How to engage loyalty scheme members for life

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By: Wise Marketer Staff |

Posted on March 17, 2011

How to engage loyalty scheme members for life

Following their first redemption, loyalty programme members' earn rates can increase by up to eight times compared to their previous point accrual patterns, according to Ben Ashwell, sales and marketing manager for loyalty platform provider Loylogic.

As a result, Ashwell suggests, loyalty programme operators must find ways to ensure that each customer's first redemption can happen as early as possible in the customer lifecycle.

The day a customer makes their first redemption with their loyalty programme is the day they truly register their engagement. The consumer will have browsed through all the redemption options, sought out the best value, or found something that their own money either could not or would not normally be able to buy.

They will have either channelled their business to their favourite loyalty programme to earn points and reach their target, or checked their catalogue to be pleasantly surprised that their balance has already achieved a reward they desire.

LoyLogic has dubbed the experience of that first redemption 'The Golden Moment', and that best part is that, once a customer has had their first Golden Moment, they're much more likely to come back for many more.

Customers who have made a redemption are on average 8 times as valuable as those who don't. This can be measured in many ways: with the spend uplift in financial and retail programmes; or the number of flight bookings or room reservations with air and hotel programmes; or the reduction in the period until the subsequent redemption and the positive word of mouth and consumer advertising that takes place to name just a few.

In fact, consumers who have experienced a Golden Moment increase their programme accrual rate on average by 30%: a figure that is even higher among consumers redeeming 10,000 points or less. These figures represent a significant increase in engagement, accrual and consequently programme profit by a segment of consumers that have already taken the time to enrol into a programme: a highly attractive and lucrative segment in itself.

The Golden Moment is more than just redemption: it is the true point of engagement by the top tier customers who represent the most lucrative segment of some of the best yielding industries in the consumer marketplace. These are the consumers that will offer the greatest contribution to a successful loyalty programme. They will drive the profits to the company shareholders and can ensure a loyalty programme directly contributes to, rather than drains, the company revenue.

The goal of every loyalty programme should be to encourage the Golden Moment and to ensure every customer redeems as early in their lifecycle as possible. LoyLogic suggests the following four steps to help make this happen:

  1. Maximize Redemption Options Redemption options should be diverse both in terms of their categorization and their cost. Merchandise redemptions offer the most effective way to create a catalogue relevant to customers with fewer points: which increases the number of your members that can achieve a Golden Moment, but also the number of Golden Moments they can reach and how soon they can be reached. Merchandise offers an excellent complement to core programme rewards (such as flights to an airline programme or room nights to a hotel programme) and open the doors of engagement to a much broader customer segment.  
  2. Every Customer Counts It is easy for programmes to focus on their largest geographic segments, but as ecommerce increases its stronghold on consumer spending and cross-border trading restrictions decrease, customers reside everywhere across the globe. For travel programmes, those customers outside of 'hub' zones will often travel further and therefore offer higher value transactions; and in the financial segment, reaching customers in developing markets are often the customers with greater wealth. A successful loyalty programme can not afford to miss any customers: so a consistent global offering is essential to make every customer count.  
  3. Allow Flexible Targets Your customers will have different levels of spend available to invest in their loyalty, and consequently into your programme. To ensure their Golden Moment is made with your programme, make their targets exciting, but achievable. Use the broad reward selection that is available to all your global customers and provide points-plus-cash tools that allow their points to contribute to the value of a product, or to give them a discount from the total price. The Golden Moment is the point of redemption, where value is sustained from their investment: so contributions toward an aspirational item will ensure they enter the realms of the engaged customer.  
  4. Ensure Optimal Value There is always temptation to increase the cost of the rewards to the customer to increase the revenue to a programme. Loyalty programme customers are value-savvy. As the programme owner you must strive for the best value for customers. Failing to do this can jeopardize that your customer will ever see the value in reaching their Golden Moment, and if they do get there, they are much less likely to repeat it. The benefits from investing in a loyalty programme are clear: but compromising the value to the member you are trying to incentivise is a cannibalisation of your own investment. Be confident that optimal value and investment will pay dividends to your programme success.

Those loyalty programmes which recognise that effective member engagement drives profitability - and therefore give their customers every opportunity to redeem - are the ones that most quickly deliver that prized Golden Moment. Once they have reached this milestone, their members will be 8 times more likely to aspire to achieve it again, which means they are 8 times more likely to be an loyal and engaged customer; leading to a lifetime of engagement and satisfied 'customer happiness'.

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