needs to be valuable, personal, seamless, and always on.
There is one missing piece, however. Your modern loyalty program won’t get far without optimization.
As modern retail continues to quickly evolve, a loyalty program that is cutting edge today will need to evolve along with it. And, to know what changes to make over time, you must invest in testing everything that could impact your members.
The biggest challenges lie after a program launch. You need to make sure it’s resonating with your members and that they understand the value. You must constantly monitor the performance of the program against the results you expected.
The solution to all of it is constant testing and optimization.
Premium loyalty programs take even more effort in terms of maintaining your members’ expectations. After all, they are investing in your program. It needs to be worth it.
There’s no doubt that it takes time and resources to optimize, but when your business depends on building a loyal customer base, the rewards of optimizing the program are tremendous.
See why premium loyalty program optimization is so important.
Modern Loyalty for Modern Customers
Remember that modern customers don’t appreciate the best. They expect it.
If you want to build a modern loyalty program that attracts and retains modern customers, follow this formula:
- Offer them something valuable with an experience they can’t get anywhere else.
- Make it personal. Show them you know them.
- Give them a seamless experience, no matter where or when they engage.
- Always let them access the program and give them the instant gratification they demand.
- Optimize the program and then keep doing that forever.
Consumers today have limitless choices about where to spend their dollars. If a brand built a modern loyalty program with your best interests in mind, wouldn’t you stick around, too?
If you want to talk about your loyalty program, reach out to our experts here any time.
Paul Wolfer
Paul is our Senior Manager, B2B Marketing. He works closely with the leadership team on strategic positioning, messaging and branding. When he's not posting on LinkedIn or working on the newest data study, he can usually be found adventuring to breweries or attempting to learn a new song on his guitar.