How to recession-proof a loyalty programme

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By: Wise Marketer Staff |

Posted on March 5, 2009

How to recession-proof a loyalty programme

The world's major markets are entering a recession and customer loyalty programmes are under the microscope, largely because of their apparent ability to attract new customers and increase footfall, according to Shaju Nair, director of global CRM and loyalty for IBS.

While budgets are at a premium, marketing departments are looking for cost-effective and easy to roll out ways to make their loyalty programmes continue to succeed.

One of the reasons that consumers can be wary of joining a loyalty programme is the perceived complexity of the process, including perhaps a lengthy form they have to fill in, or a subscription fee, or a lack of motivation to participate. But there are several ways to help achieve the marketing department's goal of increased membership:

  1. Throw out the multi-page enrolment form and replace it with smaller and simpler forms, remembering that extra information can always be collected later by your contact centre staff;  
  2. Eliminate up-front membership fees. Your source of revenue should be future business from a loyal customer. Introduce a sign-up fee during a time of economic hardship and you risk losing new members who would otherwise be loyal;  
  3. Give extra (preferably non-cash) benefits for registering during the recession. These need not be expensive, but they should convey that you care and appreciate the consumer signing up for membership of the programme.

Waiting for a reward is perhaps perceived by many consumers as the most agonising part of any rewards-based loyalty programme. The keeping track of transactions, the daily reviewing of account balances, and the constant mental calculation of points earned often takes the fun out of the overall loyalty programme experience. Wouldn't it be nice if, for once, the member didn't have to worry about how many points they have accumulated before they decide to redeem them? Here, then, are two obvious ways in which you can provide instant gratification:

  1. Give benefits instantly, rather than wait for loyal customers to accumulate points to be redeemed later. Points should be redeemable the moment they are earned. Redemption thresholds would need to be eliminated, and a range of low-point-value rewards or benefits would need to be introduced to make this possible.  
  2. Shower loyal customers with benefits that don't cost you anything extra. Not everything has to be cash-based, and simple acts such as handing over a newspaper at the check-in counter (or a designated seating area or reserved tables in the example of a hotel loyalty programme) can go a long way in creating 'stickiness' among loyal customers.

At the same time, tough times call for better and more frequent communication. Communication with customers should be such that it does not take the form of intrusive 'spam' but it should send out the message that you value and appreciate their patronage.

First, tell the world why your loyalty programme is truly valuable. Make use of inexpensive media such as the internet, and concise emails that explain your value differentiators can also be of help. Also try to generate word of mouth (WoM) publicity for your loyalty programme - for example, give members the ability to make recommendations online to their network of friends and colleagues, and allow them to personalise the message before sending it.

Second, you should demonstrate to your loyal customers that the programme's benefits are being extended only to them and not to the general public. Actions speak louder than words, so you need to make sure that programme members can see and understand that benefits are being extended only because of their membership. This will help to make them feel special and increase their loyalty toward the brand.

However, while trying to please loyalty programme members, remember that there is also a large untapped base of potential members, and it is important that you do not alienate them so much that they begin to feel resentment toward the brand:

  • Treat every customer as important. Your level of service should not drop at any point in time, and additional training might be required to ensure that frontline staff don't falter. A happy customer today may well become a loyal customer tomorrow.  
  • Have a few extra benefits available for any customer that walks in. This kind of benefit should obviously be slightly lower or less valuable than the ones offered to loyalty programme members. Again, by extending non-cash benefits to non-members, you can help to create the necessary sense of goodwill toward the brand.

Recession or no recession, loyal customers are a brand's most important assets. To increase their numbers you need to take good care of them. Particularly in such economically challenging times, these customers are the ones who have the potential to make the difference between success and failure.

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