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The best-known loyalty programs are made up of many partnerships – such as United Airlines and Hilton Hotels, or Emirates and Marriott. The majority of existing partnerships at big loyalty programs are brokered with one goal in mind: creating more value for the most frequent customers. The value can be immediate.
By the end of the programme’s first year, loyalty members made up 44% of Tarte.com revenue, despite only making up 21% of the total customerbase. Customer journeys to the moment of purchase are highly complex and too few brands are engaging with key steps along the way, to understand why customers buy, or fall out of the funnel.
This means that loyalty programs are now a more important channel for customer acquisition and retention than ever before. Customer frequency is partly determined by the nature of your business. On the other hand, 60-70% of customers may be motivated to redeem in the currency of a partnered airline or hotel.
Such ‘loyalty’ programs today are actually just rewardsprograms: ‘you do this and I will do that.’ This is normally in the form of static rules which apply a flat 1%+/- reward across the board. Devaluing your points has a negative impact on all your customers – including the best ones. They may be worth.5
The future represents much more collaboration among brands to serve common customers more effectively. An example of effective alignment of strategy with tactics include Australia’s Coles Supermarket chain and its flybuys rewardprogram. altering customer behaviour to support corporate objectives, without upsetting people.
In any case, I think the vast majority of practitioners will be as excited as I am, to think what this wave of innovation means for consumers: more brands finding cleverer, more meaningful ways to create compelling customer value. This demonstrates how relatively modest investments can help you tap into a much wider customerbase.
Bribing customers is easy and, as with most easy initiatives, not very profitable. Banks have been in and out of rewardsprograms for decades – but their focus ebbs and flows depending on the economic cycle as well as the regulatory framework. For starters, it isn’t financially sustainable.
Broadly speaking, most of the chains’ loyalty efforts have been in proprietary, albeit digitalized versions of the original S&H program: collecting in order to redeem for rewards, some digital couponing, and pushing out offers via a mobile app. How supermarkets can profit from loyalty currencies. This is nonsense.
Rewardprograms still have an important part to play in this effort; but they are only part of the picture. YouGov data from the UK shows that even the youth demographic – supposedly disloyal – thinks that points programs “are a good way for brands to rewardcustomers and 59% think all brands should offer one.”. [iii].
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