Are Consumers Attracted By Loyalty Programs?

Loyalty programs are everywhere but some are more effective than others. While consumers are very keen to sign up to loyalty offers, they will only actively participate in around half of the ones they sign up to. This shows that many companies are not convincing those customers of the value of their programs or not engaging with them once they have signed up. In some cases, customers just become too familiar with a system to feel the benefit. It is for this reason that many experts are predicting the end of supermarket loyalty cards.

What are loyalty programs?

Loyalty programs are marketing campaigns designed by brands and businesses that offer incentives to encourage customers to start or continue using the services of the company associated with the program. They may also be referred to as reward schemes as they often allow customers to earn rewards by regularly purchasing items of paying for services. A supermarket loyalty card is a good example of a loyalty program.

What are loyalty programs for?

Loyalty programs are about more than just getting the customer to sign-up or to claim a free offer. They are about retaining the customer and building a long-term relationship based on trust. A customer must feel they are getting some kind of value if they are to enter into such a long-term relationship with a brand or business.

First and foremost, customers want to feel that they are saving money or have the possibility to gain some extra value by joining a program. For example, many online casinos gain popularity through their famous loyalty programs which, in the case of Grand Mondial, can actually give clients a chance to become a millionaire by giving free spins on jackpot games such as Mega Moolah.

Your business might not be in a position to offer a multi-million dollar jackpot, so your strategists need to think about what it is their customers are looking for and how they can offer them extra value for their loyalty.

The coffee shop example

Some loyalty programs are simple but effective. Many coffee shops will give customers loyalty cards that get stamped every time they buy a coffee. Once the card is full, they can claim a free cup. This keeps the customer coming in for their coffee and offers them a satisfying reward at the end. As these customers rarely drink alone, there is a high chance they are also bringing friends who also receive a card. This is a great way to build a regular customer base.

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Should customers have to work for rewards?

In the coffee example, the customer has to earn the reward over time but as coffee drinking is a regular activity, it does not require much work. However, a customer will decide in seconds if the work required to earn any reward is of value. This can even override any emotional attachment they might have to a certain brand. It is no surprise to find that most customers prefer to save money or be given a reward for doing nothing. So, the nature of the reward will be determined by the type of service your offer.

Customers are still attracted to reward programs but keeping them actively involved is not easy. The trick is to find that sweet spot between giving the customer want they want and pandering to any emotional connection they may have to the brand while making sure that there is a positive financial benefit to the business.

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