Loyalty or engagement: Which program best connects customers to your brand?

By: Shawn Gannon

What you need to know

Loyalty programs reward repeat purchases and incentivize spending through points, discounts and perks, all driving short-term behavior.
Engagement programs nurture deeper relationships by offering personalized experiences and meaningful interactions, increasing long-term brand loyalty.
The most successful programs combine loyalty and engagement strategies, balancing transactional rewards with emotional connection.

Loyal, engaged customers are the bedrock of any successful business. But today’s customers expect more than just points and perks. In our recent loyalty study, 36% of retail customers surveyed said loyalty programs only offer rewards that benefit the brand, and 30% felt that programs lack variety and excitement. Without meaningful engagement, brands risk losing customer interest and loyalty.

The good news? Well-designed loyalty and engagement solutions can change that. By blending elements of both loyalty and engagement, brands can better understand what matters most to their customers and deliver on those expectations.

So how do you choose between creating a customer loyalty or engagement program? We’ll outline the differences between the approaches and explain why the most effective programs combine both to create lasting emotional connections with customers.

Understanding the difference between loyalty and engagement programs

Customer loyalty and engagement programs are marketing strategies that encourage customers to purchase or participate in brand offerings. The key difference between the two is in the approach.

Loyalty programs focus on driving volume and frequency of purchases, often through rewards. These transactional tactics might look like offering frequent flyer miles and exclusive airport lounge access, special discounts and coupons, or early access to products.
Engagement programs focus on nurturing relationships to create a deeper emotional connection with customers, building advocacy for your brand. Think: A post-flight personalized thank-you note, an unexpected gift, virtual communities and special event opportunities.

To maximize the impact of loyalty and engagement efforts, brands could focus on the following strategies.

Key strategies for the best loyalty programs

Focus on driving frequency of purchase and incremental spend
Clearly define the benefits and awards offered to customers
Personalize the rewards and offers based on customer behavior and preferences
Make it easy for customers to redeem awards and track their progress
Offer exclusive benefits and experiences to loyalty program members
Continuously communicate and promote the program to customers
Collect and use customer data to improve the program over time

Key strategies for the best engagement programs

Focus on driving the key behaviors from customers that lead to incremental customer value
Set clear goals and objectives
Understand your audience and their needs
Provide valuable content, awards or experiences
Use multiple channels to reach your audience
Encourage two-way communication and feedback

Why integrating customer loyalty and customer engagement is key

Historically, brands have siloed these two approaches, missing opportunities to build lasting loyalty. But our research shows that customers now expect more personalized rewards with higher perceived value. They want experiences that go beyond points and feel more tailored to their interests.

Blending loyalty and engagement strategies creates a more dynamic and customer-centric program. By integrating aspects from both, brands can:

Reward reliable customers while encouraging deeper interaction
Build emotional connections with customers to keep them coming back
Offer more personalized rewards and experiences that excite and motivate

Get the maximum benefit of your customer loyalty or engagement platform

When brands combine loyalty and engagement strategies, they create a more holistic and data-driven customer retention approach. ITA Group helps organizations use data to understand, redirect and amplify their loyalty and engagement programs. Our goal is to help you truly connect with customers. This requires:

Brand differentiation and customer engagement strategies
A technology solution that facilitates the program
Assistance to manage the day-to-day business of a program
The ability to collect and act on data to deliver rewards your customers value
Beyond-digital-only tactics to deliver unique experiences for your customers
Continuous improvement and adjustment to your approach
Measurement and analysis of the success of your program

The time it takes to recognize results from a loyalty or engagement program can vary depending on several factors, such as the program's design and the target audience. Designing programs that deliver begins with identifying program KPIs and goals.

Steps to implementing customer loyalty and engagement programs

Define your organization’s goals and the target audience for your loyalty and/or engagement programs
Research and analyze competitors' programs, and determine the resources and budget needed for implementation and ongoing management
Factor in the technology or platform you’ll use to track and measure program success, and the types of awards or incentives that will be offered
Gather insights from customers through surveys and focus groups to determine what rewards are relevant to them
Use data analysis around redemption patterns and purchasing behavior to understand the loyalty program aspects most important to customers (to then deliver a more personalized customer experience)
Listen to their challenges and make improvements accordingly
Seek out and share testimonials and stories of exceptional customer service to inspire even more brand-building behavior

Ready to create a program that keeps customers coming back? Explore insights from our latest loyalty study to discover what customers really want and how to design a program that meets their expectations.