Loyalty programs are at a critical juncture. At this year’s Loyalty Summit CXM in Los Angeles, one question kept coming up: Is loyalty stuck?
Some panelists debated whether loyalty programs have become stagnant, but we realized the real issue isn’t with the concept itself—it’s with how brands approach them. Here are three areas to reset to make sure your program is relevant in the future.
1. Find flexible loyalty program software
Many loyalty programs feel stagnant because brands slip into convention. Too many programs rely on outdated structures and uninspiring rewards and fail to evolve with customer expectations. This isn’t a failing of loyalty as a concept. It’s a sign brands are becoming complacent. By breaking free from outdated methods, brands can pivot to meet evolving expectations and unlock new opportunities for customer engagement. When you find that ideal combination of brand and loyalty strategy, that’s where loyalty becomes unstuck.
Related: Is an outdated customer loyalty platform software costing you customers?
2. Adopt a point-less approach to improve the customer experience
Another key theme at the conference was the idea of “point-less loyalty programs” or a loyalty solution that doesn't rely on customers earning points.
Traditional, points-based programs focus too heavily on the transaction rather than on driving behaviors leading to future transactions. Panelists agreed: A loyalty program should emphasize engagement over mere points accumulation. However, panelists all stopped short of discussing how the sales cycle impacts consumer behavior, something we see as key to customer engagement.
For brands that have a lot of repeat transactions (think gas, grocery and even QSR), points are still relevant. But for brands who have a subscription model or a longer sales cycle, the solution is clear: focus on behavior changes over time.
For example:
- Subscription models: Protect margins and limit ongoing liability by avoiding points rewards for passive purchases like monthly autopay. Instead, leverage breakthrough touchpoints at key moments in the customer journey.
- Long sales cycle models (like automotive): Keep customers emotionally connected to the brand between purchases by creating nontransactional opportunities to earn rewards, boosting the likelihood of future transactions and reducing defection.
3. Get your CFOs involved in your loyalty program
A recurring discussion at the summit was the importance of early CFO involvement in loyalty programs. Engaging CFOs from the start isn’t just a financial formality; it’s a strategic move that ensures the long-term sustainability of your customer engagement strategy.
Key areas for CFO collaboration
- Funding structure: Deciding between a fixed, finite annual investment or incremental, performance-based budget.
- Proof points and KPIs: Aligning on metrics that matter most to prove the program’s impact on sales cycles and customer engagement.
- Liability management: Determining whether rewards should expire and, if so, managing year-over-year liabilities.
- Testing methodology: Establishing clear criteria and metrics to evaluate pilot programs.
An end-to-end customer loyalty partner helps guide these conversations and ensures your CFO and C-suite have a transparent view and ample say in your loyalty program’s success.
Related: Understand the power of working with an end-to-end customer loyalty partner vs. a technology-only provider
Extra takeaways for enhanced customer engagement
- Do the research: Primary, secondary and custom research are indispensable. Explore customer behavior to understand engagement drivers from all angles.
- Emotional connection: Emotional engagement is fundamental to successful loyalty programs. Customers who form emotional connections with brands become advocates for life.
- Rewards can’t be boring: Dull or low-value rewards won’t cut it anymore. Instead, unique rewards amplifying your brand strategy and rewards that resonate emotionally are crucial.
The last point was a key finding in our recent loyalty study, involving 5,000+ customers from 50 top brands. Helping retail brands find a fresh approach to stale, points-based models and embrace flexible strategies that drive true customer engagement alleviates loyalty program woes. Ask yourself: Does my current partner ensure my loyalty programs stay relevant and profitable, no matter the market conditions?
Explore more of what today’s customers really want from loyalty programs in our “Transforming customer loyalty programs” ebook.