Loyalty Programs - Who Wants One?

Who wants a loyalty program? Many companies do nowadays. The question is why? One key reason is that technology has made it far more affordable to deliver a world class loyalty program. Online loyalty programs have made what was once cost prohibitive now attainable for most companies. But just because something is more affordable doesn't mean a company should do it. The great news is that technology provides far more than cost efficiencies for today's loyalty programs. Online loyalty programs enable brands to have a deeper relationship with their consumers. Think about how "old school" loyalty programs are structured. When a consumer would either buy an item or use a service, their loyalty account would be automatically credited with their loyalty points, miles or bucks or the consumer would have to cut out and mail in loyalty logos to credit their account. Rewarding purchase is certainly a component of a loyalty program but does this truly create deep loyalty? There is certainly value and consumer motivation under this scenario but this is just the tip of the loyalty iceberg. Online loyalty allows you to spend time with your consumer, get to know them, have a conversation over time, speak to them on a one to one basis and ultimately build a stronger relationship. Loyalty is not simply about rewarding purchase. Loyalty is about creating a currency to motivate behavior. Purchase is only one type of behavior. That same currency could also be used to motivate interaction - visit a company's website,  answer a survey question, learn about a new product, tell a friend about the program or product, etc. Online loyalty programs create a powerful platform that enables and motivates brand interaction. For a typical online loyalty program, consumers spend 5-10 minutes interacting with a brand with each visit. Imagine spending that much quality time with your most loyal consumer in today's cluttered, DVR-editable advertising world? At the end of the day, what would you rather have? "Transactional Loyalty" whereby a consumer purchases your product because you pay them to or "Emotional Loyalty" whereby your consumer purchases your product because you have developed a relationship with them.

Published On
Wednesday, September 5, 2007