We’re big fans of loyalty programs at Cheetah Digital. No matter what the world throws at us, we know that loyal people stick around. Loyalty, by definition, means “faithful” and that’s exactly the type of customer you want to have when things get tough.
Because brand loyalty is a concept that’s been around well, forever, it’s taken many forms. From S&H Green Stamps in the ‘30s to trading stars in an app for lattes today, loyalty programs have evolved to be bigger, better, and more enmeshed with technology.
The most successful modern loyalty programs have been so customized to brands and their customers that trying to create or modernize your own loyalty program for your brand can seem like a daunting task. What do you need to start a loyalty program? How do you find the right loyalty provider? What if you want to go beyond just transactional rewards? Of, if you have an underperforming program, how can you transform your loyalty offering? Keep reading and we’ll share how.
Loyalty vs. a pandemic
What we know: Brands with strong customer loyalty and digital connections have a significant competitive advantage over the brands who lack these assets.
Today, as we face down the consequences of a global pandemic, we are seeing, again and again, the brands with loyalty programs having an easier time transitioning to this new way of interaction; mostly digitally, with the emphasis placed on safety and convenience for the consumer.
For example, Bloomin’ Brands (parent company of Outback Steakhouse, Fleming’s, Carrabba’s, and Bonefish Grill) faced challenges during the pandemic but their investment in their data infrastructure and focus on their loyalty program allowed them to pivot to a takeout model that saw off-premise sales triple in March. They not only grew those sales but when analyzing their rewards program data, found that that they added a newer, more senior demographic to the program, which had typically been used by younger, more tech-savvy customers. Even better, Bloomin’ Brands can find new ways to use this data to cater to this new demographic within their rewards program going forward.
Developing a loyalty program strategy
Whether you’re just starting out or looking to bring your loyalty program up to modern standards, here are the key considerations for developing a successful loyalty program strategy.
Loyalty programs need a strong value prop
Your company has a value proposition and your loyalty program should have one, too. Think about why you’re offering a loyalty program — not just because your business will benefit from it, but think of how customers will benefit. Why should they join your loyalty program? What will they get out of it?
Value proposition: why someone should do business with you.
Starbucks has one of the best loyalty programs in the industry with Starbucks Rewards. Their value proposition: ultimate convenience. Their app serves as a mobile wallet, rewards system, and ordering system all in one place. All customers have to do to take part in Starbucks’ offerings is to bring their phones. Just how successful is Starbucks in their rewards program?
According to their January 28, 2020 earnings call, they currently see:
- 18.9 million active members
- 16% increase over the prior year
- ⅓ of comp store growth from Starbucks Rewards
Their app and rewards program also offered a quick and structured way for Starbucks to pivot during the pandemic. With its simultaneous loyalty and payment system, Starbucks’ value prop, convenience, for its customers is second to none.
“We know from experience that when customers join our Rewards program, their total spend with Starbucks increases meaningfully.” – Kevin Johnson, Starbucks CEO
January 28, 2020 Earnings Call
Loyalty programs should reflect the values of the brand
One of the (many) reasons consumers seek out a loyalty program is because they identify with the brand in some way. That’s just one of the reasons why your loyalty program should reflect the values of your brand; it is an extension of the brand and one that customers can actively engage with and feel like a part of.
No one does this better than Vans. The iconic brand has been around since the ‘60s and has never been at a loss for fans. Vans has a very strong brand identity and it’s reflected in their loyalty program, Vans Family. Even just the name evokes being welcomed into the fold — when you’re with Vans, you’re a part of a family.
The award-winning program encourages their “fans” to engage with their brand in many ways, whether it’s within the app or in the outside world. With each of these engagements, fans earn points-for-purchases, exclusive access to designs, and special experiences. It’s a highly successful program — it has over 10M members — and part of that is because it allows their fans to share in that strong identity.
Loyalty programs are nothing without their KPIs
Loyalty is not just putting everything out there and seeing what sticks. It should be planned and strategic and most importantly, it should be measurable. Part of the planning process is determining what loyalty means to you and then determining how you will measure it. Of course a brand wants to see an increase in sales, but you should be looking beyond transactional only because you want your loyalty program to have staying power. To do that, you need to track Customer Lifetime Value (CLV). It’s a bit more complex than just a formula but we break it down in this blog post: Customer Lifetime Value: The Metric All Marketers Should Be Using (& How to Measure It).
A modern loyalty program is achievable
There are so many other aspects of a loyalty strategy that should be included: the entire program should have a frictionless signup and user experience; it should identify the uniqueness of your customers and be personalized to them; and don’t forget the technology — the program and the solution its built upon must support rapid improvements based upon testing and learning the effectiveness of various program tactics.
But we talk about all those and more in our latest ebook. You can download it here or by clicking the button below. Or you can reach out to us at any time — we’re fanatics about loyalty and happy to talk to you about your strategy.