Not Just Discounts: How Loyalty Programs Succeed

Whether you’re a Starbuck’s Coffee fan or not, you’ve likely heard of the company’s My Starbuck’s Rewards™ program. Everyday, customers line up for their java fix with their smartphones and loyalty cards brandished, eager to earn another star to add to their collection. The program rewards customers by providing a free drink or food item after 12 stars are earned.

So why have retailers across industries made rewards programs a part of their operation? Because it works!

In fact, enrollment in loyalty programs has skyrocketed to new levels, according to an article by the National Retail Federation (NRF). Based on the Bond Brand Loyalty’s fifth annual Loyalty Report, “the average consumer was enrolled in 13.3 programs this year, compared with 10.9 in 2014.” While this is an impressive number of programs, the number each consumer actively used did decrease, dropping from 7.8 to 6.7 percent, the report adds.

According to the NRF, for a program to work, you need a greater understanding of your customer needs, an alignment with your brand and impressive mobile functionality. Instead of focusing solely on the rewards your customers receive, consider ways to make being a loyal customer even more than a coupon here or there.

“The programs that will differentiate and establish long-term, sustainable engagement with customers are those that focus on customer needs, those that focus on making the program experience enjoyable beyond getting that discount,” says Scott Robinson, Bond Brand Loyalty’s senior director of loyalty consulting and design.

This study and previous studies have helped conclude one of the biggest points of a loyalty rewards program should be the experience and relationship formed between the customer and your business.

As an independent retailer, you can use loyalty programs to your benefit, but think of ways to make your program stand out. Perhaps you come up with a system to invite loyalty rewards members up for additional benefits, like offering them first notice of in-store workshops and events or access to a special treat when they visit, like a candy bar. Get to know your customers and they’ll be even more excited to hand over their rewards card every time they shop, and next time they need an item, they’ll be more likely to return to your operation.

To read the full article by NRF, click here.