How to build customer loyalty by adding more value to your customer loyalty program

Do you know what defines the best loyalty programs? What matters most to your customer loyalty program members? Value.

Specifically, how customers perceive the value they get from engaging with your program. But when it comes to running a high-performing loyalty program, the role of value is often underestimated. Many brands assume they know value’s importance, but that’s not what we heard from customers surveyed in our recent study of 50 loyalty programs across nine industries.

Respondents reported value was three times more important to them than how easy it was to participate in a program. If the value felt worth the effort, they were willing to put up with some clunky program features.

If your brand can add more value to its loyalty program offerings, you’ll see an increase in visits, spend and wallet share. It’s a win-win for you and your customers.

Defining customer loyalty and how customer perception shapes it

Customers ask, "What's in it for me?" for every loyalty program they participate in. At its most basic level, a program’s value is what each member perceives as the answer to that question.

This “what I get” element can take many forms, depending on where the member is in their customer journey. It’s important to understand the full range of what impacts a member’s experience to provide the right value at the right time.

Value usually comes in a mix of soft and hard benefits. 

• Hard benefits: These benefits can be measured, quantified and point to ROI (e.g., points, cash, gift cards, free shipping)
  
• Soft benefits: These benefits are harder to measure because they impact how program members feel about the brand (e.g., early access to sales and products, priority service and checkout, exclusive rewards)
  

Soft benefits are critically important for a loyalty program’s success because they yield psychological benefits.  Respondents stated soft benefits connected them with the brand and conveyed a sense of status and exclusivity. These soft benefits are the key to creating brand advocates.

Brand advocates are the kind of repeat, ultraloyal members all brands want. The study confirmed this, too. Members who identify as brand advocates are six times more likely to visit, spend six times more money and generate six times more wallet share.

How value improves customer engagement and loyalty

The importance of having a loyalty program that creates perceived value can’t be overstated. Not only did the study reveal that value is three times more important than ease, but it also showed every brand’s program—across all industries—has room for improvement.

Key findings about value in loyalty program strategy

• Brands can overcome any effort-related challenges in their existing program by providing more value.
• Value can make extra effort worth it.  For example, customers may willingly submit receipts (i.e., do extra work) if they earn additional points vs. customers who automatically receive points from a purchase.
• Clearly communicating and promoting the program’s value (i.e., being descriptive and extensive when describing the benefits) will drive more members to engage with it.

Remember when brands get both value and ease right, they’re more likely to inspire members to become brand advocates.

5 key elements that generate value in a customer loyalty program (and 5 that don’t)

Perceived value is subjective to each member, but some program elements are universally loved. 

Here are five elements that study respondents repeatedly said mattered the most to them.

1. High quality rewards: Quality differentiates, and perceptions around quality impact whether a potential member chooses one program over another
2. Rewards that don’t expire: No one wants to worry about a reward’s shelf life or be told they have a deadline
3. Access to exclusive items, brands or experiences: This could include anything from access to early product releases, tickets to exclusive events and behind the scenes experiences
4. Offers that go beyond discounts at the register: Think unexpected gifts with purchase, personalized shopping and charitable donation matches
5. Great savings: Expected and unexpected discounts can have an impact

Related: How surprise-and-delight marketing builds stronger customer loyalty

On the other hand, certain program elements diminish value. Members were very clear on what they didn’t like. 

1. Rewards that only go back to the brand: This can work for coffee shops or brands with a high volume of repeat business, but it falls flat for brands where engagement is less frequent
2. Boring rewards: If customers aren’t engaged, they will forget about you and go elsewhere
3. Expiring points: No one likes to earn points and have them be taken away
4. Overly long point-earning cycles: When it takes too long to earn points, members get bored, tired and tempted by other programs
5. Lack of exclusivity: Similarity to other loyalty programs can destroy engagement and participation

Related: Learn how our retail client improved their customer loyalty program based on customer feedback.

How to increase customer loyalty by adding value

Remember improving value does not mean that brands need to instantly jump to making payouts richer. Perceived value is more important than actual value. Members care that the brand cares.

How does a brand begin improving a loyalty program? 

• Conduct some simple market research and “test and learns” to identify what your current and potential members value most. Find out what you’re doing well and where you’re falling short.
• Consider ways to make your customer loyalty program stand out from the competition. So many programs come across as the same to potential members. Give them a reason to stick around by highlighting the value.
• Look for places in the customer journey where additional elements of value can be easily introduced. This is an area where an end-to-end customer loyalty provider really shines because they are experts in the customer journey.
• Test different offers on a smaller scale and then roll them out to the broader audience once you’ve proven customers find them valuable.
• Take advantage of 1:1 personalization capabilities. With the right customer loyalty technology, brands can look across segments and create value for the right customer at the right time.
• Promote the value being offered by your program. Get the word out and get customers emotionally connected with the offer (and the brand). 

These improvement areas are where an end-to-end customer loyalty provider really shines. Because they have insights into the six key components of a successful loyalty program, they can help you identify gaps in your program and opportunities to improve how customers perceive the value you offer.

Learn if your customer loyalty program offers what customers want.