To define the strategy for a loyalty program, the first thing to do is to define the program's objective and how we measure its success.
Although the usual objectives of global programs are to improve customer lifetime value, reduce active customer churn, and maintain/increase customer acquisition and retention levels, we must bear in mind that a loyalty program is not designed for all customers. You need to know how to define which customers you want to target and what type of loyalty you want to generate: More customers? More sales? Higher average price? More repeat business? Do you want them to spend on more profitable products or services? Turn them into ambassadors for your brand?
The next step is to ensure that the loyalty program's objective is consistent with the company's overall strategy and brand messaging.
It is important to design a model that is flexible enough to remain viable as the company and strategy evolve. A program with an ill-defined strategy could become costly and not always create value for the company, so the key is to design a program that creates value for both the consumer and the company. This often involves finding a way to exploit the gap between a consumer's perceived value of something and its cost.
Having a clear internal understanding of what you are willing to give away and ensuring that you are not giving everything away to everyone will help balance that equation. The famous "coffee for everyone " approach will only result in a costly program that will not be perceived as personalized. This is where the famous levels/tiers come in.
Let's not forget that many of our most loyal customers do not consider price to be a decisive factor, but surprising them during their flight or stay creates a sense of well-being that will most likely lead to repeat purchases. If we achieve this milestone, we will have made the program a success.
Any type and size of business can venture into the world of loyalty. It is not necessary to have a CRM and a complex management structure. A simple discount program can already be considered a loyalty program and will provide knowledge about customers that can be applied to new marketing campaigns that you want to launch. In the digital world, managing a customized program is much simpler and more accessible, so any company can now incorporate this type of tool.
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